INTEREST rates are headed down, the sharemarket will climb, and we'll survive whatever Europe throws at us. That's the consensus of the 20 economists polled for the BusinessDay end-of-year economic survey. Our terms of trade will slip in the year ahead, but not by enough to derail the Treasury's and Reserve Bank's pleasing forecast of economic growth close to trend.
The panel expects Chinese economic growth of 8.1 per cent next year, not too far down on the most recent annualised reading of 9.1 per cent. World economic growth should slip to 3.3 per cent, lower than the most recent International Monetary Fund forecast issued in September before renewed concerns about European debt, but above the 3 per cent benchmark it uses to define a global recession.
Interest rates will have to fall further to shield the economy from the weaker international environment, with the Reserve Bank likely to slice a further 0.45 points off its cash rate by June and 0.65 points by year's end according to the average forecast. Significantly, every one of the 20 economists expects at least one further rate cut before the middle of the year.
None of our forecasting panel are particularly concerned about inflation, with the 2 to 3.4 per cent forecast range closely matching the Reserve Bank's 2 to 3 per cent target band. The benign outlook for inflation gives the panel confidence that the central bank will be able to cut interest rates as needed should conditions sour more than expected.
Australia's gross domestic product will grow a healthy 3 per cent over the year, according to the mean forecast, close to its long-run trend but well below the 4 per cent implied by the latest Treasury and Reserve Bank forecasts. The range of predictions is wide, with the HSBC's Paul Bloxham, a former Reserve Bank economist, the most optimistic, sticking with the Reserve Bank's forecast of 4 per cent and Neville Norman, of the University of Melbourne, and Steve Keen, of the University of Western Sydney, the most pessimistic, predicting 1.6 per cent and 1.7 per cent.
There's more unanimity about the unemployment rate, with none of the panel straying too far from Treasury's forecast of a climb from the present 5.2 per cent to 5.5 per cent by June where it would stay for the rest of the year.
The Australian sharemarket will improve next year is the view of all but three of the panel. The mean forecast has the ASX 200 rebounding 10 per cent to 4494. But that won't be enough to regain the losses of the past year, or even the losses since August. The index would climb to a mere two-thirds of its peak in 2007 before the global financial crisis.
Investors and cashed-up first-home buyers are set to push up Sydney and Perth property values by up to 5% in 2012, Raine & Horne CEO Angus Raine has forecast. According to Raine, price rather than the traditional real estate mantra of “location, location, location” will drive the buying decisions of investors and owner-occupiers over the course of the year.
“In Sydney, the market between $400,000 and $650,000 will continue to show positive signs in 2012, with investors re-entering the market, replacing the expected shortfall of first-home buyers due to the end of the stamp duty concessions on existing homes,” Raine says.
For Sydney, I see rents increasing at a faster pace than 2011. Properties prices will stagnate for the year. The interest rate cuts won't do much for value but it will help stimulate the market in terms of turnover and volume. Sydney prices will grow (but below inflation) because the mainstream are not educated enough to invest in other financial tools.
I see 4 interest rate cuts but the banks only passing on 1 or 2.
People by December will start to capitulate if any of the following occurs:
Increased cost of living forces people to sell at large discounts America goes to war Israel pisses of Iran or vice versa China's property bubble becomes obvious to he mainstream Europe implodes Another act of nature on a developed country eg Japanese Tsunami 2012 predictions of the end of the world from the Mayans comes to fruition
Without one of these factors the only possibility of a crash is if the negative feedback loop causing the economy to head south. As property prices fall, people feel less wealthy, they stop spending, there is less money in the economy, unemployment rises and property prices fall. As property prices fall further people feel even less wealthy so they stop spending even further and as there is less money in the economy unemployment rises and property prices fall.
My best prediction is that a boom or a crash are pretty unlikely. I will say prices flat for the year. (-5% to 5%) change, but with more downside risk than upside.
I predict that I will continue to get 10-20% of my predictions completely wrong.
(But this one will be one of the 80-90% I get right)
In the spirit of Chris Joye prediction Lilly livered style of predictions...
For 2012.
I predict that if the Australian economy shows weakness in 2012, the RBA may be tempted to consider adjusting the rates and consider giving mortgage holders a surprise this Melbourne Cup day
There you go... if they lower rates, I can claim, like joye, that I 'nailed it'... lol
I predict that Australian property will be down about 5% for 2012. Melbourne to be down approx 7%. Sydney about 3% and the rest about 5%.
OK, in other words you are predicting by that, by the end of 2012, prices nationally, and in Sydney and Melbourne, will be substantially UP on their levels of March 2009 when a housing crash was being widely predicted. You are saying those predictions will all be wrong.
Edit add: For clear evidence of the widespread predictions that the crash was to follow the low point of March 2009 see here: http://australianpropertyforum.com/single/?p=8175553&t=8787265 The crash was still being predicted despite the cash rate being 3% and the FHB boost being in full swing.
OK, in other words you are predicting by that, by the end of 2012, prices nationally, and in Sydney and Melbourne, will be substantially UP on their levels of March 2009 when a housing crash was being widely predicted. You are saying those predictions will all be wrong.
Ignore posts by The Whole Truth · View Post · End Ignoring The forum fuckwit goes RRRAAARRRGGHHhhh - But not a fuck was given..................by anyone.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy