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James Snodgrass
Thursday, November 20, 2008
20th November 2008
How low can they go? New report looks at the future of interest rates. Also in the news, raising awareness of potential dangers in the home; and why renovating your home is such a good idea right now...
Interest rates likely to hit new lows
The Official Cash Rate is highly likely to hit a new low point of 3.50 per cent, most likely in the final months of 2009, according to economists at the ANZ Bank. In its weekly Economic Update, the Bank says that while this may seem like a bold forecast, it is almost fully priced into money markets. The market expects 100 basis points of rate cuts in December, a further 50 basis points in February 2009 and a low of somewhere between 3.50 per cent and 3.75 per cent in March. "While we expect the RBA to ultimately deliver on current market expectations, we are of the view that it will take much longer than current pricing suggests."
ANZ predicts the rate cuts through the first half of 2009 will be in response to weak economic growth and rising unemployment. "Beyond that we are forecasting a final 50bp of rate cuts in late 2009 in response to falling inflation and ongoing sluggishness across the economy."
Saving water wisely
As the weather heats up, Australians have long tended to head for the water - pools, rivers or the beach. In recent years, we have also adopted the habit of saving water for re-use, such as grey water from washing to put on parched gardens. Despite warnings and a greater awareness of the dangers of mixing children with water, the National Drowning Report 2008, which was released this week, shows that young men and toddlers are at greatest risk of drowning.
204 men drowned in Australia between 1 July 2007 and 30 June 2008 in a range of locations including rivers, oceans and beaches. Of those deaths, almost a quarter were young men aged 18 to 34 and most died in summer and autumn while engaging in swimming or other water-based recreational activities.The other group at particularly high risk of drowning was toddlers, with 27 children aged between 0 and 5 drowning in the year to 30 June 2008. Almost 60 per cent of those children drowned in backyard pools.
But it is not just pools that present a risk for young children. Kidsafe (Victoria) recently issued a RED ALERT for parents over the drowning risk to toddlers in homes storing water in buckets or leaving wading pools filled after use to save water. Dr Mark Stokes, President of Kidsafe Victoria said that since the introduction of water restrictions, there are millions of buckets of water being stored in homes every day, with each bucket representing a potential drowning situation. "Or near-drowning, which can leave children with severe brain damage", Mr Stokes said."Many parents are unaware of the risk, with the main focus being on saving water." Kidsafe Victoria is urging parents to isolate buckets of water from children or empty buckets immediately.
Dr Stokes said leaving wader pools filled after use as a response to water restrictions can also create a deadly hazard for toddlers, and that parents cooling children in baths should not leave them unsupervised.
Renovators to the Rescue
A renovation-led recovery where billions of dollars are invested in upgrading Australia's housing stock could underpin tens of thousands of jobs in the building industry, building advisory service Archicentre suggested this week. Robert Caulfield, Managing Director of Archicentre, urged Australian home owners considering renovations to bring them forward and give preference to the use of Australian building products as a way of creating jobs.
"On average, Australian renovators spend $20 billion a year, (which is) a significant contribution to Australia's economic activity", Mr Caulfield commented."The use of Australian made building products would provide an added bonus to protect employment and the economy during this difficult period." Mr Caulfield said the recent drop in new home building would provide a buyer's market for renovation projects as builders look for replacement jobs in a more competitive environment and could cut thousands of dollars off projects. "Tendering will now come back into the market place as consumers look for better prices in a tightening economy and all sectors of the housing industry sharpen their pencils to get business", he suggested."Add to this the use of Australian made products and we can see how a well planned renovation can really contribute to Australia's economy."
Carefully carried out with clever design, planning, project management and budgeting, a renovation can produce tens of thousands of dollars extra when the home is sold to boost retirement funds and quality of life. A discussion paper for the Rudd Government's pension review earlier this year outlined the future for Australia's ageing workforce, with the majority of Australians aged 65 and over getting the pension and relying on it as their major income source. Mr Caulfield suggested that with a quarter of Australia's population expected to be 65 or more by 2047 and many of those using equity in the family home to boost their retirement funding, renovation will become an important national wealth creation strategy.
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