Australia Faces Its Demons

[mattyboy1973]

The doomsayers have been predicting house price armageddon prior to the increase in the FHOG, now that alone is being touted as the trigger for HPC. The two questions I have, are these,

1. what if the FHOG had not been increased, would we have had the crash by now as predicted by the bears for teh last five yeasr on here ?

2. when will this crash start and what will the magnitude of it be ?

Now if we stay on the FHOG theme lets agree that it has pushed the price of starter homes up by 21k and that it will drop back 21k once removed. This in itself will not result in a crash. The other factors that the darksiders do not mention is that some of the other drivers for take up in starter homes is low rates and high rents, so the FHOG whilst significant is not the only factor worth considering. Rents have started to soften in areas with new buyers so if these buyers stop buying then rent will strengthen again all part ofthe interconnectedness of teh market. Reduce immigration quotas is the biggest single threat to the market specifically rents in areas popular with new ozzies., it suprisesme that the bears dont include this in their arsenal.

The figures I have read, which have come from real estate agents themselves, are more in the order of 50k on homes around 500k or less - this is the leverging effect of an increased deposit coming into play. Now whether those houe prices are 'just' 5-k higher than they would have been without the FHOG increase, or in fact prices would have fallen in that price bracket so in fact the effect has been greater than 50k? I would suspect the latter, since home prices outside of the first home buyers range decreased by over 7% in Sydney over the last year - in fact more since some of the reduction was offset by the increase at the FHO end.

So - we could have had an approx 10% drop at the lower end turned into a 10% increase. This could, if things revert, translate into a rapid approx 20% drop. The lower end figures would also stop helping (in fact start to add a negative effect to) the higher end and we would be seeing 10% or so in this area. 10% nominal p.a. is crash speed in anybody's language.

[Bardon]

The figures I have read, which have come from real estate agents themselves, are more in the order of 50k on homes around 500k or less - this is the leverging effect of an increased deposit coming into play. Now whether those houe prices are 'just' 5-k higher than they would have been without the FHOG increase, or in fact prices would have fallen in that price bracket so in fact the effect has been greater than 50k? I would suspect the latter, since home prices outside of the first home buyers range decreased by over 7% in Sydney over the last year - in fact more since some of the reduction was offset by the increase at the FHO end.

So - we could have had an approx 10% drop at the lower end turned into a 10% increase. This could, if things revert, translate into a rapid approx 20% drop. The lower end figures would also stop helping (in fact start to add a negative effect to) the higher end and we would be seeing 10% or so in this area. 10% nominal p.a. is crash speed in anybody's language.

Yes I understand what you are saying about further leveraging up on the FHOG which is something that sellers, agents and loan writers are very good at and firrst time buyers very silly about. 50k would be on the high side but as you are well aware the housing price data in ozzie is shockingly inconsistent and varies between organisations, reporting for the last quarter was a prime example with just about every reporting entity coming out with different figures.

With respect to your projection dont forget that if less houses sell at the low end this will drag the median up. even though the top end and bottom end has fallen, it does, believ me. The only true way to do this is the repeat sale value which Residex use they actually monitor what an actual house has sold for over the years and use this data to project growth per postcode. Of course none of this allows for how much has been spent on renovation eg I buy a house for 500k spend 80k on a big reno and sell it for 600K within a year. Stats would show that the house price has increased by 20% but for me it was only 4%.

Here is one more to the mix but it drills down a bit with some % on the suburbs most affected by the FHOG.

Data confirms superior results in outer suburbs

By Terry Ryder, 11th May 2009

Outer city suburbs have performed well in the past 12 months while value growth has been virtually non-existent in inner-city areas, according to the latest RP Data-Rismark Indices.

The research confirms the key underlying theme of the hotspotting.com.au reports over the past 6-9 months: that the upper end would decline but the lower end would show activity and some price growth. It is also a continuation of a long-term trend, whereby the cheaper areas have out-performed the so-called prime areas on capital growth over the past 10 years.

“While the majority of recent commentary has highlighted the poor performance of the property market, some areas in most capital cities have recorded standout performances,” the RP Data report says. “Generally these are the more affordable mortgage-belt areas of capital cities.” RP-Data looked at Statistical Sub Divisions (SSDs) in Sydney, Melbourne, Brisbane, Adelaide and Perth over the 12 months to February 2009. It found 40 of the 51 SSDs recorded value falls, with 19 witnessing value falls of less than 5% and 22 declining more than 5%.

The SSD with the greatest fall in values (17%) was Boroondara City in Melbourne which contains exclusive suburbs such as Kew, Canterbury, Hawthorn and Glen Iris. The Boroondara City SSD has a median house price of $924,165, down from $1,118,258 in February last year.

The area with the second greatest value falls is Lower Northern Sydney - an exclusive residential area including suburbs such as Mosman, Artarmon, North Sydney and Wollstonecraft (basically Sydney’s Lower North Shore). Price decreases in this SSD equated to 15% over the year. The median price currently sits at $1,135,288, down from $1,340,949 in February last year.

By contrast, the Fairfield-Liverpool SSD in western Sydney saw values rise 5%, with the median value sitting at $394,200. In Melbourne, the Melton-Wyndham SSD on the western outskirts of Melbourne saw value growth a little under 5%, with median values currently around $275,500.

The phenomenon of the more-affordable regions being the best performing while the top end areas under-perform is supported by the RP Data-Rismark Stratified Median Index - which shows that the top 10% of sales in the major capitals have had significant falls in values. On an annual basis, the top 10% of sales have fallen in value 12% in Sydney, 19% in Melbourne, 14% in Perth and 18% in Brisbane. In all instances except for Perth, the top strata is the sector with the greatest value falls.

Quarterly data suggests improvement is beginning to occur in a greater number of markets. Over the last quarter, 23 of the 51 SSDs recorded growth in values. Again, it has predominately occurred at the lower end of the market. Moreland City north of the Melbourne CBD saw values increase 5% during the quarter, while South Eastern Outer Melbourne had a 3.5% increase in median prices. In Sydney, Fairfield-Liverpool recorded 3% growth, Outer Western Sydney grew 2.5% and Outer South Western Sydney improved 2%.

During the last quarter North-West Outer Brisbane (1%), Ipswich City (just under 1%) and Pine Rivers (0.3%) all recorded growth in house values. In Perth, East Metropolitan recorded value growth of 0.6% during the quarter.

The strongest-performing Adelaide SSD during the quarter was Western Adelaide where values rose slightly (0.3%).

“Moving forward, the remainder of 2009 is expected to see continued weakness in the top-end markets as the global financial crisis continues to unravel and few have the capacity to buy these more expensive properties,” RP Data says. “Meanwhile, well-located affordable property is expected to be the best performing during 2009. Buyers are expected to look in locations close to transport and retail amenities, particularly properties with potential to be renovated at minimal cost.”

[mattyboy1973]

It's closing in lifted from the 'other' place

New Zealand’s April House Prices Fall 9.2% From Year Earlier

http://www.bloomberg.com/apps/news?pid=206...refer=australia

[aussieboy]

It's closing in lifted from the 'other' place

http://www.bloomberg.com/apps/news?pid=206...refer=australia

New Zealand.... the Ireland of Australasia.

[mattyboy1973]

New Zealand.... the Ireland of Australasia.

does that make Australia the UK

[aussieboy]

does that make Australia the UK

No - we're the Russians.

Not sure if I'm helping my case here...

[Bardon]

A hint of jealousy maybe when he passes judgement on people he doesn't know that bought islands?

On the subject of buying Islands and the weak pound this one caught my eye. I have since been told it is the **** of Ghia, but there could be an upside to this one.

http://www.privateislandsonline.com/craro-isle-scotland.htm

This island is no good, just heard from the agent, you cant build on it the best you could hope for is a Bothy. Next one.

Edited May 11, 2009 by Bardon

[carbonoid]

QUOTE (carbonoid @ May 9 2009, 02:16 PM) *

You are, of course, completely right. I should have used the White Colonist term and said "Abos", and not "Aborigines". Won't happen again, Bruce.

Consider yourself educated, er, Paddy. You've managed a conceded pass on How to Look Superior Without Looking Like an @rse 101. Now you're all set to make more snide comments full of invective on more threads.

We'll move on to Correct Use of Apostrophes 101 next week.

Thanks for pointing that out, Aussieboy. It would not do to mangle the Queen's English just because we are in the Colonies.

[ParticleMan]

The bears will have to be right at some stage of teh cycle this is a historical fact but you cant be saying for four years as some have on here crash is coming, crash is coming, then when you get your spot in the limelight say I told you so. Dont forget the oz market has three phases, boom, slump, recovery.

One might say something about irrationality verses solvency?

Bardon - something you may or may not appreciate is that everything in the wide brown land is either a time or distance problem or both; as this applies to the phases in your supply both the boom and the bust are accentuated by labour mobility; there's nothing more unloved than a rental in a ghost town, and there's nothing in higher demand than a hotel suite when exploration's in full swing.

The issue being lag; it takes too long to produce a new dwelling unit and it takes too long to liquidate an existing one; this makes (or at least - has made, my inner Noel cautions me) your markets (in both accommodation and labour prices for that matter) more volatile than they would otherwise be.

Not that this takes the debate in one direction or the other - just a stray and passing thought that wanted to be mentioned, if you will.

What might be said is that it's doubtful that the West's paper millionaires will be able to liquidate quickly enough (now that the resources super-cycle is waning) to recover their equity (the West coast is to this day powered by exploration, not operations - misunderestimate this at your own peril); anecdotally I hear stories of entire FHOG-aspirational streets being placed on the market (I assume, by the negatively-geared investors who own them). This could be a manifestation of a rush for the exit, but could also be something else entirely.

[Bardon]

One might say something about irrationality verses solvency?

Bardon - something you may or may not appreciate is that everything in the wide brown land is either a time or distance problem or both; as this applies to the phases in your supply both the boom and the bust are accentuated by labour mobility; there's nothing more unloved than a rental in a ghost town, and there's nothing in higher demand than a hotel suite when exploration's in full swing.

The issue being lag; it takes too long to produce a new dwelling unit and it takes too long to liquidate an existing one; this makes (or at least - has made, my inner Noel cautions me) your markets (in both accommodation and labour prices for that matter) more volatile than they would otherwise be.

Not that this takes the debate in one direction or the other - just a stray and passing thought that wanted to be mentioned, if you will.

What might be said is that it's doubtful that the West's paper millionaires will be able to liquidate quickly enough (now that the resources super-cycle is waning) to recover their equity (the West coast is to this day powered by exploration, not operations - misunderestimate this at your own peril); anecdotally I hear stories of entire FHOG-aspirational streets being placed on the market (I assume, by the negatively-geared investors who own them). This could be a manifestation of a rush for the exit, but could also be something else entirely.

Yes I do appreciate the point that you are making. I have travel around most of oz and stay in the resource towns, in rentals in camps and in hotels, we currently run camps and have some very large facilities on hire to oil and gas and mining clients. I also have seen the run up in prices and rent in theses areas and no doubt that is coming back. This section of the market is a market in itself and whilstsome will get burned they will be the minority and we are not talking lots and lots of houses either.

Those that invest in these areas with small populations, single industry and fly fly out workers take ther chance with the resource prices and I know that many are trying to exit. But lets not forget we are still mining and pumping oil and gas it hasn't stopped and it wont stop so the demand will never be zero far from it.

I dont see a huge downside if some investors are dumping homes to first time buyers, they have probably taken the position that there aint going to be much growth in the short term and if they are -ve geared and the market is hot, then an investor should consider selling, this is the best time to sell. Again only the minority will have got in at the top and will come out behind.

If the coal seam methane gas to liquids projects get the go ahead in 10 and I think they will. Then we will have the whole sitiutaion of mobilising labour, materials and housing to western queensland so the whole thing goes again.

[carbonoid]

Australia suffers worst drought in 1,000 years

Depleted reservoirs, failed crops and arid farmland spark global warming tussle

* John Vidal, environment editor

* The Guardian, Wednesday 8 November 2006

* Article history

Australian farmer Wayne Dunford walks through his failed barley in Parkes, New South Wales

Australian farmer Wayne Dunford walks through his failed barley in Parkes, New South Wales. Photograph: Ian Waldie/Getty Images

Australia's blistering summer has only just begun but reservoir levels are dropping fast, crop forecasts have been slashed, and great swaths of the continent are entering what scientists yesterday called a "one in a thousand years drought".

With many regions in their fifth year of drought, the government yesterday called an emergency water summit in Canberra. The meeting between the prime minister, John Howard, and the leaders of New South Wales, Victoria, South Australia, and Queensland was told that more than half of Australia's farmland was experiencing drought.

David Dreverman, head of the Murray-Darling river basin commission, said: "This is more typical of a one in a 1,000-year drought, or possibly even drier, than it is of a one in 100-year event." He added that the Murray-Darling river system, which receives 4% of Australia's water, but provides three-quarters of the water consumed nationally, was already 54% below the previous record minimum. Last month it recorded its lowest ever October flows. Inflow this year was just 5% of the average.

The drought is likely to affect drinking water supplies to many areas. Sydney's largest reservoir is now 40% full and many small rural towns in east Australia face shortages within a month.

It is also expected to have a serious impact on crops. Last week, the government forecast its lowest wheat crop for 12 years, a 62% decrease on last year. Yesterday the agriculture minister Peter McGauran announced the allocation of more than A$200m (£80m) to help businesses which service drought-stricken farmers, in addition last month to the A$910m in payments for 72,000 farmers affected by drought.

The drought has set off a fierce political debate in Australia about climate change. The country has maintained, with the US, a sceptical stance on the issue, and Mr Howard has refused to sign Australia up to the Kyoto agreement. However, polls suggest he is increasingly out of step with public and scientific opinion and the drought has forced him to demonstrate concern.

With an election due within a year and the environment emerging as a big political issue, Mr Howard last month announced several "green energy" projects. He now concedes that climate change is taking place but argues that the Kyoto process is flawed because it does not include the big polluters - India, China and the US. But last week new UN figures showed that Australia's emissions of greenhouse gases were the highest per capita in the west, apart from Luxembourg, and that they had grown by 1.5 tonnes a head since 1990.

Australia now emits almost as much carbon and other greenhouse gases as France and Italy, which each have three times its population.

In Kenya next week Australia will come under intense pressure from ministers of developing countries at the UN meeting on climate change. However, Mr Howard is not expected to change his position.

Adding to the government's embarrassment, the leading scientific body in Australia - the Commonwealth Scientific and Industrial Research Organisation - this week predicted that rainfall in parts of eastern Australia could drop by 40% by 2070, along with a 7C rise in temperature. It said that by 2030 the risk of bush fires would be higher, that droughts would be more severe and that rainfall and stream run-off would be lower.

Mike Young, a water management expert at the University of Adelaide, told Reuters this week that Australia's long-term climate was changing. "When the drought breaks we will not return to cooler, wetter conditions. It is the worst type of drought because we are not expecting to return back to the old regime. The last half of last century was much wetter. What we seem to have done is ... built Australia on the assumption that it was going to be wetter, and we haven't been prepared to make the change back to a much drier regime."

South Australia's premier, Mike Rann, said yesterday: "What we're seeing with this drought is a frightening glimpse of the future with global warming."

But Mr Howard played down the assessment that the drought was the worst in 1,000 years, saying he doubted if anybody really knew.

Have things improved since this article was written three years ago? It looks like wishful thinking is clouding your critical faculties, Bardon.

[Bardon]

Have things improved since this article was written three years ago? It looks like wishful thinking is clouding your critical faculties, Bardon.

Yes it certainly has. As has the grain and grazing industries.

All I am doing is looking at the numbers and the various cycles thats how I do my objective assessments. Many on here state property freefalls, 40% drops with no basis for their claims other than they just want that to happen.

Edited May 11, 2009 by Bardon

[Frank Hovis]

Yes it certainly has. As has the grain and grazing industries.

All I am doing is looking at the numbers and the various cycles thats how I do my objective assessments. Many on here state property freefalls, 40% drops with no basis for their claims other than they just want that to happen.

Or they relate average house prices to average earnings. Seems a good basis to me.

If it's 6* now and the historical average is 3* times, then what happens next?

[Bardon]

Or they relate average house prices to average earnings. Seems a good basis to me.

If it's 6* now and the historical average is 3* times, then what happens next?

This ratio has some problems in its crude form. I have posted before on them on this thread.

But if you were to say house price to disposable income which is a better meaure of affordability then oz is either bang on or just below the 20 year average. This is mostly due to rising incomes.

See graph on page 3.

http://www.anz.com/documents/economics/Pro...arch%202009.pdf

I have also posted a few Reserve Bank Charts on this thread that demonstrate this ratio as well.

[Bardon]

6 month extension to FHOG boost just announced in budget speech.

and this

crash postponed for another 6 months

Home loans continue to rise nationwide

By Terry Ryder, 12th May 2009

Home loans rose again in March, continuing a pattern of steadily rising numbers of new housing finance commitments since September 2008.

The latest data from the Australian Bureau of Statistics shows the number of home loan commitments rose 4.9% in March, while the value of loan commitments was up 6.7%.

Once again the result was considerably stronger than that predicted by economists (similar to last week’s statistics on unemployment, retail spending and the balance of trade).

Loans to owner-occupiers rose 7.3% in March while loans to investors rose 4.7%. The biggest rise was from people building or buying new homes, rather than established homes.

The ABS data shows that the market bottomed in September, when there were about 48,000 loans for home buyers. Since then, every month has shown an increase, with numbers reaching almost 60,000 home loans in March.

Every state and territory has shown a pattern of month-by-month improvements since August or September last year, with the exception of Western Australia and the Northern Territory. WA showed a slight increase in March but the number of loans has remained fairly constant over the past six months. The Northern Territory has also remained static, with between 400 and 500 home loans each month since September.

But every other state or territory has shown a strong pattern of increases. Queensland, for example, has seen the number of housing loans rise from 9,700 in August to 12,600 in March. In New South Wales, loan levels from risen from 14,000 in September to 18,000 in March.

The steady improvement in most parts of Australia reflects softer prices, sharply lower interest rates, state government incentives (including stamp duty concessions) and the Federal Government’s First Home Owners Grant.

[ParticleMan]

http://www.anz.com/documents/economics/Pro...arch%202009.pdf

Thanks for the link Bardon.

As always I see the choice as between the currency and the economy; the FHOG extention confirms my existing view.

I appreciate why you focus on disposable income; my problem with the analysis is that to employers much of this self same distribution of earnings is entirely discretionary on their part (the jobs market has achieved unrivalled "flexibility" in terms of job security); this in no way refutes the viewpoint but does amount to a powerful pro-cyclical driver within this market - if the economy is booming, employment is tight, these discretionary payments soar, and the cost of assets sinks in real terms.

Conversely, if employment softens...

... but I remain convinced that the Rudd/ Swann government will do all in its power (and to be fair they do have a well stocked arsenal, as ANZ rightly point out in that same report) to replace lost global demand (they will raid pension savings first and then saddle the nation with crippling debt as they attempt to stave off the inevitable).

edit: it should also be highlighted for those unaware that securitisation was broadly not a feature of Australian residential lending; the nearest Australian banks ever got to this was in the manner in which unsecured lending has been funded - and - more recently, the Government-guaranteed debt sausage factories which have emerged; in other words - price distortions from incorrectly priced lending activity have only just started to warp this market in my view

Edited May 12, 2009 by ParticleMan

[Bardon]

Conversely, if employment softens...

It will, Budget forecasts 1 million on the rock and roll 8.5 % by June 11.

[ParticleMan]

It will, Budget forecasts 1 million on the rock and roll 8.5 % by June 11.

Yes, but the important question is "why" - as in "why forecast it, and why do so in a budget of all places?"

He's going to hit the button marked Club Med, mark my words.

[Bardon]

6 month extension to FHOG boost just announced in budget speech.

Clarification the boost will be halved in three months, I dont know after 6 months if it will revert back to pre-boost levels.

Not sure what they are going to do to my -ve gearing I think nothing. phew....

[ParticleMan]

http://www.bloomberg.com/apps/news?pid=206...id=a5tt5ehFeImI

The budget deficit will be A$32.1 billion ($24.5 billion) in the year ending June 30, rising to A$57.6 billion in fiscal 2009-10 as a recession that will linger through next year drives up unemployment and erodes tax receipts, Treasurer Wayne Swan said in his annual budget released today in Canberra.

:

The budget deficit forecast for fiscal 2010 is equivalent to 4.9 percent of gross domestic product, Swan said. The shortfall will hold at A$57.1 billion in 2011 before dropping to $44.5 billion in 2012 and $28.2 billion in 2013, he said.

:

Australia’s net debt will to peak at 13.8 percent of GDP in fiscal 2014, Swan said. By contrast, most advanced economies will have a debt-to-GDP ratio of 80 percent then, he added.

:

The economy will shrink 0.5 percent in the 12 months through June 2010 after stagnating in fiscal 2009, the budget papers said. It will grow 2.25 percent in fiscal 2011.

:

The jobless rate will peak at 8.5 percent by June 2011, from 5.4 percent last month and a three-decade low of 3.9 percent in February 2008, the government forecast.

:

The government will spend an extra A$8.5 billion on roads, railways and ports and A$3.5 billion to boost the use of energy from clean sources. It will also spend A$2.6 billion on universities, A$3.2 billion on hospitals, and an initial investment of A$4.7 billion on a national broadband network.

The government will also extend increased cash grants for first-time home buyers of as much as A$21,000 by six months until Dec. 31 to bolster construction.

The increased spending in this year’s budget is forecast to save as many as 210,000 jobs and add 0.75 percentage points to GDP in fiscal 2010, “when the economy is expected to be at its weakest,” Swan added.

Let's see how well those two (highlighted) forecasts hold up eh?

Personally I think they're highly optimistic (and that the rest of the structure of this will falter correspondingly); time will tell.

[aussieboy]

Clarification the boost will be halved in three months, I dont know after 6 months if it will revert back to pre-boost levels.

Not sure what they are going to do to my -ve gearing I think nothing. phew....

The coverage has been p1sspoor in all the papers. It's been a pain trying to find out any details of substance, save for the above.

[Bardon]

FHOG boost extended in Federal Budget

The First Home Owners Grant boost will be extended until September and then wound back.

Federal Treasurer Wayne Swann announced in his Federal Budget speech tonight that the current grant levels of $14,000 for existing homes and $21,000 for new homes would continue beyond the current 30 June deadline for another three months.

Thereafter the FHOG will be reduced to $10,500 for existing homes and $14,000 for new homes.

Swann said the Federal Government had decided to continue with the current levels beyond the original deadline because the measure had been successful and had helped 59,000 Australians buy their first homes.

For investors trying to figure out what all this means for the residential property market, the answer is: probably not much.

The research shows that the vibrant activity at the lower end of the market, led by first-home buyers, has been inspired mostly by soft prices and low interest rates, with government incentives (including state government grants and stamp duty concessions, as well as the FHOG) a relatively minor factor.

Nevertheless, the property sector (which seems to believe everything has been inspired by the FHOG) will be pleased the boost has been extended.

[mattyboy1973]

The coverage has been p1sspoor in all the papers. It's been a pain trying to find out any details of substance, save for the above.

+1 to that. I did get a pdf circular from my super fund this morning which tried to outline the changes - this bit is interesting

Deductions for non-commercial losses removed

Date of effect: 1 July 2009

Excess deductions from unprofitable business activities (such as hobby farms) can no longer be used to reduce salary and wage income for those with an adjusted taxable income of more than $250,000.

Excess deductions for these taxpayers will be quarantined to the business activity. The existing rules will continue to apply to taxpayers with an adjusted taxable income of $250,000 or less.

Taxpayers will still have the ability to apply to the Commissioner of Taxation for relief from the rules if there are exceptional circumstances, or because the nature of the activities means a taxpayer is temporarily carrying on an uncommercial business but the activities they are undertaking are nonetheless independently assessed as commercially viable.

OK - so only for the highest of earners - but wouldn't NG fit into this category? Although no mention of it, so maybe not. Quarantining tax deductions to the business that incurred them - that is how it works for residential property investment in the UK and just about everywhere else apart from here and NZ.

thh FHOG will be an interesting one to watch - again we don't know if they are getting rid of just the boost or the whole thing in 6 months. And how much demand was pulled forward because the belief was that it would end in July? Can that demand be replaced? What happens in 6 months? etc

[mattyboy1973]

FHOG boost extended in Federal Budget

The research shows that the vibrant activity at the lower end of the market, led by first-home buyers, has been inspired mostly by soft prices and low interest rates, with government incentives (including state government grants and stamp duty concessions, as well as the FHOG) a relatively minor factor.

Nevertheless, the property sector (which seems to believe everything has been inspired by the FHOG) will be pleased the boost has been extended.

I call BS on that Bardon - show me the research.

[Alan B'Stard MP]

MORE than 1.3 million households are suffering mortgage stress despite low interest rates, a new survey has found.

Independent market analyst Datamonitor found that almost a quarter of mortgage holders are experiencing mortgage stress, with first home buyers who bought in the past 12 months especially vulnerable.

Thirty per cent of these new buyers said they were facing mortgage stress, while 21 per cent expect they will have difficultly paying back their home loan over the next five years.

"These findings have important implications for the Reserve Bank's attempts to stimulate the economy by lowering the cash rate," Datamonitor senior analyst Petter Ingemarsson said.

"Economic contraction and consumer concerns risk fuelling a vicious cycle."

http://www.news.com.au/perthnow/story/0,21...from=public_rss

End of the ponzi. FHOG extension is the last gasp.