The state of the economy at the street level

[Belli]

Following a meeting with helpline representatives, an internal RBA email in July said the agency "reported a significant number of callers experiencing hardship who are accruing additional debts via credit cards, Buy Now Pay Later, borrowing from friends and family, and increasingly unpaid obligations to the ATO, their utilities providers and council rates".

But it noted that many callers were "gainfully employed" and that "examples were given of mortgagees on six-figure salaries residing in prosperous suburbs of Sydney".

That is a contradiction in terms. Basically it's those who overcommitted based on an assumption which turned out not to hold true. It's happened in the past by the way such as when interest rates were increasing to 17.5%. A number went to fixed rates at say 14% but were financially hurt when rates dropped below the rate at which they fixed and kept falling. Lots of wails about unfair and all that but, hey, you made the decision and signed the contract. Much like now a number want it both ways.

Should some go down the gurgler, another buyer will buy up the property and be smiling as they may consider they got it at a good price. That's capitalism for ya.

 

[divs4ever]

That is a contradiction in terms. Basically it's those who overcommitted based on an assumption which turned out not to hold true. It's happened in the past by the way such as when interest rates were increasing to 17.5%. A number went to fixed rates at say 14% but were financially hurt when rates dropped below the rate at which they fixed and kept falling. Lots of wails about unfair and all that but, hey, you made the decision and signed the contract. Much like now a number want it both ways.

Should some go down the gurgler, another buyer will buy up the property and be smiling as they may consider they got it at a good price. That's capitalism for ya.

yes .. but ... they should have already been financially educated before making that choice , how many were ??

the magic ( or terror ) of compounding interest confuses most, add in parameters like negative equity and many are just deer in the headlights

 

[Belli]

So? If they are financially inept that rests on their shoulders. There are free mortgage calculators readily available and have been for many years. Before taking any action they could have run various scenarios but it seems a number chose not to do that or didn't stress test sufficiently. None of it requires much in the way of being financially savvy or education.

The article mentions initially 550,000 as coming off fixed mortgages so all of them need a financial education? Or all of them will go broke and have to sell up? I think not. It's a cohort of that group and I notice while the agency reported a "significant number" is under stress it hasn't defined "significant." Is it 90%? 80%? Or is it 0.5% which is less than 3,000 of that group?

 

[divs4ever]

sounds fine in theory , however i discovered our education system has major shortcomings ( and papers over cracks extremely well )

now how many stressed mortgagees will have to tap the 'Bank of Mum and Dad '
and i haven't even touched on 'conflicted financial advice '

remember the education system tries very hard to distance students from Granddad and Grandma ( who have lived through and seen a lot )

 

[Belli]

Your latest post is nothing but irrelevant blather.

 

[mullokintyre]

Your latest post is nothing but irrelevant blather.

That could apply to quite a few posters @Belli !

 

[mullokintyre]

Just been reading about a big jump in insolvencies in the property construction sector.
From Evil Murdoch Press

Interesting that Victoria was the only state to see a fall i insolvency.
Of course it may be that most of them have already gone.
Mick

Wrong again Mick.
There was at least one left.
From ABC News

A building industry association says the customers of a Victorian home builder in voluntary liquidation might have to pay more to get their homes completed.

Key points:​

• The company owes $2 million to 200 unsecured creditors and has left 50 projects unfinished in Victoria
• The Master Builders Association of Victoria says customers might have to pay more to get builds completed
• The owner of Chatham Homes says market conditions led to the company's demise

River Dale Building Group, trading as Chatham Homes, entered voluntary liquidation on Monday.

The AS Advisory has been appointed as liquidators of the company, which was the latest builder to encounter financial woes in an industry grappling with increased costs, cashflow problems and labour shortages.

Liquidator Andrew Schwartz said the initial investigation revealed that the company owed $2 million to more than 200 unsecured creditors, most of whom were tradespeople.

Sixteen staff members were made redundant.

Mr Shwartz said the business had about 50 projects at various stages of completion, most of which were in Melbourne, as well as some in Ballarat and Torquay.

Mr Schwartz said the company had no funds and was unable to complete these builds.

Mick

 

[mullokintyre]

Wrong again Mick.
There was at least one left.
From ABC News



Mick

And now another SA builder has joined the insolvency subgroup.
From ABC NEWS

Must be a lot of anxious people who have committed to house builds over the past few months.
Mick

 

[Dona Ferentes]

it seems to be Property Bingo, but this implies some can lose. The lead times must be nerve-wracking.
.
an anecdote to highlight some of the factors at play:
.
Meet Colin Prasad and Rita Horvath, who built a holiday house in Phillip Island, which is two hours from Melbourne.

Please tell us a little about yourselves.
Both my wife Rita, 48, and I, 53, are finance professionals in the mid to late stages of our careers. We currently live in a house in the inner Melbourne suburb of Richmond that we built ourselves. But we’d like to spend more time closer to the beach as we think about semi-retirement in the next decade or so.

What did you initially want?
We’d been thinking about a holiday house for a while and had considered the Mornington Peninsula and Bellarine Peninsula, especially after the first wave of lockdowns in Melbourne.
Then in November 2020, we rented a place in Cowes – the main township in Phillip Island – where we loved the vibe. It wasn’t as maniacally busy as the Mornington Peninsula but also not an extended suburb of Melbourne, which gave us the idea of getting a place there.

What did you end up buying (and building)?
We shortly after found a block for sale in Cowes. Sensing that COVID had changed many things, I said to Rita that I didn’t think we’d ever get the opportunity to buy a block of land for $300,000 less than 800 metres from the beach again. Rita happily agreed and we made an offer. It took a few days, but by early 2021 the block was ours.
It then cost another $650,000 to build a four-bedroom house, where the upstairs area can be temporarily closed to be an apartment. Those build costs also included landscaping, solar panels and fencing.

In total, it cost just shy about $1 million to buy the land and build our dream beach house.

How did you choose a builder?
Finding a builder was tough. The local builders on the island were all fully booked and volume builders don’t do custom builds. We didn’t go for a volume builder, even though their costs would have been around 30 per cent cheaper, as they didn’t have options that met our flexible needs.
My shortlist came down to two: Langford Jones and GenYou Builders, who were similarly priced.
Langford Jones came recommended to me from someone who had built on the island years ago. They appeared to have credibility and experience and initial discussions with one of the owners was good. But I started to get a bad feeling when I got passed on to a salesperson, who wanted to make changes to my plans to make it easier for them.

GenYou was different and easy to talk to. I was speaking to the young blokes who would actually build my house. They didn’t have a lot of overheads and did not take on too much work. I also visited GenYou’s window supplier and kitchen supplier to see what they made, who told me that they were great partners and always paid on time. So, we signed with GenYou, who started in early 2022.

A few months later, Langford Jones went bust. It would have been a sad story if we had chosen them as I am sure we would have lost our deposit and still have a vacant block.

How did the build go?
GenYou quoted everything from their suppliers in advance, and our building contract had a clause to pass on to us cost increases of up to 20 per cent – I think we got a small bill for an extra $5000 for material cost increases.
I think we had less than 5 per cent variations on the total build cost and most of that was down to our choices. The whole build was done in 11 months, and they delivered exactly what I had planned.

How does it now sit in the market?
Over the last 12 months I have seen the last few blocks of land similar to ours selling for $500,000. And volume builders have increased their prices to stay in business. Whilst our build cost was probably still more than they would charge, we are much happier with the product. And our land cost was lower, so it’s probably a wash.
I think prices have come off a little now with rising interest rates. I’m not sure if we’d get all our money back if we had to sell now. But we are not selling

 

[mullokintyre]

Meanwhile, down in the burbs where people are loudly grinding their teeth as the elites in OZ tell us why we should all be supporting the voice, we find that there are a lot of people in severe distress.

From Evil Murdoch Press

When the referendum is all over, the MSM are going to have to pay attention o the other 93% of Oz citizens to see how loud their voices will be if, as many of the economists think most likely, there is another round or two of interest rate rises.
Plenty of blood in the streets to come as yet.
Mick

 

[JohnDe]

Meanwhile, down in the burbs ........ When the referendum is all over, the MSM are going to have to pay attention o the other 93% of Oz citizens to see how loud their voices will be if, as many of the economists think most likely, there is another round or two of interest rate rises.
Plenty of blood in the streets to come as yet.
Mick

That will depend on whether the Yes or No win, and by what percentage.

 

[mullokintyre]

That will depend on whether the Yes or No win, and by what percentage.

Disagree there mate, I doubt that the majority of Oz cits give a rats out the outcome, they are too busy wondering about the paying the next bill or the mortgage.
Mick

 

[divs4ever]

they are too busy wondering about the paying the next bill or the mortgage.

sadly , i think you are correct

 

[JohnDe]

Disagree there mate, I doubt that the majority of Oz cits give a rats out the outcome, they are too busy wondering about the paying the next bill or the mortgage.
Mick

Maybe, but I'm not referring to peoples' thoughts on it.

My thinking is that if Yes win, then the Left leaning MP's of the country take that as a sign that they are on the right track. And the higher the percentage, the greater the number of voters that the government can rely on to keep them in power.
On the other hand, if the No wins and by a big majority there will be a lot of soul searching from the government.

 

[divs4ever]

Maybe, but I'm not referring to peoples' thoughts on it.

My thinking is that if Yes win, then the Left leaning MP's of the country take that as a sign that they are on the right track. And the higher the percentage, the greater the number of voters that the government can rely on to keep them in power.
On the other hand, if the No wins and by a big majority there will be a lot of soul searching from the government.

it will take a LOT of searching to find any soul in the ALP or Greens Party

even folks i know with ( some ) Aboriginal blood have their doubts on this referendum

 

[wayneL]

The magic isnt compounding interest, the magic is spending less than you are earning, something the young today have a huge amount of trouble doing and when it turns to $hit they are told it isnt their fault they spent all their money.
How the hell can young people learn, when society teaches everyone that all you need to do is whine and the Government will fix it for you, all we are doing is bringing up a population that feel they are entitled to indulge themselves and when the money runs out just ask for more.
Most generations have been through severe recessions, there really hasn't been one since the early 1990's, logics tells us one has to happen soon, there are way too many $100,000 utes with $30,000 of accessories on them, dropping the kids off at school.
Let's see how it goes, when the million skilled workers settle in and Indian qualifications are accepted, people will learn how to economise, the school of hard knocks is the fastest teaching method.

I kind of get blown away when some are these kids have $10,000 worth of tattoos.

Smashed avo? Pffft.

 

[sptrawler]

I kind of get blown away when some are these kids have $10,000 worth of tattoos.

Smashed avo? Pffft.

Thought I had better delete the post, way too many are members of the bleeding hearts club and I would end up with a pile on that goes for pages.
There was a time when expectation was driven by dedication, self discipline and sacrifice.
Now it seems that expectation, only requires a demand, for it to be fulfilled.

 

[divs4ever]

I kind of get blown away when some are these kids have $10,000 worth of tattoos.

Smashed avo? Pffft.

have scars instead ( and plenty of bleeding experience ) ( scars don't ink up well nor tan )

and am a genuine tightwad so enjoy the money saved ( by resisting the ink )

HOWEVER with any luck the avocado tree will have more than the two fruit produced so far this season , so am not willing to put crap on potential customers

 

[wayneL]

have scars instead ( and plenty of bleeding experience ) ( scars don't ink up well nor tan )

and am a genuine tightwad so enjoy the money saved ( by resisting the ink )

HOWEVER with any luck the avocado tree will have more than the two fruit produced so far this season , so am not willing to put crap on potential customers

Haha yes. I was once told that scars are sexy. On that basis there should be a queue out the door and onto the road at my place LoL.

 

[divs4ever]

Haha yes. I was once told that scars are sexy. On that basis there should be a queue out the door and onto the road at my place LoL.View attachment 163637

hardily ever worked for me , but i noticed i resist wrinkles fairly well ( for a slim person )