Hi all, below is an excerpt from a recent article I have published, thoughts and comments appreciated
Australia has weathered the recent global financial crisis better than most countries. Thanks to a more stringent set of banking laws, it did not experience the same sub-prime issues that other nations did. As a result it had one of the strongest economies in the world after the crisis began. However, the average Australian has seen relatively little benefit from this, due to a quickly rising cost of living. In a relatively short period of time, Australia has become more expensive to live in than almost any other country. Living in Australian cities is now less affordable than even New York, London, or Singapore are. This is having a significant negative impact on many first time home buyers.
The Rising Cost of Living in Australia
Sydney is now the sixth most expensive city to live in out of all the countries in the world. Even though the Australian dollar has nearly doubled in value relative to the US dollar between 2002 and 2011, the purchasing power of the average Australian has not increased at all. The price of imported goods has not been significantly reduced as a result. Over this same period, the Consumer Price Index rose by a whopping 28 percent. The average Australian home owner spends 45 percent of his or her income after taxes just in paying off debts. One in five first time Australian home owners spends more than half of his or her income paying off debt. This is a significantly higher level of debt than that carried by citizens of most other developed countries. The citizens of the United States, the United Kingdom, Canada, Ireland, India, and Mexico had an average of 38 percent of their income spent on debt.
Interesting article. But I am not surprised at all. Australia did not have such bad economical problems like US did , but rise of prices and living does not show that Australia did good as well. Rise of prices usually happen before a financial collapse or inflation. I hope it is not what about to happen in Australia.
Maybe because I was in England when the GFC hit and have seen so much worse, I can’t help but feel pretty happy with the financial situation in this country. Certainly at least by comparison.
The government almost operate neutrally, with a slight deficit (compared to UK/US/Europe etc) pretty sure that’s rare. Unemployment is low, the currency is strong (would you rather it was weak?), interest rates are coming down, national savings are bulging, economic growth is solid and there’s a mining boom on.
I’m one of the bad statistics with credit card debt. But I pay it off in full every month, how many others do too? It’s obviously a portion of my income spent servicing debt but that’s all it is, my every day spending!
Maybe things will get a bit worse in the future, maybe they’ll improve! But I can’t think of anywhere else in the world I’d rather be right now working, earning, saving and making a future for myself than here.
I know the freckle thinks the outlook is dire here I’m just seriously happy for his heart he didn’t live in the UK or US when it hit the fan. Not sure he would of pulled through. And as bad as things are in England, double dip recession etc, house prices didn’t plummet!
http://www.abs.gov.au/AUSSTATS/[email protected]/Lookup/4102.0Main+Features10Dec+2011#Contents1
PS Happy Australia day
Good times or bad times is irreverent to me, what matters the most Is
My own fincial situations is, sures times might be tough but it could be allot worse.
For me being a young guy this is the first recession I have experienced so this will only prepare me better for the next time
Jpcashflow | JP Financial Group
http://www.jpfinancialgroup.com.au
Email Me | Phone MeYour first port of call in finance :)
I accept that the cost of living here is high but then again so are wages compared to the UK or the United States
The other issue which is important and that is the property market in Australia is worth around 700 Billion a year and the vast majority of that comes from owner occupiers. In other words lets say a house that you own is worth 1 million dollars and the house you want to buy is 1.2 million. The cap is $200,000 in other words mosts sales occur with people buying a selling within either the same or similar markets.
Although I do not expect that property markets will boom in 2013 I do believe that in Victoria and NSW we will to see markets recover and improve with increased demand.
I also think that inner city Brisbane will see in the results in the last 3 years
Remember slow markets create opportunities and this is where you can make real money and start to build your portfolio.
Nigel Kibel | Property Know How
http://propertyknowhow.com.au
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