Interest rates remain at 2.5 percent, though economists expect increases next year.
In the notes from the Reserve Bank of Australia’s June meeting
, the board said “continued accommodative monetary policy should provide support to demand, and help growth to strengthen over time. … On present indications, the most prudent course is likely to be a period of stability in interest rates.” And yet, economists are warning borrowers to expect interest rate increases next year as the non-mining sectors of the economy start to pick up pace, the recent fall in housing prices notwithstanding. Stability, apparently, won’t last more than seven or eight months. Read the full story here.
NSW will have a new, powerful regional planning commission
Major road, rail and housing projects in Sydney will now defer to a new planning authority after the complaints of politicians and business groups about being caught up by regulations in the 43 government agencies around the city. The Greater Sydney Commission in Parmatta would be similar in concept to the Greater London Council model. Read the full story here.
Is this the best economy Australia can do?
ABS figures land today. Some of Australia’s economic bookies think this may be the end of a golden boom era, given the recent slide in home values and an austerity budget that promises lower growth. Hockey’s budget heavily on strong household consumption and investment in new housing, despite low wage growth, with rising home prices giving consumers a financial cushion to spend more. But if home values continue to fall, that may combine with the budget to make things even worse than folks are betting. Read the full story here.
The economy is a tale of two Australias
The resource-rich states of Western Australia and Queensland face falling commodity prices. The southeastern states ride buoyant property markets. The result is a tidal economic shift back from the West to the South East, with state budgets as ground zero for the wave. Read the full story here.
Residential mortgage default rate has nowhere to go but up
Australian banking researcher David Ellis said bad mortgage debts at the Big Four banks are at “unsustainably low levels” that would revert to form with the first rise in interest rates. The Australian Prudential Regulation Authority released draft guidance this week to prevent the rise of American-style “liar’s loans” with inadequate documentation of a borrower’s capacity to service debt, as well as claw back provisions when brokers create high levels of loan delinquency. Read the full story here.
Sydney, a city at war with its own history
They should have named Sydney after Darwin, since respect for heritage defers to survival of the fittest, particularly in the Sydney CBD, an area of “layered leftovers, everything that for various reasons was never bulldozed, flooded, or remodelled into something ‘better’.” An argument attacks the primacy of the city in the business culture of the region, rather than the suburbs where people live. Read the full story here.
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