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GUEST OBSERVATION
Until now, student debt in Australia has been relatively modest, with low repayment rates, low indexation and high repayment thresholds. This won’t be the case if the government proceeds with changes mooted in the recent budget, including higher fees and higher interest on debts. Australia will move to a student debt model similar to the US, so this is a good place to look at the effects that large levels of debt have on young graduates.
<a href="https://www.demos.org/what-cost-how-student-debt-reduces-lifetime-wealth" target="_blank">Much recent research</a> from the United States shows that student debt is having profound and negative effects, both at the individual and at the national level.
Graduates living with debt
Purdue University is a public university in South Bend, Indiana. President Mitch Daniels commissioned a large, evidence-based study of the impact of student debt on university graduates. <a href="https://www.gallup.com/strategicconsulting/168791/gallup-purdue-index-inaugural-national-report.aspx">The results</a>, based on a survey of 30,000 graduates, were recently released.
The <a href="https://www.nuvo.net/indianapolis/purdues-mitch-daniels-talks-college-costs/Content?oid=2837651#.U4KfSPmSyPY" target="_blank">findings of the study</a> are sobering, on two fronts.
First, student debts weigh heavily on students’ later wellbeing. Wellbeing was measured along five dimensions: life purpose, social engagement, community engagement, financial satisfaction and physical health. Graduates without student debt were seven times more likely to report themselves to be “thriving” along all of these dimensions than graduates (or indeed dropouts) with more than $40,000 in debt.
This finding tends to confirm the results of a <a href="https://www.sciencedirect.com/science/article/pii/S0272735813001256">major meta-analysis</a> of evidence from the United States, the United Kingdom and New Zealand. The findings suggest that higher levels of debt while a student are significant predictors of stress and secondary negative health consequences. This study also points to other evidence of serious consequences more generally. Higher levels of debt have serious long-term consequences, including mental, neurotic or psychotic disorders, depression, suicide attempts (or suicide completion), problem drinking and drug dependence.
Secondly, large debt burdens influence choices related to work, careers and lives. Graduates with higher debts are less likely to be entrepreneurial and start new businesses. This is to be expected, as student debt repayments tend to constrain the capacity to borrow for other productive purposes.
In the robust free-market economy of the US, such entrepreneurial timidity among the best and brightest is a source of real and valid concern for policy makers.
Other <a href="https://www.sciencedirect.com/science/article/pii/S0047272710001337" target="_blank">recent research</a> has shown that students with higher debts tend to pursue higher-paying careers, not pursuing “public interest” jobs in areas like teaching and community services. Over time, this means that public institutions like schools will have to pay higher wages to attract the best and brightest, indirectly shifting some of the cost of student debt back to the taxpayer in the form of higher public sector salaries.
Large student debts <a href="https://www.learnvest.com/2012/10/real-women-speak-out-how-student-loans-have-affected-me/" target="_blank">have also been shown</a> to lead to delays in home purchases and having children.
Debt ain’t free
Shifting more of the burden for higher education back on to students, and saddling them with huge debts, may seem like a good idea for policy makers, but it will have serious long-term consequences for those students and thus the wider Australian community.
In the United States, the average student graduated with around $30,000 of student debt in 2013. Currently, Australian graduates of three-year business degrees have debt of a similar level.
If the proposed changes lead to higher fees, <a href="https://theconversation.com/how-much-student-debt-will-you-be-facing-post-budget-26712" target="_blank">as most analysts expect</a>, it would be reasonable to anticipate the graduates of 2018 completing their three-year degrees with debt of around $50,000.
It would be naïve to think debts of this level won’t have far-reaching consequences for graduates’ well-being and the work and economic choices they make in their lives. These choices will have serious consequences for our economy and society.
John Rice is associate professor in strategic management at Griffith University.
John Rice works for Griffith University, a public university. His most recent previous role was Chief Researcher at the National Centre for Vocational Education Research, a ministerial company owned by the Commonwealth and State education ministers. He has received grant funding from the Australian Research Council. He is a current member of the Australian Labor Party and the National Tertiary Education Union.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
Photo courtesy of <a href="https://taxrebate.org.uk/" target="_blank" rel="nofollow" data-rapid_p="22">TaxRebate.org.uk</a> / <a href="https://creativecommons.org/licenses/by-sa/2.0/" target="_blank">Creative Commons</a>.
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How will rising student debt affect first home buyers?

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GUEST OBSERVATION
When I speak to someone looking to buy an off the plan property, one of my first questions is usually “investor or first-time buyer?”
Recently it was claimed that there is currently a ‘property war’ between first time home buyers and investors, each one vying for in-demand properties throughout Australia. If there is a property war, then the investors are winning. They have more experience, better credit, and in most cases, the confidence to act quickly.
Last year saw a lot of first time buyers forced out of the market due to high property prices and excessive demand. The proportion of first home buyers of all owner-occupied loans financed in January increased .5% from December. Although this is a good development for buyers and the market, this stat is still five times less than investment loans financed. But for those intimidated by the investor presence, first time buyers can easily move into top quality properties.
One of the priority issues for first time buyers is location. Most buyers are looking for something close to the city and close to work, which is where the investors begin driving competition. Smart investors will recognise these areas as the key hotspots and are also looking in these areas. But there are brand new developments in Surry Hills, Rosebery and Alexandria that pose fantastic opportunities for those looking to take a step into the market.
Most inexperienced buyers don’t realise how cost effective off the plan purchases are. Many assume that because it is a new development it is going to cost them more. But seeing as many off the plan purchases occur months ahead of moving in, they afford you the time to save a larger deposit and allow you to qualify for the First Home Owners Grant if applicable.
Off the plan purchases represent some of the best opportunities for first time buyers to not only move out of home, but to move into the market as investors. Now more than ever, buyers are taking the opportunity to buy a new apartment and rent it out to pay off their mortgage faster. With the large number of young professionals looking for homes and willing to pay higher prices for better locations, the potential for return off a purchase can be significant.  
Sam Elbanna is managing director of <a href="https://www.cpmrealty.com.au/" target="_blank">CPM Realty</a>.
 
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Not according to ‘the plan’: First home buyers missing out on off the plan opportunities

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The Australian residential property market has recently been showing signs of improvement.
Investors and changeover buyers are being drawn back to the market following interest rate cuts and the positive outlook for housing.
Unfortunately, first-home buyers are missing out on the favourable environment due to  a number of reasons – stamp duty, the size of deposit required and ability to save for it, unemployment and underemployment concerns.
Recent changes to the first-home owner grant in all states and territories (except for Western Australia and the Northern Territory) have added to the uncertainty and impacted on the activity of first-home buyers in the market.
As part of the inter-governmental agreement (IGA) on the reform of Commonwealth/States financial relations signed in June 1999, all states and territories agreed to provide uniform financial assistance to Australians who are buying their new or established first-home through the introduction of the first-home Owner Grant.
According to the recently released QBE Lenders’ Mortgage Insurance’s (QBE LMI) 2013 Mortgage Barometer Report, 84% of first-home buyers believe property prices are close to reaching or are above what they can afford and 69% worry they will neverbe able to afford their own home (compared to 24% of all respondents).
Unfortunately, governments of most states and territories have made it much harder for first-home buyers to see their dreams realised. Table 1 (below) shows recent changes to the first-home owner grant.
<img alt="hawthornejuly25table1" height="328" width="470" src="/images/stories/2013/07/hawthornejuly25table1.jpg" style="display: block; margin-left: auto; margin-right: auto;">
As a result of the new policies, the Australian Bureau of Statistics’ figures for March 2013 show that first-home buyers are becoming an endangered species. 
Figure 1 (below) shows that in Australia, only14.2% of owner-occupier housing finance commitments in March were from first-home buyers – the lowest level seen since May 2004.
<img alt="hawthornechart2" height="226" width="470" src="/images/stories/2013/07/hawthornechart2.jpg">
Housing finance figures for April show that in New South Wales and Queensland (both below), where the grant ended in Octobe rlast year, first-home buyers made uponly 7.3% and 10.3% of the owner occupier market respectively with both states significantly decreasing their share in the total number of first-home buyers in Australia.
<img alt="hawthornechart3" height="212" width="470" src="/images/stories/2013/07/hawthornechart3.jpg">
<img alt="hawthornechart4" height="203" width="470" src="/images/stories/2013/07/hawthornechart4.jpg">
Two out of three first-home buyers in NSW and Queensland surveyed by the QBE LMI’s indicated the new policies made an impact on their purchase intentions.
With new arrangements aiming to stimulate building activity, it is too early to expect substantial positive results on the industry. REIA has been lobbying hard against the breach o fthe IGA, however we are still to hear what the Commonwealth will do.
Evgeniya Hawthorne is Research Officer for the <a target="_blank" href="https://www.reia.com.au/">Real Estate Institute of Australia</a>.
 
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First-home buyers left out as residential market improves: Evgeniya Hawthorne

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A new Chapel Street, South Yarra development has been completed, just over two years since construction started.
661 Chapel St is the first Australian project of Malaysian-based developed Gamuda Land and was completed ahead of schedule. Settlements are set to occur in May 2018.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/25/2b369aa3a2ea4c529adf81a8eb014801.jpg" alt="">
Consisting of 116 apartments over 30 floors, the Bird de le Coeur designed development is close Melbourne High School and the Yarra River.
The hotel style development also has a library, BBQ area, 25 metre lap pool, private cinema, dining rooms and board room, as well as a wine cellar.
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/25/f746b8e3b3f641898dab56c5caafbd9a.jpg" alt="">
661 Chapel St’s project director Aw Sei Cheh said the development was inspired by town making principles and the location was a major selling point for local and interstate buyers.
“We have had strong sales for this project, and strong inter-state sales too – with 15% of purchasers coming from NSW,” he said.
“Sydney-siders are attracted to Chapel Street’s legendary status as Melbourne’s premier shopping street, the locality to greenery such as the Yarra river and Royal Botanical Gardens, and its proximity to Melbourne CBD and other landmarks such as the MCG.”
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/25/fd2087db2eaa4a949463c8be7faf5571.jpg" alt="">
The Urban Developer recently reported that sales for the project are at approximately 70%.
Prices for the apartments start at $546,000 for a one bedroom, and go up to $2.7 million for a three bedroom.
There is an unsold $22 million penthouse shell which will be customised to the purchaser’s brief by celebrity interior designer David Hicks who has undertaken some preliminary (pictured) designs.
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<div>It is a 729 sqm residence over three levels, likely to include three bedrooms, five bathrooms, sauna, steam and shower room, gym and yoga room, cinema, study and wine cellar.</div>
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<div>The 729 sqm space includes 93 sqm of balcony space and 82 sqm of rooftop.</div>
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Chapel Street apartment development completed ahead of schedule

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The biggest mining boom in Australian history since the gold rush of the 1850s is about to change shape. The investment phase of the boom, which has seen $400 billion invested in the last decade, is tapering off.
The elevated prices paid for Australian mineral exports since 2003 are falling, and with them, the huge boost they provided to national income and government revenue. As these changes begin to transform the economy once more, our new report, <a target="_blank" href="https://grattan.edu.au/publications/reports/post/the-mining-boom-impacts-and-prospects/">The Mining Boom: Impacts and Prospects</a> assesses the benefits and costs of the boom, and points to what policymakers should and should not do next.
Overall, the boom has been good for Australia. It helped the country weather the global financial crisis. It helped fund major government initiatives. Most Australians have prospered.
But the boom has also provoked fears. Some worry that it has benefited mining states, companies and workers, but left the rest of the country worse off. Some believe that the high dollar caused permanent damage to trade-exposed industries such as manufacturing, tourism and international education.
Some believe a bigger mining sector will expose the broader economy to resource price shocks or that the boom will end in a severe recession. Others believe the Commonwealth Government mishandled the boom by failing to save much of the windfall it has generated.
Our report examines the impact of the boom on the economy and tries to ascertain whether the worriers are right. With one striking exception, it finds that they are not.
Certainly the boom has boosted incomes more in the mining states of Western Australia and Queensland and the Northern Territory. But in the past decade, incomes have increased faster across the country than in the decade before. Regional centres have grown at different rates, but few are left worse off. Benefits have been spread across the country as the boom helped to offset the impacts of globalisation and technological change on lower-skilled workers.
Trade-exposed industries are indeed under pressure, though not all the pressure can be blamed on the boom. High income economies around the world are adapting to the rise of China as a manufacturing power. That would have reshaped the Australian manufacturing sector even had there been no boom.
The high exchange rate has compounded the pressure, with trade-exposed industries catching the so-called ‘Dutch Disease’ of rising costs during a resources boom. But will these sectors be able to respond even if the exchange rate falls, or have they been hollowed out? We examined the record of other countries that had periods of high exchange rates followed by falls. Manufacturing growth grinds to a halt while the exchange rate is high.
But it does not last: we found no evidence that manufacturing is hollowed out by the period of exchange rate elevation. Manufacturing and other trade-exposed industries bounce back quickly to trend.
The concern about a possible recession is less easy to assess, but again we find grounds for cautious optimism. Turning to the historical record, falls in resource prices elsewhere were often followed by recession and years of slow growth.
Those that faltered let capital inflows and inflation get out of control, or got caught up in debt crises, but other countries adjusted and continued to grow. Australia, among resource-rich economies, has had a long record of relatively stable growth, reflecting a mixture of relatively good policy institutions and settings, low exposure to industries prone to sudden contractions such as capital goods manufacturing.
If those policy settings (including decentralised wage setting, effective competition and prudential regulation, floating exchange rates) can be preserved and strengthened, the economy will be best placed to adjust if the boom comes suddenly to an end.
The fourth community concern – that the benefits of the boom have not been saved – is well-founded. The Commonwealth Government has not saved enough of the proceeds of the boom. Tax decreases and spending increases have been larger than Australia can afford in the long run. Some spending was justified by the response to the global financial crisis, and some has been invested, but underlying budget deficits now need to be repaired in more difficult times.
Australian governments need to do more to tighten their budgets, which will permit them to respond strongly if the outlook darkens. Governments should resist temptations to protect industries, but continue to invest heavily in skills and education to help workers and citizens respond to the changing risks and opportunities of a globalised economy.
These will be even more important as the longest and largest mining boom in 150 years winds down.
Jim Minfie is Productivity Growth Program Director at the  <a target="_blank" href="https://grattan.edu.au/">Grattan Institute</a>.
This article was originally published at <a target="_blank" href="https://theconversation.com">The Conversation</a>. 
 
 
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What do we do as the mining boom tapers off?: Jim Minfie 

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<a target="_blank" href="https://www.propertyobserver.com.au/residential/sydney-auctions-in-80-plus-overdrive-for-fifth-consecutive-weekend/2013081164077?utm_source=Property+Observer+List&amp;utm_campaign=172492e153-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-172492e153-"></a>
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<a target="_blank" href="https://www.propertyobserver.com.au/residential/sydney-auctions-in-80-plus-overdrive-for-fifth-consecutive-weekend/2013081164077?utm_source=Property+Observer+List&amp;utm_campaign=172492e153-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-172492e153-"><img height="110" width="400" src="/images/stories/2013/08/aug16nos/83.8-clear-aug-16.gif" alt="83.8-clear-aug-16"></a>
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<div>At near peak levels, <a target="_blank" href="https://www.propertyobserver.com.au/residential/sydney-auctions-in-80-plus-overdrive-for-fifth-consecutive-weekend/2013081164077?utm_source=Property+Observer+List&amp;utm_campaign=172492e153-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-172492e153-">Sydney managed an 83.8% weekend auction clearance rate</a>, according to Australian Property Monitors (APM), the fifth consecutive weekend with a preliminary 80% plus outcome.</div>
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 <a title="Can Sydney achieve its sixth consecutive week of weekend auction clearance rates above 80%?" href="https://www.propertyobserver.com.au/news/can-sydney-achieve-its-sixth-consecutive-week-of-weekend-auction-clearance-rates-above-80/2013081564266?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=polloftheday">Can Sydney achieve its sixth consecutive week of weekend auction clearance rates above 80%?</a> </div>
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<a href="https://www.propertyobserver.com.au/residential/sydney-s-residential-market-is-hot-glowing-red-hot-or-white-hot-pete-wargent/2013081264097?utm_source=Property+Observer+List&amp;utm_campaign=172492e153-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-172492e153-" target="_blank"><img alt="90-wargent-aug-16" src="/images/stories/2013/08/aug16nos/90-wargent-aug-16.gif" width="470" height="115"></a>
Pete Wargent says that "in the white (or red) hot sectors of the market such as Sydney's inner west,<a href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CCoQFjAA&amp;url=http%3A%2F%2Fwww.propertyobserver.com.au%2Fresidential%2Fsydney-s-residential-market-is-hot-glowing-red-hot-or-white-hot-pete-wargent%2F2013081264097&amp;ei=hpoNUsLhB87MiAexoIHwAQ&amp;usg=AFQjCNF_GOGxQ3YTIK4mrmpqf3ME2ynQwQ&amp;bvm=bv.50768961,d.aGc" target="_blank"> clearance rates have been hitting at around 90% and the market is clearly boomi</a><a href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CCoQFjAA&amp;url=http%3A%2F%2Fwww.propertyobserver.com.au%2Fresidential%2Fsydney-s-residential-market-is-hot-glowing-red-hot-or-white-hot-pete-wargent%2F2013081264097&amp;ei=hpoNUsLhB87MiAexoIHwAQ&amp;usg=AFQjCNF_GOGxQ3YTIK4mrmpqf3ME2ynQwQ&amp;bvm=bv.50768961,d.aGc" target="_blank">ng."</a>
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<a href="https://www.propertyobserver.com.au/hotspots/sydney-property-market-is-a-bit-like-the-porridges-of-the-three-bears-in-goldilocks-too-hot-or-too-cold-and-some-just-right/2013081264127?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=jonathanchancellor'spropertyinsights&amp;utm_source=Property+Observer+List&amp;utm_campaign=b3c350ffc5-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-b3c350ffc5-" target="_blank"><img alt="896000-jc-insight" src="/images/stories/2013/08/aug16nos/896000-jc-insight.gif" width="470" height="115"></a>
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Red hot, white hot… a <a href="https://www.propertyobserver.com.au/hotspots/sydney-property-market-is-a-bit-like-the-porridges-of-the-three-bears-in-goldilocks-too-hot-or-too-cold-and-some-just-right/2013081264127?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=jonathanchancellor'spropertyinsights&amp;utm_source=Property+Observer+List&amp;utm_campaign=b3c350ffc5-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-b3c350ffc5-" target="_blank">83.8% weekend Sydney auction clearance rate is hot of which ever description one wishes.</a>
But beware its mostly in the middle class and aspirational suburbs. Certainly not at the top end or bottom end suburbs.
Saturday's median house price was $896,000 compared to the $694,000 APM median house price. Ditto units which on the weekend sat at $640,000 when the overall median unit price across Sydney sits at $491,000.
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<a target="_blank" href="https://www.propertyobserver.com.au/news/red-hot-not-a-boom-but-john-mcgrath-warns-on-inner-sydney-residential-market/2013081264133?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news&amp;utm_source=Property+Observer+List&amp;utm_campaign=b3c350ffc5-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-b3c350ffc5-"> </a>
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<a target="_blank" href="https://www.propertyobserver.com.au/news/red-hot-not-a-boom-but-john-mcgrath-warns-on-inner-sydney-residential-market/2013081264133?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news&amp;utm_source=Property+Observer+List&amp;utm_campaign=b3c350ffc5-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-b3c350ffc5-"> <img height="110" width="400" src="/images/stories/2013/08/aug16nos/8-john-mcgrath-aug-16.gif" alt="8-john-mcgrath-aug-16"></a>
The low interest rate environment was prompting price growth inner-city Sydney property markets, triggering McGrath Real Estate founder <a target="_blank" href="https://www.propertyobserver.com.au/news/red-hot-not-a-boom-but-john-mcgrath-warns-on-inner-sydney-residential-market/2013081264133?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news&amp;utm_source=Property+Observer+List&amp;utm_campaign=b3c350ffc5-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-b3c350ffc5-">John McGrath to suggest the pace of price recovery in some property markets was a concern.</a>
Aussie executive director, James Symond said the conference followed the group's biggest year with settlements for the 12 months to June 30 organically growing by 8%.
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Property Observer notes listing volumes were up to their highest winter level, though still slim compared to the typical spring selling season.
<a target="_blank" href="https://tinyurl.com/n4pesax">Surry Hills tops the 12 Sydney weekend auction hotspot suburbs</a>
<a href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CCwQFjAA&amp;url=http%3A%2F%2Fwww.propertyobserver.com.au%2Fresidential%2Freal-prospect-sydney-s-median-house-price-will-exceed-%24700000-during-spring-selling-season-apm-s-dr-andrew-wilson%2F2013081163656&amp;ei=LZoNUpU2pp6IB9f4gEA&amp;usg=AFQjCNEyOfszSFGXyEx5DILph8OXkn4coQ&amp;bvm=bv.50768961,d.aGc" target="_blank">
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<img height="110" width="470" src="/images/stories/2013/08/aug16nos/700000-wilson-aug-16.gif" alt="700000-wilson-aug-16"></a>
Australian Property Monitors senior economist <a href="https://www.google.com.au/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;cad=rja&amp;ved=0CCwQFjAA&amp;url=http%3A%2F%2Fwww.propertyobserver.com.au%2Fresidential%2Freal-prospect-sydney-s-median-house-price-will-exceed-%24700000-during-spring-selling-season-apm-s-dr-andrew-wilson%2F2013081163656&amp;ei=LZoNUpU2pp6IB9f4gEA&amp;usg=AFQjCNEyOfszSFGXyEx5DILph8OXkn4coQ&amp;bvm=bv.50768961,d.aGc" target="_blank">Dr Andrew Wilson predicts Sydney residential price growth was set to exceed 7%</a> and could reach 10% over the course of the year.
Dr Wilson said that here is a real prospect that before year's end, the median price for Sydney houses will exceed $700,000.
<a target="_blank" href="https://www.propertyobserver.com.au/residential/commbank-s-ian-narev-loses-no-sleep-over-australian-property-bubble-risk/2013081264129?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news&amp;utm_source=Property+Observer+List&amp;utm_campaign=b3c350ffc5-June_21_1_29_2013&amp;utm_medium=email&amp;utm_term=0_a523fbfccb-b3c350ffc5-">
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Commonwealth Bank chief executive <a target="_blank" href="Narev%20says%20is%20often%20questioned%20by%20overseas%20investors%20on%20Australia's%20high%20house%20prices%20compared%20with%20incomes,%20but%20says%20banks%20here%20could%20weather%20double%20the%20level%20of%20unemployment%20and%20a%2040%%20fall%20in%20prices.">Ian Narev says he doesn’t lose any sleep over concerns about a possible property bubble in Australia </a>following record low interest rates.
Narev says is often questioned by overseas investors on Australia's high house prices compared with incomes, but says banks here could weather double the level of unemployment and a 40% fall in prices. 
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The 7 must-know property investment numbers of the week, topped by Sydney's 83.8% clearance rate

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The “days of super-low interest rates are coming to an end,” according to the Australian Financial Review economic commentator David Bassanese.
David Bassanese suggests that borrowers should not count on the variable rates remaining at current lows levels.
He suggest they should consider locking in lower funding costs while they still can.
The Reserve Bank cut Australia’s official cash rate to an all-time low of 2.75% two months ago and the United States Federal Reserve has indicated it will keep the US official cash rate hovering around zero.
However, speculation is growing that with a more robust forecast for the US economy, the Fed will ease off its bond-buying and money-printing as early as September and David Bassanese says this has “professional traders jumpy”.
The yield for a 10-year US Government Bond has risen from 1.6% in May to a recent high of 2.5%, while Australian government bond yields “have not been immune”.
The rising bond yields coupled with the declining $AUD suggests that the RBA may resist another rates cut as trade exposed industries become more internationally price competitive.
David Bannanese believes it “would be prudent to factor in at least one, and ideally two, percentage point interest rate increases" from the RBA over the next few years.
He predicts that rising interest rates will place downward pressure on currently owned asset prices and could "soften" home prices.
He also noted that rising interest rates were a positive sign that economic conditions are normalising and tempering the "risks of another excessive build-up in debt levels" .
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Jacob Robinson

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