Is australia living in a massive bubble and will it go pop if not why not

[flag of convenience]

Also the thing about Australia is it does not need to worry about what is happening overseas as much as other countries. Australia is pretty self sufficient in terms of it has a small population and a big back yard to feed it. Also a strong banking and technology sector. This county won't starve

 

Australia if anything is over exposed to world markets and prices not less. While it may not starve the price of food would likely escalate greatly come a crash in world resource prices and the after effects. Folk would default on debt, unemployment would mean less money and the that follows that.

 

If food is so expensive in relatively good times how much do you think it would be in a crises. Plenty of rabbits and animals available to eat in the wild I suppose.

 

Banking is heavily over exposed to the whims of the housing market. Meanwhile RBA seems to be floundering somewhat with regards escalating house prices and how to react.

[Marisawright]

The amount guaranteed has since been reduced. Australian banks are heavily over exposed to the housing market. A bubble prick and they would find themselves in trouble. Of course the government would bail them out as well they know, but at tremendous cost to the taxpayer. No great talent required by the banks to date.

 

The smaller banks aren't exposed because they're required by law to hold mortgage insurance (which protects the lender not the borrower). When the original GFC happened, the big four banks were heavily exposed because they'd been handing out loans like sweeties, but even so, they were never in danger - our regulations limited how far they could go. The GFC gave them a scare and they tightened their loan criteria a lot. They have loosened up a lot now, but I still don't think they've gone back to handing out 100% or even 95% loans to all and sundry, as they used to.

 

Our house prices are ridiculous but even if they drop, I think it's the borrowers who will suffer far more than the banks.

[newjez]

I think the UK open to all border policy is digging a great big hole that no amount of cost cutting is going to fill.

That's a bubble in the making right there along with house prices blowing the average wage out of the water.

For me ( and I'm just Mr average don't know jack ) I think I will be more trusting of the Australian bubble bouncing along a lot longer than the UK one.

End of the day, would rather sleep on the beach than under a bridge!

Don't think the wife and kids would be too happy but I'm easy to please.

 

Very few homeless in Australia seem to sleep on the beach. They are quite common in Brighton. I've never known why.

[flag of convenience]

You've been listening to Tony Abbott too much. I do think the whole world is riding for a fall and Australia can't avoid being dragged down with it - but if you look at the facts, not the political spin, you'll see that inflation has been well controlled and wages have grown in line with it. As for a debt problem - if Australia's economy is sick, then almost every other country in the world is in intensive care. All you have to do is look at the percentage of GDP, e.g. compare Australia to the UK, the US, Canada, any of the EU countries.

 

 

http://www.economist.com/content/global_debt_clock

 

Australia is far too over exposed to China to escape lightly from a downturn in that country. Talk about too many eggs in one basket. Our economy should be higher GDP considering living through a boom in recent times. Our good luck and little to do with any great insight by government and certainly not the banks.

[newjez]

You've been listening to Tony Abbott too much. I do think the whole world is riding for a fall and Australia can't avoid being dragged down with it - but if you look at the facts, not the political spin, you'll see that inflation has been well controlled and wages have grown in line with it. As for a debt problem - if Australia's economy is sick, then almost every other country in the world is in intensive care. All you have to do is look at the percentage of GDP, e.g. compare Australia to the UK, the US, Canada, any of the EU countries.

 

 

http://www.economist.com/content/global_debt_clock

 

The concept of Australia being debt free is a fallicy. Whilst not as bad as some (UK included), I think you will find they make the top twenty.

[flag of convenience]

Very few homeless in Australia seem to sleep on the beach. They are quite common in Brighton. I've never known why.

 

Possibly they'd be rounded up and arrested? Fear of visibly sleeping in the open of assault? Besides sleeping in cars down the beach(not allowed) I'm almost certain homeless folk sleep in the bushes by the dunes at some beaches.

 

In general homeless folk sleep in more concealed places than in the doorways of shop fronts all to visible in Central London at least when I lived there.

[flag of convenience]

The concept of Australia being debt free is a fallicy. Whilst not as bad as some (UK included), I think you will find they make the top twenty.

 

While national debt isn't a problem it is personal debt, largely due to inflated house prices I expect that is a big problem. Over consumption without the means in many cases to which is encouraged no need.

[flag of convenience]

The smaller banks aren't exposed because they're required by law to hold mortgage insurance (which protects the lender not the borrower). When the original GFC happened, the big four banks were heavily exposed because they'd been handing out loans like sweeties, but even so, they were never in danger - our regulations limited how far they could go. The GFC gave them a scare and they tightened their loan criteria a lot. They have loosened up a lot now, but I still don't think they've gone back to handing out 100% or even 95% loans to all and sundry, as they used to.

 

Our house prices are ridiculous but even if they drop, I think it's the borrowers who will suffer far more than the banks.

 

Depends on how big the drop is. If folk walk away from paying more debt in droves as can't pay that would pose a problem. Some border line lending that I know of has gone on as well. Folk earning big money but on short term contracts. One contract ceases unlikely to be earning anything close to present. Two I know in this situation who are living it would seem on hope something comes up.

[Guest]

You've been listening to Tony Abbott too much. I do think the whole world is riding for a fall and Australia can't avoid being dragged down with it - but if you look at the facts, not the political spin, you'll see that inflation has been well controlled and wages have grown in line with it. As for a debt problem - if Australia's economy is sick, then almost every other country in the world is in intensive care. All you have to do is look at the percentage of GDP, e.g. compare Australia to the UK, the US, Canada, any of the EU countries.

 

 

http://www.economist.com/content/global_debt_clock

 

Comparing the GDP debt - thats what i was talking about. Oz has a small population so the knock on effect is massive and thus a small amount of debt can cause a large slide. However this country has developed from digging stuff out of the ground and has survived from doing this alone. Still lots in the ground and humans will always rebuild somewhere if its not China. I dont think the bust will be forever

[jasepom]

There is unlikely to be a huge price correction in Australian property, because it's just too desirable to own new houses here and the land is very valuable. There's more likely to be stagnated price increases.

 

The average price in the suburbs is $550k which equals about £200k in Uk. People seem to be happy to pay that kind if price for a Victoria terrace or a semi-detached home which on paper isn't worth that. The difference being at least here you do get a property that has good quality finishes and is worth the valuation. I would think speculation has added 100k to the average home in the last 5 years, but affordability will stop any future rises.

[betterskierthanthewife]

Tp put it in perspective. Australian debt as a % of GDP is 27%. UK is 96%, Germany is 84% and the USA is 83%. Greece is 153% and Ireland is 129%.

[Misplaced]

We have been in Canberra for 9 months and if you ask most Australians they consider it to be expensive, not as expensive as Sydney but still expensive. What we have found is some things are more expensive than the UK and others not. It's all relative really.

 

All I'll say is don't get hung up on cost of living. We did a little bit when we were in the UK waiting to come over and have been pleasantly surprised. Our main concern is affording to buy a house.....we are getting on a bit...lol.....Canberra isn't cheap for housing!!

[snapper123]

Tp put it in perspective. Australian debt as a % of GDP is 27%. UK is 96%, Germany is 84% and the USA is 83%. Greece is 153% and Ireland is 129%.

 

In Ireland before it went belly up around 2007 I think GDP was around 24% as you stated its now 129%

[flag of convenience]

Comparing the GDP debt - thats what i was talking about. Oz has a small population so the knock on effect is massive and thus a small amount of debt can cause a large slide. However this country has developed from digging stuff out of the ground and has survived from doing this alone. Still lots in the ground and humans will always rebuild somewhere if its not China. I dont think the bust will be forever

 

Not only from digging out the ground as wool and cereal exports, fruits and meat were leading the pack prior to digging out of the ground. Wool was especially important in Australia's history. Australia rides on the sheep's back being an old saying, underlining its importance.

 

Resource prices are dictated from abroad and can drop dramatically. Remember Africa is rich in resources but hardly rich nations. Boom conditions are but that and the demand we experienced over the past decade will not be readily repeated. China owing to restructuring and sheer size can hardly be matched.

[flag of convenience]

We have been in Canberra for 9 months and if you ask most Australians they consider it to be expensive, not as expensive as Sydney but still expensive. What we have found is some things are more expensive than the UK and others not. It's all relative really.

 

All I'll say is don't get hung up on cost of living. We did a little bit when we were in the UK waiting to come over and have been pleasantly surprised. Our main concern is affording to buy a house.....we are getting on a bit...lol.....Canberra isn't cheap for housing!!

 

And shelter is a basic necessity where cost has got way out of hand since around 05. What may look reasonable to those from certain UK locations is darn expensive compared to norms in house/average pay rates over recent decades.

[flag of convenience]

There is unlikely to be a huge price correction in Australian property, because it's just too desirable to own new houses here and the land is very valuable. There's more likely to be stagnated price increases.

 

The average price in the suburbs is $550k which equals about £200k in Uk. People seem to be happy to pay that kind if price for a Victoria terrace or a semi-detached home which on paper isn't worth that. The difference being at least here you do get a property that has good quality finishes and is worth the valuation. I would think speculation has added 100k to the average home in the last 5 years, but affordability will stop any future rises.

 

The cost of home ownership is ever increasingly outside of first home buyers reach. Hardly too desirable under the circumstances. Many do it out of fear of missing the boat completely, even if affordability is a serious issue.

Prices should remain neutral until the market decides which may to go. Economic factors impacting on importing people and employment will decide. Government and RBA intervention being another factor as how far to allow prices to fall. There certainly should be a correction. Will it be allowed to happen, that is the question.

[jasepom]

I think the media here are partly to blame for hyping the market. They are obsessed with property prices. If you look at the morning news they are disappointed when house prices don't go up. They continually believe house price rises are good for people. So yeah they are sprucking the bubble. To them it's free money, but the flip side is of course getting on the property ladder becomes increasingly difficult.

[Marisawright]

Comparing the GDP debt - thats what i was talking about. Oz has a small population so the knock on effect is massive

 

Do you understand what GDP debt means? It's comparing the debt as a percentage of our Gross Domestic Product - which means when they quote the debt league tables, they're taking the size of our economy into account.

 

Here's the table. Unfortunately it's in alphabetical order but it's easy to see that Australia is way, way, way down the list and remember, this is in proportion to our size, not raw data.

 

 

http://www.oecd-ilibrary.org/economics/government-debt_gov-debt-table-en

[newjez]

Tp put it in perspective. Australian debt as a % of GDP is 27%. UK is 96%, Germany is 84% and the USA is 83%. Greece is 153% and Ireland is 129%.

 

Click on the arrow, and then have a look. Not defending the UK. They are by far one of the worst. But Australia is in the game.

 

http://www.cnbc.com/id/30308959

[starlight7]

The UK still has investments and assets from its old colonial days which Australia has never had because it was too newly developed for the plundering. Like Australia the UK doesn't actually produce a great deal these days- the old mills and mines and steel industry are long gone thanks to the politicians. Mainly its riches seem to be involved with things like banking and investment, retail and generally living off the efforts of others. Long term I think Australia will be fine provided it doesn't open the floodgates. Australia needs to develop the hinterland- all these years as a nation and still no movement here. Maybe they should have a long hard look at other desert countries to see what can be done?

[RioMarina]

Tp put it in perspective. Australian debt as a % of GDP is 27%. UK is 96%, Germany is 84% and the USA is 83%. Greece is 153% and Ireland is 129%.

 

 

 

Don Argus warns of debt, bubble bombs

 

• by:Adam Creighton

• From:The Australian

• May 24, 201412:00AM

 

 

 

 

 

 

 

RISING debt risks undermining living standards at the same time that stockmarket bubbles pose a threat to savings, one of Australia’s most eminent businessmen has warned.

 

Don Argus, former chairman of corporate giants BHP and Brambles, said Australia’s economic growth would suffer if Australia’s total debt, now 220 per cent of GDP, climbed much further.

 

 

 

Just sayin!

[betterskierthanthewife]

Don Argus warns of debt, bubble bombs

 

• by:Adam Creighton

• From:The Australian

• May 24, 201412:00AM

 

 

 

 

RISING debt risks undermining living standards at the same time that stockmarket bubbles pose a threat to savings, one of Australia’s most eminent businessmen has warned.

 

Don Argus, former chairman of corporate giants BHP and Brambles, said Australia’s economic growth would suffer if Australia’s total debt, now 220 per cent of GDP, climbed much further.

 

 

 

Just sayin!

 

Ah, TOTAL debt?! so you're including household debt, corporate debt AND public debt? Compare the total debt to Japan, Greece, Ireland, USA and UK.....

[Guest]

Unfortunately Australia has sold out a lot of its farming and food production industry to Chinese entities. Not sure how this will pan out in the long run.

 

Australia survived before we had the mining, we live on the sheeps back which is rarely mentioned. We export a lot of food and will continue to do so. The country is so vast and the cattle stations and sheep stations so large you could not even imagine them. England could fit into a cattle station. They muster with helicopters and export the beef. Yes the mining boom has been good but Aus will always survive because the peoople who came to live here, pioneers and convicts were tough and their descendants are tough and resilient people. They are nothing like Brits anymore. In fact Australia is nothing like Britain.

 

Britain has wealth yes but in the hands of a few. There are also a lot more people in Britain, however there are a lot more to feed as well as we found out during world war 2.

 

The prices will continue to rise and what you have to do is think in dollars not pounds, you cannot live in Australia and keep thinking, oh that costs such and such in UK.

 

My sister recently spent a holiday with me in March this year and she said she did not see much difference in the prices at all.

 

Housing is expensive, housing is expensive in UK as well if you want to live in desired areas, no country is immune to peoples perceptions of where to live and where they will pay more.

[Lambethlad]

Abbott is doing his best to talk down the economy. Consumer sentiment has plummeted since the budget was announced. People are feeling apprehensive about the future - so spending and investment will take a dive too. It is crazy when Australia has one of the healthiest economies among developed nations that the government is talking doom and gloom.

[jasepom]

Absolutely it's crazy talk by the govt and will only harm the economy. You can't carry on talking like that when you have an excellent economic record around the world. Other countries will think we are nuts.