Posts Tagged 'Rates'

While the Australian dollar is strong, investors can find discounted opportunities with the right buying advice, according to WBP Property Group.

View full post on API Australian Property News

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Investors will be relieved to hear the Reserve Bank Governor has promised to keep interest rates on hold, at least for the short term. Glenn Stevens told the House of Representatives Economics Committee last week that another rate rise would “not imminently” occur.

View full post on API Australian Property News

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Investors who compare mortgage rates are wasting their time, according to Mortgage Choice. The company’s chief executive officer Michael Russell told The Adviser comparison rates should become a thing of the past, because they’re no longer relevant to brokers or borrowers.

View full post on API Australian Property News

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There are problems with the Australian Greens proposal to introduce laws preventing the banks from raising their interest rates in excess of the Reserve Bank of Australia’s (RBA) cash rate rises, according to Datamonitor.

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www.notapennydown.com . Mark Fidgett, a mortgage broker in Vancouver BC Canada, explains ALL the benefits of the Buyer Protection Plan. Imagine Buying a home in Vancouver, BC and being protected with a Price Guarantee, Wow

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Chris Hinds talks with Kevin Turner about the impact of the Brisbane City Council Rates increase on the Brisbane Real Estate market. For more information contact Chris Hinds on 1300 128 011 or visit www.chrishindsteam.com.

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Recently analysis was performed for Gluten Free Pages on the growth of whole country gluten free e-markets (using Google data) for the US, Australia, Canada and the UK.

That research showed that the US (42%) and Canada (18%) had the largest growth (gluten free searches on Google from 2004 to 2009), while Australia had 10% per annum growth and UK essentially zero.

This information is tempered by the actual base level of searches in each country. Previous analysis of what is termed ‘Celiac searches / mth’ within each country ranks the four countries of interest as : Australia (4.2 searches), Canada (3.3), USA (2.7) and UK (2.2). The analysis adjusts values to take account of internet usage and Google market share. Of course the US has the largest population of each country under analysis so in absolute terms the US has the most searches (over 3 million) however ‘searches per celiac’ gives a truer indication (level of saturation) of a market in each country. 

The GFP Matrix is a construct that compares a country’s ‘celiac searches per month’ V ‘GDP per person’. This analysis shows that there is a logarithmic relationship between these two variables. That is, the greater the wealth of a country, the higher the diagnosis and the higher the e-demand for gluten free products.

To better understand the dynamics of these each countries markets it is best to analyze the lowest level of analysis that Google allows – down to state level. Firstly consider the US.

AMERICAN STATES

Following this theory of country wealth being related to the level of gluten free market maturity, it is useful to compare the top ten economic US states with the bottom ten states and see if this rule applies within countries.

The data below is “measured by median household income” and is sourced from: The U.S. Census Bureau in 2007.

The 10 richest states with the highest median household income

          STATE              INCOME     POPULATION

          Maryland           $65,144    5,296,486

          New Jersey         $64,470    8,414,350

          Connecticut        $63,422    3,405,565

          Hawaii             $61,160    1,211,537

          Massachusetts      $59,963    6,349,097

          New Hampshire      $59,683    1,235,786

          Alaska             $59,393    626,932

          California         $56,645    33,871,648

          Virginia           $56,277    7,078,515

          Minnesota          $54,023    4,919,479

The 10 poorest states with the lowest median household income

          STATE          INCOME      POPULATION

          Montana        $40,627     902,195

          Tennessee      $40,315     5,689,283

          Kentucky       $39,372     4,041,769

          Louisiana      $39,337     4,468,976

          Alabama        $38,783     4,627,851

          Oklahoma       $38,770     3,450,654

          Arkansas       $36,599     2,673,400

          West Virginia  $35,059     1,808,344

          Mississippi    $34,473     2,844,658 

US POOREST STATES ANALYSIS 

For the three poorest states in the US, Google “does not have enough search volume to show graphs.” Of the other seven, data only starts in late 2008 and is very intermittent and unreliable.

You might consider that the Google data cut off applies because of low searches caused by low state populations. This might seem also seem to be the case for rich states too as the three ‘rich states’ out of the top ten that do not have data record (Hawaii, New Hampshire, Alaska) ALL have populations under 1.3 million people. However two of the rich states that Google’s does record data for: Connecticut (pop 3,405,565) and Minnesota (pop 4,919,479) both have lower populations than four of the poorest ten states that don’t have a Google record.

This rules out population size as the only predictor of data availability or market maturity. Two preliminary likely causes that may lead to lack of data for low wealth populous states is that they are likely to have low internet usage and low diagnosis rates. Without diagnosis, their need for gluten free products would not exist and search demand would be very low.

US RICHEST States analysis

Data is available for Maryland, New Jersey, Connecticut, Massachusetts, California, Virginia and Minnesota. Data is not available for Hawaii, New Hampshire, Alaska.

The similarity in growth profiles between the ALL American growth trend and the wealthy states suggests that these states have the most effect on the total countries growth in general. It is noted that the vast majority of these wealthy states are all geographically close by to each other in the north east of America, so they are likely to have cultural similarities.

The ‘ALL American’ gluten free e-demand growth trend is one of the highest of all the developed countries under analysis. Of the top ten wealth states in the US, California has the largest population but has only an average market growth rates, compared to the other rich states. High wealth is likely to be contained in its largest cities like San Francisco and LA with regional wealth and interest in gluten free searches reducing the overall growth rate. Also as a whole the state is likely to have achieved its growth relatively early and may have a high absolute search numbers already, reducing its growth rate potential.

Lowest growth rate HIGH WEALTH states

Connecticut and Maryland are the first and third highest wealth states in all of America yet over the last couple of years they have had the lowest of the rich states growth rates. In particular Maryland has the highest ‘wealth per population’ value and the lowest growth profile. This could mean that it has already peaked in absolute search terms or that it simply isn’t growing as fast as expected. Of equal influence maybe that Maryland state while having a high population of 5,296,486 and a high density of 222 people per square km, however it has a relatively small ‘largest city’ of Baltimore with around 635,000 people.

Connecticut is the third richest state but only has a population of 3.4 million people. Connecticut area is 12,548 square km with a population density of 279 people per square km but again its largest city is Bridgeport with a population of 140,000.

It is believed that besides the need to have a minimum state population, that a relatively high urbanization may be required to achieve critical mass of both diagnosis, word of mouth and a substantial gluten free market.

Highest growth rate HIGH WEALTH states  

Massachusetts (popn 6,349,097, sq km 20,305, popn density 320) is said to have most of its population in the Boston metropolitan area. Boston itself has a population of 600,000.

Virginia is the highest growth of the wealthiest states. (popn 7,078,515, Area is 102,547 sq km, popn density 75). The population density is low, but this is because compared to the other states analyzed above, it has one of the largest areas. However with its large area, it still has a very high level of urbanization, with its top five cities accounting for nearly 1 million people: Virginia Beach, 438,415; Norfolk, 231,954; Chesapeake, 218,968; Arlington, 195,965; Richmond, 193,777;

For America, It would appear that high wealth, high urbanization, and states above four million people are needed to generate the highest growth in gluten free demand.

AUSTRALIA

Australia’s three most populous states and capital cities (abs data June 2007) are:

          NSW      6,888 M    (Sydney = 4.334M)

          VIC      5.204 M    (Melbourne 3.805 M)

          QLD      4.181 M    (Brisbane 1.857M)

          TOTAL Australia population = 21.015 M

From the population information it can be seen that the three largest states in Australia comprise the majority of Australia’s population, and within those states, the populations are largely within the capital cities.

At the start of this article it was stated that Australia has a ‘celiac search per month’ value of 4.4 compared to America’s 2.2. Thus while Australia has a much higher search value per celiac, its gluten free search growth rate is much less than America because it is closer to maturity and plateuing.

The net worth data shows that apart from house prices (much higher in Sydney than Melbourne) that Sydney and Melbourne have a similar wealth profiles. As these two cities have similar populations, level of urbanization, wealth, education and race profiles it can be seen that their gluten free growth trends are also very similar. Also note that just like the less populous states in America, Brisbane is the lower wealth and lower population capital city, of the three states analyzed in Australia, which has resulted in it having the lowest growth trend of the three largest states.

The high level of urbanization (large proportion of state populations in large cities) seems to be one of the main reasons that Australia’s ‘celiac search / mth’ rate is higher than the US.

CONCLUSIONS

From the analysis of America’s top ten wealthiest states and Australia’s three wealthiest states, it appears that the wealth of a state (per person) is a good indicator of the gluten free searches GROWTH trend (and most likely the awareness of celiac disease). The highest ‘wealth per person’ states have a much higher growth rate of gluten free markets compared to the poorer states. This suggests that the markets are still in their infancy as the high wealth states are growing fast but beginning off a low base. This is in line with general low diagnosis rates.

It also appears that there is a population threshold for states where gluten free registers in the ‘publics consciousness’ to have them search in sufficient numbers to be recognized by Google. For example Connecticut (population 3,405M) is the third richest US state (per person), but it has one of the lower populations and lower urbanizations, which leads to one of the lowest growth trends of the wealthy US states. Queensland’s capital, Brisbane (population 1. 857M), is a lower proportion of the state’s total population (compared to NSW and VIC) which leads to QLD having a gluten free search growth profile that is substantially lower than VIC or NSW.

It would also appear that a high wealth states with high urbanization are also likely to have potentially higher educated populations and more likely to seek out resolutions to health conditions such are caused by things like celiac disease.

Wealthy states that are more rural populations are likely to have less access to internet, and have less experienced (regarding celiac disease diagnosis) doctors causing less gluten demand and low gluten demand growth rates.

At the other end of the scale it appears that the largest wealthy states are likely to have already generated a substantial base for gluten free searchers several years ago and thus the relative growth trends of the wealthy most populous cities in America (California) and Australia (Sydney) are not the highest growth trend states because they are beginning off a high base and may be slightly more mature markets.

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Lock-in interest rates for home loans by talking to a mortgage broker. Learn how to lock-in interest rates for home loansusing the real estate tips in this free video. Expert: Richard Blake Bio: Richard Blake is a licensed real estate agent that has closed more than 20 times the number of transactions per year than that of the average realtor for the last three years. Filmmaker: Christopher Rokosz

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WAR STORIES

Beat up the Brokers!

I can understand why there is a general disdain for mortgage brokers at present. They have left a dirty stain on the carpet in the USA and a bad smell in the littlest room in the house – but to blame them for the global financial meltdown is a bit rich. Australia is, I believe, already a very over regulated country and the financial services industry is the most regulated of all. What happened in the States could never happen here. Yes there are some cowboys out there who have no qualms about hyping up the property market so they can overextend gullible people into investment property. Yes it is risky for people to access all the equity in their homes and then invest it in other things but that is a choice for the individual. Of course some people are going to get burned if its not well managed. As in the recent Four Corners program on the ABC which focused on some people who were not the sharpest tools in the shed who made some bad decisions – but it is not worth regulating the industry even more for the minority who need protection from them selves.

Margin Games

However there is one new regulation being talked about that I do agree with. You may have heard in the news about the high-flying directors of publicly listed companies who have been wiped out by margin calls on the stock market. In many cases this has been unfair as they are a victims of a nasty game (that has been imported from the States of course). What happens is that traders or hedge funds target directors who have margined their stock (i.e. used their stock as collateral for debt). The hedge funds “short” the stock (buy puts betting the stock will fall) and then circulate rumours and negative reports (from dodgy financial journalists) that the stock is in trouble. Even big company directors can’t find the sums required to cover their stock at short notice so it is sold from under them causing the stock price to plummet. The only winners are the devious short sellers who laugh to the bank.

Woolworths

Obviously I am an advocate of the free market and think a boycott of Woolworths in Mullumbimby is not going to work. I see both sides of this debate and think there may be a solution. Anyone who has spent time in the States can see what a disaster rampant mall development has been to small towns. Also Woolworths have openly adopted the corporate strategy of Wal-Mart who are the “Attila the Hun take-no-prisoners” of retail. But they operate within the law and can set up wherever they want. The problem is that a mall complex surrounded by car park sucks business from a town centre changing its architecture and culture. I was recently in Canberra and they have new developments that include Woolworths and Coles but still maintain a streetscape with shop fronts. The supermarkets are upstairs and the car parking is out the back. This can happen on Station Street and then this development can just become and extension of the town and not competition to it. It is a middle way that can work.

East Of Everything

The program may have its faults but the series “East of Everything” on ABC on Sunday nights will be a boon to the shire – as if we needed it. To me the acting and script take a second place to the real star of this series which is the natural environment. Filmed on the back lots of the Byron Beach Resort – soon to be the Becton redevelopment site – it looks fantastic and I can imagine people over the world watching it and thinking what a great place to live. Apparently this is what happened to Barwon Heads in Victoria where “Sea Change” was filmed some years ago. It saw a huge influx of visitors and people wanting to move there after it was screened.

PROPERTY PUNTING

Even though the property market has moved out of a complete stall I don’t see a rapid rush back in just yet. As they say – cash is king in times of uncertainty and many punters will be keeping chips off the table. But also it is said that times of uncertainty are also times of opportunity. I can see that more people have been putting properties on the market so there are some good buys out there.

But a part of me is happy that the expected property run did not happen. I know that may sound strange coming from a person who can benefit from property speculating. But I am not alone in thinking that ongoing escalating property prices in this country can do be damaging to the society. It will be interesting to watch how the powers that be make the effort to help first homebuyers and a rental blow out. At present there is the scheme giving developers a $6000 per dwelling tax write off to build low cost housing. That is a good move.

They also have an idea to provide funds for first homebuyers to equal funds that are being saved for a home deposit. I think that is a bit lame but better than nothing. But watch out renters – stories are out there rents are going to increase 50% in the next 4 years. To me one easy, but unpopular way to keep house prices under control is to re introduce Capital Gains Tax on any sales over $1 Million. This is the main reason why top end property is consistently strong as owners of exclusive property can live in their home for a couple of years and pocket an extra mil or two when the move up.

INTEREST RATES

The share market may have bottomed and interest rates may have topped. Don’t rely on my opinion on these things. It is such a volatile situation, but most pundits predict just one more rise this year to put the inflation genie back in the bottle and then it may recede over time. With the look of the global economy going into recession rates may drop quite quickly as the best device a reserve bank has to stimulate an economy is to lower interest rates.

At present the standard variable rate with CBA is 9.44% (after their recent rise of .14%) but the average loan rate sits at 8.93%. But the best best rate on offer from us (Lawfund) is either 8.57% or 8.67% (depending on the bank) – this is after a discount and NOT a honeymoon rate. Most fund providers are offering some kind of discount to attract new customers and keep the old ones. If your rate is over 9% and your bank won’t give you a rate cut and your exit fees are not too onerous, I will be happy to take your call and see if we can help.

Resources:

www.byronpropertysearch.com.au

www.realestate.com.au

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The interest rate increase has in turn caused a rapid fall in the housing sector. There is a home loan fall of around 7.9% which is a steep fall in past eight year’s time. With the increase in interest rates and the cost of living boost has become a burden for the common man. The Melbourne Institute index is at its lowest level, forcing consumers to reduce borrowing.

How does Rates woes prompt housing slump. It is also seen that the economy is slowing drastically; looking at the figures proves this fact. The Reserve Bank of Australia feels that the fall in the construction rates have been a boon as they will not be any need for them to increase rates.

Where else does Rates woes prompt housing slump. It is seen following the patterns of United States and Britain, Australia has also gone into housing recession leading to fall of housing sector. The reasons for this fall are increase in borrowing costs and slow economic growth which is leading to decrease in housing price fall for the past five years.

What does International Monetary Fund say on Rates woes prompt housing slump?

The International Monetary Fund has estimated the property market would slide by 30% by the year 2010. Since the Great Depression most of the Australian cities have experienced a slash in house price.

According to International Monetary Funds expert who feels Australian houses are overvalued by 25% in the year 2007 when it is compared with the household income. It was thought only Ireland, Britain and Netherlands were supposed to have a higher value for their houses, but the scenario has changed today.

Residex’s view on Rates woes prompt housing slump

It is felt that the data is highly irregular when compared with the data since 1865. Housing cost has fallen in cities like Melbourne, Sydney, Perth, Brisbane, Adelaide, Darwin, Hobart and Canberra by 0.6% to 2.2% according to Residex.

Rates woes prompt housing slump is a reality, the 100 year slide is seen in real estate and every aspect of housing industry has gone into negative. The debt in housing has grown twice since 1990 to 160% of the income, which is a lot more than Britain and the United States, says AMP Capital Investors. The median house price has increased by 140% during the period.

It is also felt that compared to Americans’ spending on property the Australian houses are very expensive. An Australian spends his six years of earning on property, whereas an American expends only half of that.

The growth rate is the same since 1991, whereas the Reserve Bank of Australia expected growth to move from 3.9% to 2.25%. The number of unsold homes is also going up and auction rates are falling. It is also seen that the period it takes to trade a properties has also gone up by 50%.

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