Australia Economic recovery will be 'unpredictable and uneven' RBA warns as it models 50pc property price fall

10:55  27 october  2020
10:55  27 october  2020 Source:   msn.com

Sydney's sinking suburb: residents could be waiting MONTHS for repairs

  Sydney's sinking suburb: residents could be waiting MONTHS for repairs Distraught residents watching their properties crumble as the ground sinks could be waiting months for repairs as authorities squabble over who is to blame.   Jordan Springs East, a new development in Llandilo, near Penrith in Sydney's west, is in such crisis the local council slapped notices on 841 homes, worth $605 million, warning would-be buyers.The ground is allegedly built on insufficiently compacted landfill - causing it to sink by up to a foot in some areas in just the past few years - with unknown long-term effects.

The coronavirus pandemic represents a major shock for the global and EU economies , with very severe socio- economic consequences.

However, the NBS warned that the reading did not signal a stabilisation in economic activity The resumption of consumer spending is uneven , too. According to Fidelity International, the Although many blame globalisation for the virus, a global recovery will be the path to economic health for all.

a close up of a box: About 8 per cent of housing loans were on deferred payments in June. Many of these deferrals have now ended. (ABC News: Liz Pickering) © Provided by ABC Health About 8 per cent of housing loans were on deferred payments in June. Many of these deferrals have now ended. (ABC News: Liz Pickering)

More Australians could go into "negative equity", where the value of their property falls below the outstanding balance on their mortgage, if the pandemic-led recession leads to a big fall in house prices, according to the Reserve Bank (RBA).

In a speech about major risks to Australia's financial stability on Tuesday evening, RBA assistant governor Michele Bullock warned more businesses would go under and this would have a negative impact on bank balance sheets.

These 14 Versatile Midi Dresses From Amazon Will Be Your Go-Tos All Fall Long

  These 14 Versatile Midi Dresses From Amazon Will Be Your Go-Tos All Fall Long The season transitioning to fall doesn't mean you have to give up on wearing cute dresses. There are plenty of midi styles that will keep you warm while still looking stylish. You need to start doing your shopping on Amazon — the site has a massive selection of clothing. Instead of spending all of your money on just one dress, you can buy a few. So quit putting off your Autumn shopping, and stock up on our favourite midi dresses. 47891667This Long-Sleeve Midi Dress ($26) comes in all sorts of colours.

“The recovery of demand is slower than that of production, which is starting to drag on the economic recovery ,” China Logistics Information Center, which helped compile the data, wrote in a statement on its website. That said, returning to pre-pandemic growth rates anytime soon would be a tall order.”

China's factory gate prices fell at their slowest annual pace in five months in August as the world's second-largest economy and its industries continued to recover from a slump caused by the coronavirus pandemic earlier this year. Annual producer prices fell for a seventh straight month but.

Ms Bullock said the economic recovery from the recession would be "unpredictable and uneven".

"There will be rising business insolvencies and problems for some households in servicing their debts," she said.

The recession has raised the possibility some households will be unable to meet their repayments because their incomes have fallen.

This would see the banks face an increase in non-performing loans, Ms Bullock said.

She warned that while the share of loans currently in negative equity was low, this could change if there was a substantial fall in house prices.

With population growth forecast to remain weak for the next year at least, it is possible the housing market could further weaken, especially across major capital cities.

A new paper finds stimulus checks, small business aid, and “reopening” can’t rescue the economy

  A new paper finds stimulus checks, small business aid, and “reopening” can’t rescue the economy Real-time data on how the economy responded to Covid-19 suggests the problem is the disease itself.The coronavirus pandemic ripped through the American economy at an incredibly rapid pace — so rapidly that it’s been difficult for economists and others to understand what exactly is going on.

Bank 's chief economist warns against 'Chicken Licken' pessimism in UK. Andy Haldane says excess caution threatens economy ’s recovery from Covid crisis. Chancellor appears to defend decision to reopen swathes of economy amid coronavirus. Published: 4:50 PM.

The Reserve Bank has put in place a comprehensive package to lower funding costs and support the supply of credit to the economy . This support is important as it helps non-bank financial institutions and small lenders to continue to provide credit to Australian households and businesses.

"Price falls could be exacerbated by housing investors who, seeing vacancy rates rising and rents falling, decide to sell," Ms Bullock said.

More households could face 'difficult circumstances'

While households' cash flow has been underpinned by government income-support policies, loan repayment deferrals, and low interest rates, and some Australians have been saving and paying down their debt or building deposits, many others are vulnerable.

"Not all households will have been able to increase saving and will find themselves in difficult circumstances," Ms Bullock said.

At the peak in June, about 8 per cent of housing loans were on deferred payments.

"Many of these deferrals ended in September and October and payments have recommenced," she said.

"There is still, however, a significant minority of households that are seeking to remain on deferred repayments.

25 New Zara Pieces That Will Sell Out by November, According to Shopping Pros

  25 New Zara Pieces That Will Sell Out by November, According to Shopping Pros We can't deny that our shopping editors check Zara for new releases every single day. The massive retailer offers a variety of high-quality apparel at affordable price points. This October, the store is bringing its A game with plenty of cool sweaters, dresses, jackets, accessories, and more. If you're wanting to treat yourself to something new as fall comes into full swing, make sure to look through our top picks. These are the newest items you should get to before customers put them out of stock — trust us, we're good at predicting these things. Then prepare for temptation to take over. Zara Lace Shirt Zara Lace Shirt ($50) © Image Source: zara.

“The recovery is weak and uneven . Inflation has been too low for too long, financial markets are still fragmented, and structural gaps persist: these And here are the IMF's key points: The eurozone recovery is weak, its financial markets remain too fragmented and the region risks falling into deflation.

Oil price recovery . Demand for oil all but dried up as lockdowns across the world kept people inside. Coronavirus drove the price down further. Brent crude is the benchmark used by Europe and the AstraZeneca's share price , for example, has hit record highs. The Drug company says it will be

"Many of these loans are higher risk, in that they tend to have higher loan-to-valuation ratios or are held by people who work in industries particularly at risk from the current health crisis.

"Non-performing loans to households, which had already risen over the past couple of years, are therefore expected to continue to rise over the coming months."

She said banks had increased their reserves for future losses.

However, this position could change. The Reserve Bank carried out hypothetical modelling to show what could happen to banks' balance sheets if something unusual and unexpected happened.

"As an example, one scenario that would see a major bank's capital ratio fall below 6 per cent — that is well into its capital-conservation buffer — would be a fall in property prices of 50 per cent, GDP declining by 20 per cent and unemployment rising to 20 per cent," Ms Bullock said.

"A downturn of this magnitude has not been observed since the Great Depression and, even then, capital ratios remained about prudential minimums.

"This confirms that the likelihood of a major bank failing is very low. But there are vulnerabilities."

Erring on the safe side

  Erring on the safe side Good morning, early birds. There have been significant calls for the Berejiklian government to reopen the Victorian-NSW border, and a new report suggests that concerns about climate change are at a record high in Australia. It's the news you need to know, with Chris Woods.On this front, Melbourne will today move to a range of eased restrictions including some reopened hospitality, and home visits of two people from the same household. The Nine paper reports the state government is training an army of hundreds of reserve contact tracers and, according to a new Ipsos poll, one-quarter of city respondents are rethinking where they live due to the pandemic.

NESARA stands for National Economic Security and Reformation Act which was supposed to be implemented within the U.S. and designed for the Republic of America. However, as it was merged into the GESARA act, there is no need for NESARA as a separate treaty for the U.S. anymore.

We are offering tax help for taxpayers, businesses, tax-exempt organizations and others – including health plans – affected by coronavirus (COVID-19). Economic Impact Payments. We have sent most payments to taxpayers.

Business failures to impact bank balance sheets

Aside from the risk from households, small businesses have been hit particularly hard during the recession, with revenue falling in aggregate by close to 15 per cent since March.

"In industries such as arts and recreation, and accommodation and food services, the declines in sales have been even bigger," Ms Bullock said.

She said as stimulus measures were wound back, business failures would increase, and this would happen even as the economy started to recover.

"Survey evidence suggests that around a quarter of small businesses that are currently receiving income support would close if support were removed now and trading conditions had not improved," she said.

"While not all business failures will result in losses for the banks, it will have an impact on banks' balance sheets.

The area of particular concern is commercial property, with retail vacancies on the rise.

"This has accelerated with the onset of the pandemic, particularly in CBD retail," Ms Bullock said.

She said there was uncertainty about prospects for rental demand for CBD office property, particularly in Sydney and Melbourne.

"In both cities, there is substantial new supply coming onto the market, and vacancy rates have already started to rise," she said.

Australian house prices rebound in every major city except one

  Australian house prices rebound in every major city except one Property sales group Domain revealed Australian buyers returned to real estate during the September quarter as they braced for tax cuts to be fast-tracked. The popular coastal town which both Chris Hemsworth and Zac Efron call home has enjoyed a 29.6 per cent year-on-year surge in September.Median house prices in Byron Bay now stand at $1.16million. Sydney, Australia's biggest housing market, saw a 1.2 per cent increase in median house prices to $1.154million during the September quarter, 6.8 per cent over the past year.

"Commercial property prices could experience sharp falls in this environment, putting pressure on investors that had borrowed to invest in such property.

"While banks do not have a large direct exposure to commercial property, impairment rates are likely to rise."

Ms Bullock said there were also still big international risks that could spill over into Australia.

"High corporate debt in some countries, high sovereign debt in Europe and low profitability of banks in some countries all pose a risk to financial stability," she said.

"The current recession is likely to exacerbate these issues and potentially impact the financial system's ability to cushion the shock."

Victorian drag on economy won't be so bad: RBA deputy

Earlier in the day, Reserve Bank deputy governor Guy Debelle was more positive about Australia's recovery from the coronavirus-driven recession.

He told Senate Budget Estimates Australia's economy may have performed better than expected in the September quarter.

Dr Debelle said the RBA was releasing new forecasts next week, but his "best guess" was Victoria's extended lockdowns did not have as large an impact on the national economy as expected.

That means Australia may not record three consecutive quarters of negative growth.

"It looks like the September quarter for the country probably recorded positive growth, rather than negative, and that is the best we can tell, and this will be confirmed when we see the national accounts," Dr Debelle said.

"The strength of the growth of the rest of the country was more than the drag from Victoria, and possibly the drag from Victoria was a little less than we had forecast in August."

Australia's economy contracted by 0.3 per cent in the March quarter, and by 7 per cent in the June quarter.

There were 930,000 Australians considered officially unemployed.

The official employment rate is 6.9 per cent, the official underemployment rate is 11.4 per cent, and the employment to population ratio is a low 60.3 per cent.

In the Federal Budget, Treasury forecast that it could take "about five years" for the unemployment rate to fall to 5 per cent, and for inflation to be sitting comfortably within the 2 to 3 per cent range.

The RBA will announce its next interest rate decision this coming Tuesday.

Australia central bank not out of firepower yet, says Lowe .
Australia central bank not out of firepower yet, says LoweSYDNEY (Reuters) - Australia's central bank is not out of firepower yet and has additional monetary policy options if needed, though negative interest rates are still "extraordinarily unlikely", Governor Philip Lowe said on Tuesday after cutting rates to record lows.

usr: 3
This is interesting!