The Daily Reckoning Australia From Dan Denning at the Old Hat Factory: ----------------------------------
--"Thousands give up on home ownership dream," reports Eli Greenblat in today's Age. The Australian Bureau of Statistics reported yesterday that the number of new home loans for owner occupied housing fell by nearly 8% in May, and by 25% in the last four months. Builders aren't building, even though immigrants are still coming to Australia in droves.
--All of this has Craig James, the lead economist at ComSec, perplexed. "Something has to give unless you are going to have people in their 30s and 40s still living at home with mum and dad...The situation is unsustainable...More homes will need to be built to house our growing population."
--Or maybe, as more than one reader has pointed out, we'll go back to living with our parents. Maybe this whole living arrangement of one man, one house is what's unsustainable. Houses have gotten bigger while fewer people are living in them. This is a great luxury, if you can afford it. But maybe this allocation of our collection resources is no longer economic, especially as houses are not a productive asset, but one that you consume.
--Besides, for tens of thousands of years human beings lived and evolved together because we needed each other...to hunt, to defend against rival tribes, to sing, to dance, and to raid our neighbors’ and steal their warm pelts. Maybe life has more meaning when other people need you and you live in small groups. Maybe sitting in front of campfires with the tribe is better than sitting in front of LCDs alone.
--On a statistical rather than philosophical note, the ABS also reports jobs data today. With banks raising interest rates and petrol and food prices up, the last blow the economy needs is rising unemployment. Still, you can sense the worm has turned psychologically.
--Consumers will spend less because of marginally higher food and petrol prices. But they will also spend less because they are more worried and less confident that a year ago. That's not a recession. But it could take some pressure of the RBA to raise rates later this year. July CPI figures come out in a few weeks. By then, the rate picture for the rest of the year should be clearer.
