she keep-s predicting disasters of one sort or another, the latest happens on Sept 23

I'll give a million to one that the world ends on the 23rd, I'll pay out on the 24th, if it happens, so bet up now.

Australia’s economy is built on shaky foundations

WE’RE the lucky country but our luck is about to run out due to factors out of our control. Brace yourselves for a hard crash

http://www.news.com.au/finance/economy/australian-economy/australias-economy-is-built-on-shaky-foundations-and-its-about-to-collapse/news-story/d924ef058941e0df3b8e4896e38db882

NOBODY NEEDS THAT MUCH STEEL

The initial rally in commodities at the beginning of 2016 was caused by a bet that more economic stimulus and industrial reform in China would lead to a spike in demand for commodities used in construction. That bet rapidly turned into full-blown mania as Chinese investors, starved of opportunity and restricted by government clamp downs in equities, piled into commodities markets.

SHOULD WE STOP MINING BLACK GOLD?

Australia’s second biggest export is coal, being the largest exporter in the world supplying about 38 per cent of the world’s demand. Production has been on a tear, with exports increasing from 261Mt in 2008 to 388Mt in 2016.

While exports increased by 49 per cent over that time period, the value of those exports has collapsed 38 per cent, from $54.7 billion to $34 billion.

WE’VE WASTED OUR GRAVY TRAIN

What is more shocking is that despite the gargantuan amount of money that China has been pumping into the system since 2014, Australia’s entire mining industry — which is completely dependent on China — has struggled to make any money at all.

Across the entire industry, revenue has dropped significantly while costs have continued to rise.

ARE WE BUYING HOUSES WITH FLAT WHITES?

With an economy that is 68 per cent services, as I believe John Hewson put it, the entire country is basically sitting around serving each other cups of coffee or, as the Chief Scientist of Australia would prefer, smashed avocado.

Successive Australian governments have achieved economic growth by blowing a property bubble on a scale like no other.

A bubble that has lasted for 55 years and seen prices increase 6556 per cent since 1961, making this the longest running property bubble in the world (on average, “upswings” last 13 years).

BUBBLE BUILT ON ‘FAKE’ CHINESE INCOME

Already at the time of the GFC, Australian households were at 190 per cent debt to net disposable income, 50 per cent more indebted than American households, but then things really went crazy.

WE CAN’T AFFORD TO LIVE HERE

Foreign buying driving up housing prices has been a major factor in Australian housing affordability, or rather unaffordability.

Urban planners say that a median house price to household income ratio of 3.0 or under is “affordable”, 3.1 to 4.0 is “moderately unaffordable”, 4.1 to 5.0 is “seriously unaffordable” and 5.1 or over “severely unaffordable”.At the end of July 2017, according to Domain Group, the median house price in Sydney was $1,178,417 and the Australian Bureau of Statistics has the latest average pre-tax wage at $80,277.60 and average household income of $91,000 for this city. This makes the median house price to household income ratio for Sydney 13x, or over 2.6 times the threshold of “severely unaffordable”. Melbourne is 9.6x.

WE’VE BEEN HERE BEFORE, LONG BEFORE

Australia is not alone, Chinese “hot money” is blowing gigantic property bubbles in many other safe havens around the world.

But combined with our lack of future proof industries and exports, our economy is completely stuffed. And it’s only going to get worse unless we make a major transformation of the Australian economy.

We can’t rely on property to provide for our future. In 1880, Melbourne was the richest city in the world, until it had a property crash in 1891 when house prices halved causing Australia’s real GDP to crash by 10 per cent in 1892 and seven per cent the year after.

The depression caused by this crash was substantially deeper and more prolonged than the Great Depression of the 1930s. Macro Business points out that if you bought a house at the top of the market in 1890s, it took 70 years for you to break even again.

CAN WE FIX IT?

We have serious problems in this country. And I think they are about to become very serious. We are on the wrong trajectory.

I’ll leave you now with one final thought.

Harvard University created something called the Economic Complexity Index. This measure ranks countries based upon their economic diversity — how many different products a country can produce — and economic ubiquity — how many countries are able to make those products.

Where does Australia rank on the global scale?

Where does Australia rank on the global scale?

Worse than Mauritius, Macedonia, Oman, Moldova, Vietnam, Egypt and Botswana. Worse than Georgia, Kuwait, Colombia, Saudi Arabia, Lebanon and El Salvador.

Sitting embarrassingly and awkwardly between Kazakhstan and Jamaica, and worse than the Dominican Republic at 74 and Guatemala at 75, Australia ranks off the deep end of the scale at 77th place.

77th and falling. After Tajikistan, Australia had the fourth highest loss in Economic Complexity over the last decade, falling 18 places.

“In the 1970s … we became a third world economy selling raw materials and food and we let the sophisticated industrial side fall apart … If in the final analysis Australia is so undisciplined, so disinterested in its salvation and its economic well being, that it doesn’t deal with these fundamental problems … Then you are gone. You are a banana republic.”

Looks like Paul Keating was right.

The national conversation needs to change, now.

ExceedAndExcel wrote: Would love the economy to continue to tread water for a while yet. Have a fixed rate expiring in about 18 months and would love to be able to fix again at a similar low rate. Don’t mind if the housing market slows a bit either given I’m looking to buy again in the next 6 months.

don't mind treading water, the article suggests much worse than that

Good for me  maybe go to your profile & check preferences in case a gremlins hopped in.

yes but if you read the article it seems to make some valid points

Short of some unforseen disaster , it's hard to see House prices in the 3 main capital cities continueing to be in short supply.
The yearly migration rate hovers to some 200,000 yearly at this time and they have to be housed.
Most want to live Sydney , Melbourne and to a lessor degree Brisbane so they all appear solid investments.
Sales 15K North east of Brisbane in one Villa complex I know very well,
Have gone 350K 380- 385 350K to 2010..   350K- 375K 405K 410 2 years ago - 420 18 months and the last one 465K in October 2017.
I've been hearing for 70 years how House Prices are going to collapse but hasn't happened in any of the solid areas.
Exclude mining & some tourism dependent districts as that's unpredictable.

Dr E wrote: Anyone waiting for the bubble to burst before getting a property in an east coast city should hold on. <span style="font-size: 12px;"> </span> <span style="font-size: 12px;">The boom is certain to stall ... around 2050 is my tip ... April.</span>

EXACTLY
Oz markets away from the main 3 cities & established Eastern coast areas aren't doing comparably as well now.
Many are losing their investments there. ( risky areas )
Be careful of a slight correction around the Gold Coast AFTER the
Games .
This 50% QLD Gov target for renewables is a concern also, given there in debt over 80 billion.
----------------------
"The US experience in the '00s suggests that housing markets with high participation of leveraged speculators tend to exhibit increased volatility in both booms and busts," the report said.

These 'investor' cities had greater than 50 per cent appreciation in the housing boom and a 50 per cent larger correction when the market declined, compared to the US national average.

Author of the report, head of financials investment at Watermark, Hamish Chalmers, said there was the possibility of a sharp drop in home prices in Australia if mum and dad investors ran for the exits.

"Our research highlighted that the Australian economy is exhibiting many similar symptoms that those other economies did before they had their housing-led busts, so things are definitely slowing," he said.
------------
Has been the same here in many areas too . Supply & demand the name of the game.

Dr E wrote: How long have the doomsayers been talking about a "housing bubble"? We could see a 10% correction in many parts of Sydney soon ... suburbs that have had a run of >10% p.a. growth year on year for 5 or 6 years, and doubled in value ... so effin what! ... who cares unless you were one of the dummies who bought in the past 6 months?

You are spot on.

A subject where it's abuse to nothing, if you mention good experience you have gained..
I note the "king" mouth" on here was preaching his intentions some 2 years ago.   > Repeated recently, he hoped things remained slow as he intended to do (lol)= what he has already told us 2 yrs. previously.
I had a laugh as that's so typical..     Is still talking, after more than 2 years so one would expect he has missed the boat again for this cycle.

The Penny doesn't drop or deter some from denial, that Solid Area Real Estate NSW , Qld , Vic ,just keeps on increasing and that can't change while our migration numbers remain anywhere near our present intake.
Plenty of wealthy Asians , Indians , Wherever, ready to move here.
= It's all about supply and demand.

That last Post was some years ago.

present intake.
Plenty of wealthy Asians , Indians , Wherever, ready to move here.
= It's all about supply and demand. [/QUOTE]



No brains, didn’t miss the boat. 2yrs later and I’m buying AGAIN. All the while you’re sitting on you’re beanbag, reminiscing the days when Sydney prices went up 15% per MONTH (LOLZ) and waiting for it all to end.

So much for avoiding me. [/QUOTE]


really, I missed the boat, AGAIN

ExceedAndExcel wrote: Whale wrote: present intake. Plenty of wealthy Asians , Indians , Wherever, ready to move here. = It's all about supply and demand. No brains, didn’t miss the boat. 2yrs later and I’m buying AGAIN. All the while you’re sitting on you’re beanbag, reminiscing the days when Sydney prices went up 15% per MONTH (LOLZ) and waiting for it all to end. So much for avoiding me.

really, I missed the boat, AGAIN
[/QUOTE]

LOLOLOL ..... AND A LIAR ...
   Must make you feel good .     You missed the Boat all right.


Yes Whale, 15% per MONTH. Happened in the 80s, just ask Macca.

And he wants us to believe he is an authority. Totally clueless. [/QUOTE]

maccamax wrote: LOLOLOL ..... AND A LIAR ...    Must make you feel good .     You missed the Boat all right.

15% for 12 months, wow house prices went up by 435% in 12 months

max manewer wrote: I wonder who is the biggest LAIR on this site. And please, do not "correct" my spelling !

lolololol I only had to refer to the Forum "mouth" and look who responded. hahahaha

haha