Australia is facing mixed evidences about its economy and now there is a possibility of interest rate cut which may give short boost to the house prices. The lower interest rates are good news for Australian property market though it has led to concerns that the Reserve Bank of Australia (RBA) could increase the house prices.
Newly built home sales in Australia dropped considerably in August which appeared to be the lowest slump in sales since 1997, showing the signs of struggling Australian real estate sector. The new home sales hit a 15-year record low prior to the month of August, underscoring the RBA's decision to cut the interest rates which pushed the Australian dollar to $US 1.0310 from $US 1.0369. Sales of new homes sank 5.3 percent in August to 5,383 from July when it dropped by 5.6 percent to 5,682, according to Housing Industry Association (HIA). The report submitted by HIA was based on the industry survey of the nation's largest builders.
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The demand for loans to buy a new home dropped in Australia in July as per the report of Australian Bureau of Statistics. This number dropped by 1% to 44,804 which is quite low as compared to the downwardly revised one 45,278. Economists were expecting that the housing finance will remain stable in July but it resulted into an opposite action.
Glenn Stevens, the governor of Reserve Bank of Australia (RBA), commented that the economy appears to have been recording reasonable overall growth, low inflation and relatively low unemployment. He further added that as GDP's share, the resource investment boom will take place within coming year or more, speaking in his usual six months appearance before the economic committee of House of Representatives in Canberra on 24 August, 2012.
Chief economist of Treasury is blaming SMEs as well as second rate management practices for low productivity of Australia. Conversing in Melbourne at the Australian Conference of Economists recently, David Gruen Treasury chief economist said that, there were lots of causes of inferior management practices in the companies of Australia, which include their size which is compared with those in other developed countries.
The review reported that David Gruen has said that, manufacturing of Australia has a greater proportion of very small companies with fewer than twenty employees than almost all other Organization for Economic Co-operation and Development nations", Family-run businesses are liable to exhibit poor management performance. Gruen said that multinationals tended to enforce stronger management practices as well as he urged the government to let businesses being demoralized by the high
Inflation rate of Australia has dropped to a thirteen-year low down, freeing the RBA to cut interest rates as well as reducing concerns that the resources success will spark more extensive value rises. Customer prices rose just 1.2 % over a year to June, the lowest yearly increase from 1999. A senior economist at Commonwealth Bank, John Peters said that, wage pressures from the successful resource sector are not flowing into the other economy, who said worries the resource success would fan inflation which had been a concern for the RBA.
Mr. Peters said that, a lack of order for services was "helping place a lid on cost growth other than the mining field", noting the moderately fast rate of growth of supplies and services not influenced by strong Australian dollar had decreased in June quarter.
The NAB raised its loans rate for business lending by 20 basis points recently however the other main lenders are reluctant to unveil whether they’ll also raise loan rates. Increase by NAB in the ''liquidity premium'' for average to large businesses is its second such raise this year. A spokeswoman for National Australia Bank played down the effect of the raise to SmartCompany.
She said that, the liquidity margin is applicable to some market-connected products primarily for average to large-sized businesses which want to access finances for short periods of time. The huge majority of small business users will not be affected as they largely make use of variable rate lending products.
