Out with the old in with the new

With 30 day at 4.39% & 180 at 3.73% day bank bill swap rates indicating GDP to decrease in the next 6 months.
1 year domestic Bond rates are at 3.35% and 5yr at 4.245% indicating GDP growth (inflation) over approximately at the start of 2010 to 2015. The trend of the capital markets over the past weeks have seen interest rates increase as bond prices fall as they are sold off.
Historically the Australian share market around August September, October, and November falls. This period often makes Equities the best time of year to purchase.

Currently unemployment is at 4.4% seasonally adjusted but at 4.3% trend this is would mean approximately 250,000 people. With declining GDP in 2009 Australia will see increased unemployment due to Australia increasing becoming a service providing economy. As in other economy’s full-time workers will be moved to part-time thus the real unemployment figure may slightly be underestimated. Unemployment could easily reach 9% at the end of 2009 due to additional 250,000 unemployed.

Real estate prices in America have fallen on average 30% throughout, with some areas falling to 50%. This is due to oversupply of new housing estates on the outskirts of towns and cities, but inner city apartments have on averages fall but still maintain value due to the demands for city living. Spain has seen the same scenario. Costal provinces that set up apartments with beautiful costal views stand uncompleted due to the oversupply and the decline in credit markets. The same real-estate scenario can be seen throughout the world.

Australia is not immune to the global price decline in real estate – we are only lagging behind. The Equity markets throughout the world had seen huge falls, Hard & soft commodity prices have fall with the next asset class to fall (by text book) would be real estate. That would mean we would see property prices in Australia fall between 30% to 50%, this is not unrealistic. Australia will see an increase in unemployment in 2009, investors have left the market with only new home buyers (young couples) using the Federal and State handouts to venture into the market in the last quarter of 2008.
Australian’s are in first place (or second depending where you get your information) as the most in debit households in the world. An indication of the Residential real estate market is the Commercial real estate. In December 2008 The Commonwealth Office Property Trust a publicly listed entity revalued its $1.1 Billion commercial
portfolio down 5%.
Save your money as you are going to need it this year more than most. To get back to buying equities in the second half of 2009 or to see you thought to your period of unemployment.