The Housing Industry Association predicts 25,000 fewer homes will be built in 2011 than 2010, a downwards revision from previous estimates, according to its National Outlook for the December quarter.

HIA wants the federal government to introduce further stimulus measures to boost new housing starts so they don’t fall back to 2009 global financial crisis levels.

“Housing starts are forecast to fall by 15 per cent to a level of 143,430 in 2011, wiping out a majority of the short-lived, stimulus driven gains of last year,” HIA chief economist Harley Dale said in a statement.

“This fact delivers a very poor scorecard on new home and rental market affordability, which especially hurts aspiring first home buyers and lower income households.”

HIA also wants the government to appoint a minister responsible for fixing Australia’s housing shortage and review taxes charged on new home construction.

Dr Dale said housing starts had risen in just two out of the past 10 years – 2002 and 2010.

A significant decline in new home building in Victoria, formerly the “shining light of residential building”, was a major contributor to the poor outlook, Dr Dale said.

“We are forecasting a 19 per cent fall (in Victoria) from these dizzying heights, to 48,170 starts in 2011,” he said.

“If the alarming escalation in residential land values is not arrested, the fall from grace will be much sharper.”

Queensland’s residential building market, the weakest in Australia, is forecast to fall 20 per cent in 2011.

NSW housing starts are forecast to fall 4 per cent in 2011, on top of a current shortfall of 15,000 dwellings per year.

Western Australia would face its fourth decline in five years, due to a shortage of readily available land and the need for policy reform, HIA said.

South Australia, Tasmania, the ACT and the Northern Territory were all expected to see declines in new home construction in 2011.

HIA said this would flow through to growth in renovations activity, which hit nearly $32 billion in 2010.
“We expect activity in the renovations sector to hold largely steady this financial year, which would be a good outcome,” Dr Dale said.
Smh article

If you have missed three monthly mortgage payments, expect a default notice may be in the mail any day now.

More people than ever are defaulting on their home loan repayments, according to credit ratings agency Fitch and the situation is expected to get even worse.

The agency has found borrowers who were behind late last year have been unable to catch up and are now reaching the critical three-month trigger point for defaults.

In its report Fitch found mortgage payments that were more than 90 days late increased a surprise 12.5 per cent in the past three months of 2010, compared with the previous quarter.

Mortgage performance is also expected to have worsened in the first quarter of 2011, mainly because of the usual impact that the Christmas holiday spending has on first-quarter mortgage performance.

The 25-basis-point interest rate rise in November and the Queensland floods and Cyclone Yasi might also have had an effect on the index.

If you are in trouble, face the problem and consider options such as changing your loan to interest-only which will have the effect of reducing the repayment required to service the loan. Also, consider consolidating loans to reduce the overall payment required. There are other strategies available to assist with financial hardship but it all should start with a realistic budget to work out where you are and what you can afford in terms of repayments.

If you are in financial difficulty, whether it be personal or corporate debt, call the Insolvency Experts 24 hours a day on 1300 100 285.

Article excerpts from news.com.au

While Australia’s optimism is still well above the global average at 38 percent, the survey highlights a significant decline which is a far cry from last year’s soaring confidence of 79 percent. Increases in interest rates, declining property market values, current export conditions, and employment rates have contributed to the decline in confidence among Australia’s privately held business owners.

The report notes that declining property values are putting businesses under pressure as banks and financiers look to secure their investments.

Confidence in Australia’s exports is also down with many exporters suffering over recent months as the Australian dollar has continued to strengthen against the US dollar.

The HIA gauge of the performance of construction, which has been in negative territory for seven months, fell 3.6 points to 40.2 in January from 43.8 in December.

The HIA said “While flooding and bad weather conditions have caused project delays and stoppages, higher interest rates, caution on the part of home buyers and businesses and tight credit conditions continue to hamper growth,” and “The immediate outlook for the sector is not encouraging with new orders continuing to fall albeit at a slower rate than in December.”

The January report showed that activity in apartment construction fell the most, taking it to a reading of about 25 from close to 40 in December.

Article excerpts smh.com.au

Chartwell collapsed in April 2008, owing investors more than $60 million.

Mr Hoy, of Melbourne, Victoria, pleaded guilty to deception charges totalling in excess of $21.7 million in the Supreme Court of Victoria. Specific charge details are as follows:

Obtaining a financial advantage by deception (34 counts)

These charges relate to Mr Hoy dishonestly obtaining over $13.3 million from investors, in part on the basis of false representations made to them as to how their money would be used. Mr Hoy also pleaded guilty to obtaining in excess of $5.8 million on behalf of Black Swan Holdings Pty Ltd from the Commonwealth Bank of Australia based on false financial statements provided by Mr Hoy, also a director of Black Swan Holdings.

Obtaining property by deception (10 Counts)

These charges relate to Mr Hoy obtaining over $2.5 million from investors, in part, on the basis of false representations made to investors as to how their money would be used.

Dishonest use of position as a director (1 count)

This charge relates to Mr Hoy dishonestly using his position as a director of Chartwell to gain an advantage for Black Swan Holdings by executing a guarantee on behalf of Chartwell regarding an equipment loan between CBFC Ltd and Black Swan Holdings to purchase a yacht valued at approximately $6.9 million.

Carrying on a financial services business without a licence (1 count)

This charge relates to Mr Hoy aiding or abetting Chartwell in the carrying of a financial services business without an Australian financial services licence as required under the Corporations Act.

Engaging in dishonest conduct in carrying on a financial services business (1 count)

This charge relates to Mr Hoy aiding or abetting Chartwell to engage in dishonest conduct by providing false information to investors in relation to:

1. The reasons for delay in payment of interest payments
2. The security of their investments
3. The financial status of Chartwell and its prospects for future success.

My Hoy was bailed to appear in the Supreme Court sitting at Geelong on 25 January 2011 for further mention.

Background

On 19 August 2010, former Chartwell secretary, Mr Ian Rau was sentenced to two years and seven months imprisonment after pleading guilty to eight charges arising from ASIC’s investigation

A SURVEY commissioned by one of Australia’s largest mortgage brokers has found that almost one in 10 home buyers believe the latest round of interest rises could force them to sell up.

The Mortgage Choice survey, completed before the Reserve Bank’s Melbourne Cup day decision to lift the cash rate, found 9per cent of mortgage holders could not afford any increases to the repayments on their loans.

The survey found that the two further 25-basis-point increases widely tipped for next year would be enough for about 18 per cent of home buyers to consider selling.

That’s an option already taken up by South Australian couple Sally and Martin Ojasoo, who recently sold their new home at Evanston, north of Adelaide, after struggling with $1300 monthly repayments.

The prospect of even higher rates was too much for a family budget overstretched by a five-year, 8.25 per cent fixed-rate loan taken out in mid-2008, just before interest rates crashed to record low levels in the wake of the GFC.

“I made a bad decision fixing a loan I couldn’t afford,” Mrs Ojasoo said.

“Then everything was pointing to even higher variable loan rates when our fixed term was due to end in a couple of years.”

Breaking the fixed-term loan contract incurred a $10,000 Westpac fee, but fortunately the Ojasoos cleared about $50,000 from the sale after repaying a $24,000 credit card debt.

They plan to live mortgage-free in a kit home near Wallaroo, on South Australia’s Yorke Peninsula, after paying $20,000 for a block.

The survey questioned 1061 people, 536 of them with mortgages, about property and finance matters for this year’s consumer sentiment survey.

Although respondents rated interest rate concerns second to other cost-of-living increases such as utility bills and clothing, this was before the RBA surprised markets by increasing rates – the seventh 25-basis-point rise since the previous October.

Major banks subsequently increased their marginal rates beyond the Reserve’s 25 basis points.

Mortgage Choice said the findings were borne out by a doubling of calls to the group, most from anxious home buyers wanting to refinance mortgages.

Article by The Australian newspaper

Concerns about the possibility of a debt default by the Irish government unleashed a fresh round of fear on global markets overnight, sending shares and other risk-related assets like commodities and the Australian dollar tumbling worldwide.

After the Aussie dollar traded above parity against the greenback for several days earlier in the month, downward pressure on the currency is growing, analysts say. The dollar was buying 97.58 US cents this morning, nearly 1 US cent down from yesterday’s close of 98.55 US cents.

Downside seen for dollar

Sydney-based CCZ Statton Equities research director Dave Hofman said that people planning on taking advantage of the strong Australian dollar to travel overseas should lock in their vacations now.

“Anything from here is cream,” he said.

“The long-term average is well below where we are now,” said Mr Hofman, flagging the 74.5 US cent level. Also, the fact that most currency analysts foresee the Aussie dollar trading over parity against the greenback suggests parity wouldn’t last, he said.
The local dollar, like the commodities closely associated with it, are considered risk assets, which are invested in heavily when global growth prospects brighten. Once fears about growth resurface, investors flee to assets considered safer, such as the US dollar, or bonds.

Mr Hofman expects sovereign debt fears to continue to crop up in the months ahead.

“The issue will subside and it will come back,” he said. “We all have lovely short-term memories.”
The underlying fear troubling investors is that governments in Europe and North America are carrying unsustainable debt levels that could pose default risks.

Nonetheless, barring a sustained shock from overseas there’s “no reason why our market should drop dramatically”, Mr Hofman said. He expects a buying rush towards Christmas.

White Funds Management director Angus Gluskie echoed the sentiment.

The Sydney-based fund manager said that after the US Federal Reserve’s $US600 billion stimulus program was announced at the beginning of this month, markets and financial media have turned their focus back to Europe.

The stimulus program, known as quantitative easing, drove down the value of the US dollar, while pushing up the price of commodities so crucial to Australia’s mining-intensive economy.

“Markets tend to be focused on one thing at a time,” said Mr Gluskie. “Everyone spent the last two months talking about quantitative easing and took their focus off these developments in the euro zone.

“Markets are probably going to be nervous for at least a couple of days while they see how European governments address this latest bubbling up of risk in credit markets.”

Nonetheless, he predicts the benchmark S&P/ASX200 index could still be 100 points higher by the year’s end, helped by an expected quickening of the US recovery. Around midday today, the ASX200 was down 69.6 points, or 1.5 per cent, to 4630.7.

More debt issues on the agenda

Anthony Gray head of client management at currency-house Travelex also urged travellers to lock in strong Australian dollar rates now because once investors stop focusing on Ireland’s debt troubles, they will likely turn to Portugal or another debt heavy European nation.

“I think there will be continued risk aversion because our focus is turning toward Europe,” said Mr Gray, adding that the Australian dollar’s rise over parity is likely to have been temporary.
He forecasts the dollar sitting at 96.5 US cents in the short term.

China inflation a worry

Other worries are also weighing on shares.

China’s food inflation hit a 25-month high in October, spurring fears that China’s economy is growing too quickly and it will need to lift interest rates. A slower growing China, which has helped carry the global economy through the financial crisis, weakens investor appetite internationally.

czappone@fairfax.com.au

This is as a result of a mix of financial pressure on companies and a government-sanctioned Australian Taxation Office policy to go easy on slow payers by rescheduling repayment terms.

One unproved story has it that SMEs’ share of June 30 indebtedness, which normally runs between $2 billion and $2.7bn, ran out to break the $8bn mark this year for the first time.

The ATO wouldn’t comment on that number and hasn’t yet got publishable statistics for June 30, 2010, but it does say that overall indebtedness to it at June 30 rose from $10.23bn in 2006 to $12.2bn at the same date in 2009, which is now 14 months ago.
We may not be comparing apples with apples here, but there’s certainly a trend, and the news for the solvent taxpayers among us isn’t that good.

As we’re running a deficit, every extra billion that isn’t sitting in Treasury’s consolidated revenue column will need to be borrowed at the market rate, or whichever expenditure program it’s been allocated to won’t be financed.

PPB insolvency specialist partner Mark Robinson says: “It wouldn’t surprise me in the least that there’s been a significant increase in the amount of tax owed by SMEs as a consequence of the more conciliatory repayment schedules entered into (by the ATO) following the global financial crisis.”

Commissioner Michael D’Ascenzo told a small business summit on June 10 last year that the 2009 May budget had allocated “$100 million over four years to the ATO to assist small businesses and other taxpayers experiencing financial distress to stay in business.

This mainly involves early intervention and the provision of payment arrangements aligned with the taxpayer’s cashflow”.

What was left unsaid was that the Australian taxpayer’s interest bill (that’s the rest of us we’re talking about now) on the delayed payments forgone is going to be a lot more than the $25m a year the ATO is getting to manage tax laggards.

But what’s even more ominous is that the kinder repayment schedules, in some cases, have been used by lender banks to get themselves higher up the repayment queue and as one insolvency specialist noted, “it’s actually a false economy because it’s interfering with the credit market”.

“It’s not good policy and credit providers are very unhappy that some borrowers are concealing their debts to the ATO,” he says.

He says that some stretched small business borrowers are using the ATO “like a bank” in a way that’s already widespread in Britain, where the tax office has been granting interest-free reprieves of up to 18 months.

“They get to a point there where the banks are telling borrowers to ask the tax office for some leeway,” he says.

Other sources say that lenders in Australia have taken to demanding to see clients’ ATO “integrated client account”, which records the state of the client’s indebtedness to the ATO. “Any lender who’s not doing that is in a danger zone,” says one expert.

At the summit last March, D’Ascenzo said that about 706,000 micro-businesses in Australia, with a turnover of less than $2m, owed the ATO $6.5bn and that the number of “debt cases”, where repayments were being specifically managed, had jumped by 13,000 or 7 per cent to 200,000.

“We have a community-first approach to debt which is about supporting the taxpayer in meeting their obligations and remaining viable,” he said.

“The earlier we engage with taxpayers, the better the chances of finding a suitable solution. When a debt arises, we try to intervene early and contact the taxpayer as soon as possible.

” In the first 10 months of the 2008-09 financial year we have had almost 580,000 conversations with taxpayers,” he said, applying a new nuance to the word “conversation”.

So, is this softly, softly approach to slow payers a bad thing? It’s a least worst situation, where everyone knows that the alternative is administration and possible liquidation, which would see the businesses even less able to pay the tax owed.
But overdue tax has a way of snowballing, even with the interest holidays of up to 12 months that the ATO began granting on June 1 last year.

The worst news for directors of stretched small businesses is that the ATO’s systems are reportedly under so much pressure from all the additional delayed payment work that the ATO is hoping to stop having to issue Director Penalty Notices, that ominous document that warns the company directors they could be personally liable for unpaid tax. “The ATO is saying it’s taking too long to generate a notice,” we are told.

“If that happens, directors will become automatically liable for debts without knowing it,” continues the same expert, who, like many in the field, deals regularly with the ATO and thus doesn’t want to be identified as a critic.

What we’ve also been reliably informed is that the ATO is understandably very keen to get the outstandings down as soon as possible by ramping up recoveries, and it’s taken the unusual step of farming out part of its its debtor ledger to commercial and mercantile agencies: in other words, professional debt collectors.

“There’s clearly desperation within the ATO to turn the situation round,” one veteran concludes. Let’s hope it can walk the very challenging tightrope of lifting recoveries while avoiding a material rise in the number of corporate failures.

Article by A Main

A PENSIONER’S family has blasted banks for approving “crazy” credit after he was granted a $70,000 spending limit.
Pauline Stubbs says she only discovered her husband Alec’s extraordinary line of credit – and $36,000 debt – when opening his mail while he was being treated for cancer in hospital.

“I nearly died,” Mrs Stubbs said.

“How in the hell could they think a pensioner could really afford this? We are not secret millionaires.

“Even if he asked for this, don’t they check into people’s circumstances before they throw money around?”

Former wharfie Mr Stubbs, 72, has been on a pension for several years.

Despite this, his ANZ card has an astonishing $46,000 limit. His Commonwealth Bank card has a $25,000 cap.

In a stunning turnaround, the ANZ agreed to wipe the $18,600 debt on its account after being approached by the Herald Sun and investigating. Bank spokesman Stephen Ries conceded it was a mistake to approve a credit limit of that magnitude.

The Stubbs own a modest home in Yarrawonga, Victoria, and both receive a $485 fortnightly aged pension.

Mr Stubbs’ deteriorating health and confusion has left him unable to properly explain his finances.

Mrs Stubbs said they had kept mainly separate bank accounts for most of their 53 married years, and she was in the dark about his monthly minimum repayments attracting interest and running into hundreds of dollars.

The couple had enough savings “to cover our funerals and bury us”.

“He has his bills and I have mine. We haven’t been living lavishly,” she insisted.

Consumer Action Law Centre spokeswoman Nicole Rich said hundreds of other pensioners had racked up ridiculous credit limits in the past decade.

Tighter regulations introduced last month meant lenders now had to do full assessments for every credit extension, but this only judged whether customers could repay minimum amounts.

“Plenty of people end up trapped because they pay off only the minimum for many years with no real hope of ever paying off the full amount,” Ms Rich said.

“We think customers should be assessed on whether full debts can be repaid within two years.”

The ANZ account opened in 2001 when Mr Stubbs was listed as retired and on a small income. His limit ballooned to $46,000 by 2007.

ANZ spokesman Stephen Ries said: “It’s clear this customer’s credit limit should not have been increased to this extent, and due to the exceptional circumstances we have decided to clear this debt to ensure the family is not placed under any additional stress at this time.

“However, we encourage any customers that find themselves in financial hardship to contact us early so we can help them work their way through the situation.”

Article excerpts news.com.au

Read more: http://www.news.com.au/money/money-matters/banks-lend-crazy-70000-to-pensioner-whose-income-is-485-a-fornight/story-e6frfmd9-1225907087169#ixzz0x0ZvMNnz

Retailers are slashing prices by up to 70 per cent to entice customers, but, as The Sunday Telegraph visited shopping centres across Sydney, idle retail assistants were struggling to sell stock.

In more than 600 detailed interviews conducted in marginal electorates around Australia, the majority of voters said they felt the economy was volatile and had changed their spending habits.

Spending on a broad range of consumer items, including clothing, holidays, restaurant and takeaway food, newspapers and magazines is shrinking as Australians struggle to cope with interest rates, increased cigarette taxes, rising petrol prices and tight rental and housing markets. And there is more bad news for Prime Minister Julia Gillard and Treasurer Wayne Swan: 53 per cent of consumers believe they are less competent at economic management than former PM John Howard and his treasurer, Peter Costello.

The Sunday Telegraph interviewed more than 200 voters in Penrith, Campbelltown, Parramatta and the Blue Mountains. More than 60 per cent said they had changed their spending habits, with 38 per cent spending less, 12 per cent saving less money, and 10 per cent paying less off their mortgage.

Seventy per cent have delayed buying big items, especially cars and houses.

Of those who have reduced spending, the biggest cutback (23 per cent) was in clothing, while 33 per cent said they were spending less on restaurants and takeaway food and 18 per cent admitted they had reduced spending on holidays. The one treat surviving the downturn is a trip to the movies. Only eight per cent of those interviewed said they had reduced their outings to the cinema.

Forty-three per cent of NSW consumers surveyed said the economy was “volatile” whereas 44 per cent believed it was stable.

Nationally, 48 per cent of voters said they were worse off now than at the 2007 election and 44 per cent said they were worse off financially than this time last year.

In NSW, those figures were 37 and 35 per cent respectively.

The investigation revealed credit-card debt is spiralling. In NSW, 39 per cent owe more on their credit cards than last year, with 55 per cent owing more than $1000 and 18 per cent owing more than $5000.

A whopping 54 per cent of respondents nationally and 37 per cent in NSW are saving no money each week.

The disastrous situation was confirmed by dozens of retail staff in shops around Sydney, who revealed the dire situation to The Sunday Telegraph on condition of anonymity.

Stock was going on sale at discounts of up to 70 per cent as soon as it arrived at Wittner stores, a shop assistant said.

“The sale keeps getting bigger to move the stock. Even the new shoes that come in are going on sale the day they arrive,” she said.

“Customers don’t like to browse any more.

“They see the shoes they want in a magazine, come in to buy them and leave without looking around.”

A Myer saleswoman said she feared losing her job.

“I’ve never seen it so quiet. I’m worried, because they’re cutting shifts,” she said. Another department-store worker said women’s fashion departments were no longer taking deliveries of new stock.

Conditions were even quieter this year than at the height of last year’s downturn, another store worker said, admitting that long days with no customers were making staff miserable.

Australian Retailers Association executive director Russell Zimmerman said retailers were not selling stock despite the huge sales.

“Some stores are offering 70 per cent off,” she said.

“That’s unprecedented, and they still can’t get people in the door. It’s tough out there, and retailers are finding it harder to move product than they have in the past.”

Consumers are also increasingly nervous, with the latest Westpac-Melbourne Institute consumer sentiment index falling by 12.3 per cent over the past two months – the biggest drop since March, 2008.

Westpac chief economist Bill Evans said consumers were more concerned about international economic conditions than they were during the global financial crisis.

Concern about global instability was at its highest since the Asian financial crisis of 1997-98, Mr Evans said.

Official consumption figures confirm the slump, with NSW lagging behind the nation in the Australian Bureau of Statistics’ latest retail turnover trend figures.

NSW was the only state to record a fall, with trend turnover dropping 0.1 per cent in May compared with a meagre national rise of 0.2 per cent. Auction sales have been heading south for 11 weeks, with figures from RP Data showing only 56 per cent of capital-city auctions last week resulted in a sale.

In Sydney last week, more than 40 per cent of auctions resulted in no sale.

Article excerpts Sunday telegraph