The Economic News Thread

[moonmoon]

good news.

[Ho Really]

good news.

In what sense?

Cheers

[Wayno]

The head of "Business SA" was quoted as saying a few commercial building projects are potentially going to fold very soon (I saw this in thursday's paper). They did not mention which buildings, nor which Developers, but obviously the Hills building on KWS was one of them.

i'm hopeful that the downtown remains isolated to 2-3 commercial buildings in the CBD, and that the residential side of the CBD market keeps pushing ahead (c'mon Spire!). Our population continues to grow, and people need to live somewhere!

[Ho Really]

...i'm hopeful that the downtown remains isolated to 2-3 commercial buildings in the CBD, and that the residential side of the CBD market keeps pushing ahead (c'mon Spire!). Our population continues to grow, and people need to live somewhere!

I don't think there will be too much of a downturn on the residential developments. As you've said Wayno, people need to live somewhere and they need to work as well (in the city hopefully). I would like to see many start their own businesses and fuel a commercial boom. Maybe in a year or so.

Cheers

[Wayno]

SA appears to have performed very well in the 12months to June 30. The star performer was GMH. Here's hoping for further improvements this year (assisted by the slowly expanding mining boom)!

SOUTH Australia achieved a record $10.34 billion in exports in 2007-08, well above the $9.01 billion in the previous year. The performance was boosted by strong mining, car, wheat and wine shipments.

Mineral exports reached $2 billion for the first time as mining continued to lift shipments.

But the star of the year was the car sector, because GM Holden's shipments rose from $979 million to $1.48 billion. The increase was largely due to GM Holden's Pontiac G8 export program to the United States, which started in November, 2007.

GM Holden corporate affairs manager Andrea Matthews said the company was making 620 cars a day at Elizabeth - about half of which were exported.

"We're midway through a new export program with the Pontiac G8 to the U.S., which we've just announced is being extended to Canada,'' Mrs Matthews said.

She said the Middle East continued to be an important market, along with Britain and New Zealand.

The wine sector also improved its performance to a record $1.85 billion (up from $1.73 billion), while wheat exports reached $582 million ($368 million) and seafood exports hit $338 million ($303 million).

Other major export sectors such as meat, wool, machinery and petroleum all fell slightly.

South Australian Chamber of Mines and Energy director industry marketing Anne Walker said the state's mining sector had entered a period when there would be a number of new commercial mining operations and types of commodities mined.

"These new mines will deliver significant growth to our annual mining export figures this financial year and in the years ahead,'' she said.

Business SA chief executive Peter Vaughan described SA's export performance as very encouraging, particularly in a challenging environment.

"While exporters are facing the challenges of a strong dollar, high interest rates and increased business costs, the increase in commodity prices contributed to the record export figures,'' he said.

[AtD]

House price rise highest in Adelaide
http://www.abc.net.au/news/stories/2008 ... n=business
Posted Mon Aug 4, 2008 1:32pm AEST
Adelaide's house prices have recorded the highest annual rise of the capital cities.

The Bureau of Statistics says Adelaide's house prices have grown by 16.2 per cent over the past year compared with a national average increase of 8.2 per cent.

Melbourne's house prices rose 14.1 per cent, while in Perth prices dropped 0.9 per cent.

ANZ Bank economist Alex Joiner says Adelaide's population growth has been a factor.

"We see this as a factor of ongoing robust economic performance in South Australia, as well as a particularly strong housing sector because of strong underlying population growth," he said.

House Price Indexes: Eight Capital Cities, June 2008

[Wayno]

Adelaide housing market in top ten least affordable

Many analysts keep saying "our property prices are safe, we won't burst like in the US and other countries, our fundamentals are sound", but being in the top 10 most expensive cities is probably not sustainable (that's my personal opinion)...

Sydney has become the world's most unaffordable housing market - but Adelaide has also made the top 10.

Research by the Institute of Public Affairs says the fall in house prices in the United States has left Sydney as the most expensive housing market in the world.

Analysing data from US-based consultancy Demographia - which examines house prices from 159 urban areas around the globe - it said Melbourne, Perth, Brisbane and Adelaide are also in the top 10 most unaffordable cities following the US sub-prime crisis.

The average Sydney home costs over eight times the average household income in that city.

IPA director of the deregulation unit Dr Alan Moran said misguided government polices were the culprit of Australia's unaffordable housing market.

He said the cost of Sydney homes was inflated by laws which restricted the availability of land, imposed lengthy bureaucratic procedures, increased the cost of building new homes for environmental requirements and charged high taxes "masquerading as development levies", Dr Moran said.

"These measures are preventing all but the most affluent young buyers from getting a toehold in the housing market," he said.

"It is clear that regulatory restrictions are fuelling the high cost of building new homes."

He said areas like California and Britain had seen recent price collapses and were seeing fewer and fewer new homes built.

"By contrast, (US) cities with few regulatory restrictions - such as Atlanta, Houston and Dallas - have seen stable prices in the housing market," Dr Moran said.

From the ipa.org.au website: The average Australian house requires 6.6 years of income to buy, compared with 3.2 in Canada, 3.7 in the US and 5.5 in Britain.

[muzzamo]

We are in for a major, major, MAJOR correction with very wide reaching economic flow on effects. Make no mistake.

The constant spruiking by the advertiser "MIIIIIIIIIIINNNNNNNNNNIIIIIIINNNNNNNNGGGGGG BOOOOOOOOOOMMMMMMMMMM YOU MUST BUY PROPERTY NOW OR MISS OUT FOREVER" doesn't particularly help, but its no suprise given that the Real Estate industry would make up at least 40% of their income.

A good place to read about all this is http://www.globalhousepricecrash.com - not suprisingly the Australian forums there are very active at the moment.

[SRW]

He said the cost of Sydney homes was inflated by laws which restricted the availability of land, imposed lengthy bureaucratic procedures, increased the cost of building new homes for environmental requirements and charged high taxes "masquerading as development levies", Dr Moran said.

The IPA is a conservative think tank, and these criticisms very much fit into their world view.

"By contrast, (US) cities with few regulatory restrictions - such as Atlanta, Houston and Dallas - have seen stable prices in the housing market," Dr Moran said.

And note their international renown as wonderful places in which to live.

[Will Derwent]

While it is true the IPA is a conservative think tank, and Alan Moran is famous for advocating this stuff, he does have a point.

Restricting supply in the face of increasing demand is going to have an inflationary affect in the market for any good, and this is especially evident in housing. (Notice that inflation rates in construction related materials has risen slower than CPI, but land prices, not including the house itself have risen dramatically.) Some of this you can't help (there is only so much land within 1km of the CBD in any city), but restrictions on developing brownfield sites in inner city areas do have an impact on prices.

In fact, this is the reason why several state governments have undertaken planning system reviews (particularly SA and VIC) to reduce the regulatory burden on developers in an effort to improve economic growth. So it's not all a conservative plot to ruin everyones neighbourhood.

[AtD]

SA economy 'accelerating'
http://www.abc.net.au/news/stories/2008 ... 399844.htm

The September quarter business outlook from Access Economics says South Australia's economy is accelerating when the rest of Australia is slowing down.

The report describes retail spending and car sales in South Australia as remarkably strong, suggesting the State's lower rate of household debt and cheaper homes make it more resilient to high interest rates.

It also predicts a better year for the State's farm output.

However the report says South Australia's overall output is growing at a slower rate than the rest of the country, and that annual population growth of one per cent is also weak.

[frank1]

SA economy 'accelerating'
http://www.abc.net.au/news/stories/2008 ... 399844.htm

However the report says South Australia's overall output is growing at a slower rate than the rest of the country, and that annual population growth of one per cent is also weak.

Nice article, except how they slip this little 'weak' comment in.

[rev]

What's wrong with that part frank? It is the truth..1.0% population growth is weak.
Can't expect all articles to be sugar coated.

[Will]

What's wrong with that part frank? It is the truth..1.0% population growth is weak.
Can't expect all articles to be sugar coated.

Maybe for Australian conditions, but in other first world countires, particularly those in Europe and Japan, a 1.1% population growth rate would be considered high.

[AtD]

Ric Battellino, Deputy Governor of the RBA, gave a speech this week about why he thinks house prices in Australia will remain high for the foreseeable future. It's a good read, if you're into that sort of thing.

http://rba.gov.au/Speeches/2008/sp_dg_301008.html

Some commentators who have looked at the US housing market feel they have seen the future for the Australian market. In some ways, this is understandable because economic developments in Australia have in the past often mirrored those in the US.

As you know, the ratio of housing costs to income has been unusually high in recent years and it is not unreasonable to expect that it will decline over time. But this ratio can adjust in several ways: lower house prices, rising incomes or falling interest rates. In the US, falls in house prices have been a big part of the adjustment. I think there are reasons, however, to believe that the Australian housing market will not follow the US market to the same degree.