Dorian Traill, Author at Bank said No

Unemployment at highest level in 12 years

The unemployment rate rose to 6.4% in June, the highest it has been since August 2002. 14,500 full time positions were added but 14,800 part time jobs were lost, causing the economy to lose around 300 jobs in July.

The labour force data is causing some analysts to worry, with HSBC Chief Economist Paul Bloxham calling the labour market “weak”. This is the first time since 2007 that the country’s unemployment rate finished higher than the United States, currently at 6.2%. The recent announcements caused the Australian dollar to drop to 92.96 US cents from 93.55 US cents.

Read more about this on the Sydney Morning Herald website.

Can ASIC repair the credit repair industry?

The Consumer Action Law Centre has called for reforms to the credit repair industry to safeguard the interest of clients. Concerns for the industry have moved the Australian Securities and Investments Commission into the spotlight to regulate credit repair and eliminate rouge operators.

The report claims that credit repair companies are charging high fees and tend to complicate client issues instead of resolving them. Allowing ASIC to manage this industry will force credit repair companies to outline their duties publicly and publish fees, terms and other information on their website. ASIC can then appoint an Ombudsman to assist clients in lodging a formal complaint without having to go to court.

Read more about this on the Adviser website.

Growing optimism for first home buyers

First home buyer numbers rise for the second consecutive month to a seasonally adjusted 2.2%, according to the Australian Bureau of Statistics. Master Builders Chief Economist Peter Jones believes that this will provide inspiration to the growing confidence of first home buyers as they make their presence felt in the market again.

In the 2013 and 2014 fiscal year, new home loans have increased by 12%, attributing to low market rates and high construction activity, both conducive for first home buyers. New home loan building is also at a four – year high of 13.2%. Although this is still below the long term average of 20%, first home buyer data is in an upward trend. Economists are expecting this to continue, as first home buyers are trying to make their presence felt back into the market.

Read more about this on the Property Observer website.

8 reasons why you should stop renting and start owning

Home affordability issues have caused experts to ponder whether now is a good time to rent or buy. Last July, the Reserve Bank of Australia has released data showing that house prices are rising at a constant rate for the past 6 decades that people may be better off renting than owning property. Wealth advisory group Chan & Naylor believes otherwise, providing us with 8 reasons why you should stop renting and start owning property.

Owning a house is forced savings. Putting your money in a long term investment, such as property offers reassurance in later life.

Owning a house can cover your retirement cost. With the growing issues that the government has in sustaining retirees, a house can be used to pay for retirement.

Break free from the rental market. Renting puts you at the mercy of your landlord who, depending on market conditions, can raise rent at any time and evict you if you fail to meet your obligations.

Owning a house gives you financial certainty. Rent increases with values on the market. Paying for rent will eventually become unaffordable in the future.

Owning a house gives you peace of mind. You are basically purchasing what you can afford. You may need to readjust your finances as rents change.

Owning a house can be passed on to future generations. A house is a great asset that you can easily pass on to the younger generation.

Owning a house is less volatile than stocks and other investment types. Housing may have had its up and downs, but nothing as drastic as the stock market.

Rent options are limited. Only 30% of the housing sector is owned by investors. This is a limited number when looking for properties to rent.

Read more about this on the Property Observer website.

Macquarie in hot water for bad financial advice

Global banking group Macquarie will start contacting clients for bad financial advice provided by their financial advisory arm, Macquarie Private Wealth. 160,000 will be sent out to affected clients, after the Australian Securities and Investments Commission flagged them for poor compliance.

ASIC has called on Macquarie to entertain clients in the remediation process within 5 months and compensate those that suffered financial losses due to bad advice.

Read more about this on the Sydney Morning Herald website.

Uncertainty, not stability keeping interest rates low

The Reserve Bank has kept the interest rates at record low levels for over a year and economists have been quick to point this out as a period of stability for the economy. Ironically, the RBA has decided against any changes on the interest rate as the economic drivers remain unstable, with the slowdown in mining investments, unemployment and the elevated currency.

Australia posted its highest unemployment rate in July at 6.4% – higher than the United States for the first time since 2007. The local currency also remained higher than what was expected by the central bank. In the housing sector, home prices rose by 1.8% in the second quarter of the year. All these and contributed to the RBA’s decision to keep the interest rates on hold, with these factors tipping both ends of the economic scale.

Read more about this on the Sydney Morning Herald website.

Interest rates to boost economy: RBA

It’s been over a year that the interest rates have been pegged to a record low 2.5%, yet Reserve Bank Governor Glenn Stevens is convinced that investment levels have yet to reach their full potential, calling the current levels “below par” at a recent announcement at the House of Representatives Standing Committee on Economics.

Banks have been more than willing to lend – a positive indication that more activity is expected from the property sector. Despite a high unemployment rate, the current net worth of households have increased by $120,000 over the past 2 years. Mr. Stevens describes the housing sector “strong” with “robust prices” making it an ideal investment choice.

Read more about this on the Adviser website.

ATO declares Bitcoin as barter transactions

Transactions that involve Bitcoin and other crypto currencies have been declared as barter transactions by the Australian Taxation Office. This also means that tax outcomes will be treated as such, in purchase transactions and personal use – where capital gain is ignored for as long as it costs $10,000 or less, and similar capital gains tax rules apply for investments when they plan to sell their bitcoins.

Read more about this on the Money Management website.

One third rely on parents to purchase their first home

As house prices continue to rise, first home buyers need all the help they can get – even from their parents. One out of three home buyers are seeking assistance from their parents in paying for the entire deposit of their property, according to data from Aussie Home Loans.

Looking back, less than 10% of parents helped their children purchase their first home. With house prices increasing around 10% annually, parents have been shelling out around $122 million a year. Home owner loans and contributions have increased by 15% from the previous year, clear signs that the coming generations are in dire need of help in purchasing the house of their dreams.

Read more about this on the DailyMail website.

Consumer confidence to drive property shortage in the next 2 decades

There is an expected residential property shortage in the country for the next two decades because of high consumer confidence, and current government policies are making it more difficult, according to AV Jennings director Peter Summers.

The current economic conditions have been favorable for the residential property sector, as it experiences a high demand from buyers due to the low interest rate, inflation and increasing consumer confidence. He adds that an interest rate hike will unlikely change the sentiment of buyers, as consumer confidence has been a main driver of property demand over the years, despite increasing home values. First home buyer numbers have improved at 13.2% for June, up from the previous month’s 12.6%, according to the Australian Bureau of Statistics.

Read more about this on the Property Observer website.