and now for some right-wing propaganda;
Housing price bubble headed for unemployment ‘pop’
Australia’s property bubble is coming to land on a very sharp pin—the sharp increase in national unemployment.
Although the Australian Bureau of Statistics reported official unemployment held steady for the month of December, at 5.8 per cent, it recorded a plunge in the participation rate to 64.6 per cent.
That is, only 64.6 per cent of people of working age are active in the workforce, either working or looking for work.
When the participation rate falls, it is usually because job-seekers give up looking for work, at which time they are no longer counted in the unemployment statistics.
If the participation rate today was the same as the average in 2011—65.5 per cent—the official unemployment rate would already be 7.1 per cent.
And that’s just official unemployment, not real unemployment. For example, the ABS counts people who work as little as one hour per week as employed.
The Roy Morgan research company conducts its own monthly unemployment survey, using different parameters, including not counting people who work only one hour per week as employed. Roy Morgan reports the current unemployment rate is 10.7 per cent!
The Roy Morgan figure is usually 2-3 per cent higher than the official figure, but in recent times it has climbed much faster, reflecting the constant announcements of job losses in major industries and businesses.
Who will pay the mortgages?
Australia’s property bubble has been fully stretched for a long time, balancing precariously on the backs of the working families struggling to service their massive household debts.
Australian household debt to disposable income is more than 150 per cent.
A single percentage of increase in unemployment is in the order of 100,000 people, many of whom will have mortgages.
Houses are already priced out of reach of most first home buyers, so in recent times most of the buyers of property have been small investors. Recent analysis by UBS showed that 57 per cent of property investors are in debt, and are low-to-mid..., vulnerable to rising unemployment.
When the workers, whose mortgage payments service the banks’ obligations, can no longer carry the burden, the Australian banks will crash as dramatically as their counterparts in the other countries whose economies were dominated by property, including Spain and Ireland.
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