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Reduced super contributions caps for people over 50 have resulted in self-managed superannuation fund contributions falling by almost 25% in the 2012-13 financial year, according to new research.
In the past year, average contributions fell $12,300 from $47,500 to $35,200, a study by SMSF fund administrator Multiport found.
The report found the decline was most likely the result of the reduction in the concessional contribution cap, with a cap of $25,000 applying to members of all ages during the 2013 financial year, rather than just those under 50.
In the past three financial years SMSF holders over 60 years old could make a concessional contribution of $50,000 to their fund.
In the 2013-14 financial year the cap will be increased and people over 60 will be able to contribute $35,000.
“With the increase in Super Guarantee to 9.25% and the increased concessional cap of $35,000 applying to the over 60s from July 1, 2013, a small lift is expected in the contribution levels for the 2014 financial year,” the Multiport report states.
But SMSF Professionals Association of Australia chief executive Andrea Slattery said it’s not just the changes in concessional caps which are influencing the amount people contribute.
“Our research confirms people have contributed less because they were concerned by the government’s constant tinkering with super and they had less confidence in the super system for the long term.
“People are not confident in the decisions which were being made around super,” she says.
Both major parties have recently committed to a <a href="https://www.smartcompany.com.au/superannuation/056797-small-business-tax-experts-remain-unconvinced-over-canberra-s-five-year-superannuation-freeze">freeze in superannuation changes</a> for five years.
Labor has said it would make no major changes, while the Coalition committed to making no detrimental changes.
Slattery says the freeze will give Australians greater confidence in planning for their futures.
The Multiport survey of 1950 of its clients also found SMSFs are starting to favour higher risk investment options.
“A significant amount of cash holdings moved into the fixed interest sector early in the financial year, with the cash down almost 2.7% and fixed interest up 2.6%,” AMP SMSF administration head of technical services Philip La Greca said in a statement.
La Greca says the changes in these investments were influenced by the reduction in official interest rates and improving sentiment about future movements.
“The allocation to Australian shares was up 0.8% to 37.5%, slightly higher than expected from normal growth in the market. This was mostly driven by the significant weighting that direct Australian shareholders have in the top 20 stocks, which outperformed the All Ordinaries,” he says.
Slattery says SPAA research also indicates more people are investing in property and equity.
“SMSF trustees are professionally advised as well as more engaged, and that engagement means they’re making decisions that are for their benefit in retirement and SMSF trustees do perform quite well,” she says.
 
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This article was originally published on <a target="_blank" href="https://www.smartcompany.com.au/?">SmartCompany.</a>
 
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yredrup-o4Anfe78KF

Reduced super contribution caps for people over 50 has led to 25% fall in SMSF contributions

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The former owner of ABC Learning Centres, Eddy Groves, is homeless, bankrupt and reportedly owes creditors more than $31 million.
The remarkable decline of Groves has been well publicised, but the full extent of his situation is only just coming to light.
He was declared bankrupt on January 29 this year in the Adelaide Federal Magistrate's Court, but ABC Learning Centres were <a target="_blank" href="https://www.smartcompany.com.au/finance/five-lessons-from-the-spectacular-fall-of-eddy-groves">placed in receivership</a> in November 2008, effectively sealing the fate of the once BRW Rich List regular.
The Australian reported today Groves has <a target="_blank" rel="nofollow" href="https://www.theaustralian.com.au/news/former-childcare-mogul-eddie-groves-claims-to-have-3879-in-the-bank-after-being-bankrupted/story-e6frg6n6-1226578261275">debts of $31 million</a> and has only $38.79 to his name, as indicated by a statement of his financial affairs provided to Insolvency Trustee Services Australia.
The once high-flying executive used to be known for driving Ferraris, and owning multimillion dollar properties on the Gold Coast and basketball team the Brisbane Bullets.
Today, Groves is reported to be in a backpackers' hotel, but he's optimistic he'll be out of there in the next two weeks.
"Still to find a permanent address but expect to in the next two weeks," Groves said in the statement.
The bankruptcy proceedings were launched by the Commonwealth Bank, which had pursued Groves over a private debt of $5 million on a loan he took out to purchase the Adelaide Dome basketball stadium.
Following the bankruptcy, PPB Advisory partner Mark Robinson said in a statement issued on January 29 it would be conducting "urgent inquiries" into Groves' financial position.
"PPB Advisory will be making urgent inquiries with Mr Groves and other persons of interest to determine possible assets which may be available to pay unsecured creditors.
"Another key focus of the trustee will be to examine related party transactions which may have taken place prior to our appointment," Robinson said.
Fairfax reported today Groves <a target="_blank" rel="nofollow" href="https://www.theage.com.au/business/homeless-groves-lists-debts-of-216m-20130214-2efx7#ixzz2KvLrCFJX">owes the Westpac bank $209,000</a> on four credit cards and owes his family and friends, including his wife Viryan Collins Rubie, more than $1.5 million. He also says he owes company Iconic Properties, of which he was a director until late 2009, $8.7 million.
Among his few assets which still remain is $10,000 worth of sporting memorabilia, currently in the possession of his ex-wife Le Neve, along with life insurance and trauma policies worth $18 million issued by ANZ subsidiary OnePath.
His self-managed Butterfly superannuation fund also holds $213,916.
Gone alongside his multimillion dollar properties are his four Harley Davidsons and a Honda CRV.
ABC Learning Centres was first listed in March 2001 and by mid-December 2006 the company was valued at $3.4 million after its share price hit its peak of $8.62, putting his personal fortune at around $300 million.
Groves was quoted as saying in 2008 the pressure for a company to grow was immense.
"There is an enormous amount of pressure that the public market can put on a company to continue to grow.
"Even though you tell yourself not to fall into that trap, it's very difficult not to, because the share price continues to grow, the returns were continuing to grow, and people want you to maintain that pace," he said.
The reasons for the company's downfall were numerous, including aggressive expansion, poor financial account management and a lack of thorough management.
Take a look back at <a target="_blank" href="https://www.smartcompany.com.au/finance/five-lessons-from-the-spectacular-fall-of-eddy-groves">what small businesses can learn</a> from Groves.
This article originally appeared on <a href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>.</body></html>

Eddy Groves left homeless, bankrupt and owing millions

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Analysts are growing more confident of a sustained recovery in the property market following yet another strong weekend of auction clearance rates, with over two-thirds of residential properties selling at auction in Melbourne and Sydney.
However, some warn the market will need to keep its momentum after the Easter break later this month.
The Real Estate Institute of Victoria reported 69% of the 884 properties on the market sold, down from 72% last week, but up 8% from this time last year.
In Sydney, the number of properties for sale was increasing, with 22% more properties listed than in the corresponding period last year. There were 455 auctions in Sydney, compared to 374 this time last year, according to Australian Property Monitors' figures.
The clearance rate was at 69.3% for the 455 properties auctioned. Last week, <a href="https://www.smartcompany.com.au/property/054339-auctions-record-highest-results-in-two-years-as-buyers-sellers-respond-to-interest-rate-cuts">74.2% of properties sold</a>, Australian Property Monitors reported.
AMP senior economist Andrew Wilson told SmartCompany it was a "solid result" for the Sydney and Melbourne markets.
"Although the clearance numbers are down a bit on last week, they are still significantly higher than a year ago. Melbourne listing numbers are also down slightly, but some very high numbers are coming through in the next few weeks with Labour Day and Easter holidays coming up, numbers in the 1100-1200 range," he says.
Wilson was enthusiastic about Sydney's jump in residential property listings, but says the Sydney market has always been weaker than Melbourne's.
"Both markets are operating at levels closer to numbers of the boom period in 2010. Confidence builds its own momentum and it's off and running, but the full picture will be revealed come Easter," he says.
Wilson says while it's still early days, there is a momentum building fuelled by renewed confidence.
"While it's still perhaps early days, with three full weeks of auction activity there is a sense of momentum building in the market and there is a consistency about the numbers," he says.
"Both Melbourne and Sydney are moving in the one direction, indicating there is an underlying driving force. Low interest rates are generally fuelling both housing markets.
SQM managing director Louis Christopher says increasing market confidence is influenced by global factors.
"The positive housing market is driven by very low interest rates and renewed confidence in the local and domestic economy, created by the rise in stock markets and banks around the world," he says.
Notable auctions over the weekend included the sale of fashion designer Alannah Hill's Toorak Road home in Melbourne, which sold at auction for $4.365 million.
The most expensive house sold in Melbourne over the weekend was located on Domain Street, South Yarra and went for $6,450,000, according to the REIV.
Christopher says the results should not be taken as gospel as there are still a number of unreported auctions, but the positive results suggest a modest recovery in the market.
"2013 is looking increasingly positive and optimistic. We are quite positive and confident we will see real estate price increases throughout the course of the year, varied by city and locations but positive overall and we don't see the election influencing on the direction of the housing market," he says.
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"Solid" weekend auction results for Melbourne and Sydney

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With Chinese New Year lunar festivals well underway, the early economic winners from the festivities include the Australian tourism industry, hotel and luxury retail sectors.
Eighty thousand Asian tourists were expected to fly in for the festival, mainly from China and Hong Kong, an increase of 50% on the monthly average – and they’re spending more money than ever before.
Tourism Australia spokesman Leo Seaton told SmartCompany foreign visitors are spending more every year.
“Total trip spend by visitors from China surpassed the $4 billion mark on a 12-month ending basis, up 16% for year ending September 2012.”
“This is at the back of a strong 33% growth in holiday spending,” he says.
Chief executive of the Retail Doctor Group, Brian Walker, told SmartCompany Australian retailers need to be more aware of the growing market.
“There’s no doubt the capital markets of Sydney and Australia are increasingly prime destination for Asian consumers, we see areas of Sydney and Melbourne that are predominantly Asiatic.
“Retailers should be aware of products for this target market and consider training staff in second languages,” he says.
According to Tourism Australia, the <a href="https://www.smartcompany.com.au/business-travel/053687-record-tourist-numbers-arrive-as-australia-aims-for-rivers-of-visitors-from-asia">number of tourists</a> arriving each year for the festival has increased steadily over the past few years in line with overall increases from Chinese visitors.
The Australian Bureau of Statistics reported the number of Chinese visitors to Australia grew by 16% in 2012 to 626,000 people.
Seaton says it’s too early to predict the precise impact the festival will have on the tourism industry, but it is expected to give a “significant boost”.
“The Chinese love Australia. The Chinese New Year Lunar Festival is acknowledged to be a big boost to tourism and a number of airlines have added additional flights for the period,” he says.
China Southern Airlines has been running extra flights from China to Cairns this year to meet the demand and in the past flights have also been increased to Adelaide and Uluru.
A spokesperson for the City of Sydney, Keeley Irvin, told SmartCompany luxury retailers are also benefiting from the boom.
“Based on anecdotal feedback at this stage, luxury retailers are doing well. These tourists have a fair bit of money to burn and as part of tradition, people buy new clothes as part of the celebrations,” she said. 
President of the Haymarket Chamber of Commerce, Brad Chan, says the weekend saw more visitors of both Australian and Chinese descent to the popular Sydney CBD precinct.
“Generally speaking the weekend just past has been busy for the Haymarket area. Australians like to venture into town to celebrate with their families and enjoy the festivities and the Asian tourists, even though they’re on holiday, like the familiarity.
“Most of the restaurants have stayed quite full, but retail in general is also doing quite well,” he says.
Chan says he expects the area will remain busy for the next few weeks and there has been steady growth in attendance at the celebrations over the past decade.
“Over the past five to 10 years we’ve seen a steady improvement in the Chinese New Year celebrations in Sydney and this has been partly driven by the City of Sydney who have invested a lot of time and money in these celebrations,” he says.
Hotel company Accor – which owns hotels such as the Novotel, Quay West, Ibis and the Sofitel – has seen significant growth of nearly 20% in the number of Chinese guests staying at their hotel in the past year.
Accor expected significant numbers of Chinese visitors to continue to stay with them over the festival period. The company has been developing a strategy to better cater to Australia’s growing number of Asian tourists.
Accor now has welcome kits in Mandarin, as well as Chinese newspapers, television channels and electrical adaptors. They also train their staff in cultural differences.
The number of <a target="_blank" href="https://www.propertyobserver.com.au/trends/chinese-signal-property-buying-intentions-in-australia-as-permanent-arrivals-numbers-rise-and-visitor-numbers-jump-dramatically/2013020659187?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=news" rel="nofollow">Chinese visitors to Australia</a> has tripled in the past decade. China is now the fastest growing tourism market of visitors in Australia and the second largest overall.
 
This article originally appeared on<a target="_blank" href="https://www.smartcompany.com.au/index.php"> SmartCompany.</a>
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Australian hotel and retail sectors benefit from Chinese New Year celebrations 

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Bankruptcies are at their lowest level in 17 years, new quarterly figures reveal, but rather than signalling improving economic conditions, experts believe it's become harder for businesses to chase debtors.

The numbers released yesterday by the Insolvency and Trustee Service of Australia indicated the national number of new bankruptcies fell 13.9% to 4774 – the lowest number for the quarter since March 1996.
Total personal insolvencies also declined by 11.11% to 7214 compared with this time last year. The largest decline of personal insolvencies was in Tasmania, where 17.96% fewer people declared insolvency.
Insolvency experts offered varying opinions why the insolvency figures were reduced, with some believing the increase in court filing fees for creditors makes chasing debtors too expensive, and others believing the process of tracking down an individual person is too difficult.
Business recovery and insolvency lawyer with Lawler Draper and Dillon, Hugh Milne, said some lawyers are now recommending some creditors not pursue debtors because of the high court costs.
"I spoke to some other lawyers recently and there has been an increase in fees to wind up a company, which is proving to be an issue. People are now thinking twice about going to the next stage of the process," he says.
The <a href="https://www.fedcourt.gov.au/forms-and-fees/court-fees/fees" rel="nofollow">cost of Federal Court filing fees</a> increased from $1983 to $4375 for listed companies on January 1 this year.
McKean Park Lawyers insolvency lawyer David Brett said the process of chasing debtors has become more expensive, but said businesses also find it a challenge to locate individual debtors.
"The costs in the courts have increased, but not outrageously so. It's just getting harder and harder to track down individual debtors."
"You ring up an estate agent trying to find a forwarding address and you're unlikely to get it because people are afraid they're going to be sued," he says.
Brett says there is also a distinction between chasing a company and an individual over debts.
"You have to differentiate between a personal debtor and a company. In relation to an individual, there are a few more processes you need to go through and this makes the process quite costly.
"With a person, before you can start chasing them for debts you have to get a court order; whereas to wind up a company there just needs to be a debt of $2000."
"With a person, it needs to be a debt of $5000 and you need a court order," he says.
"I spoke to some other lawyers recently and there has been an increase in fees to wind up a company, which is proving to be an issue. People are now thinking twice about going to the next stage of the process," he says.
The <a href="https://www.fedcourt.gov.au/forms-and-fees/court-fees/fees" rel="nofollow">cost of Federal Court filing fees</a> increased from $1983 to $4375 for listed companies on January 1 this year.
This article originally appeared on <a href="https://www.smartcompany.com.au/" target="_blank" rel="nofollow">SmartCompany</a>.
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Bankruptcies down to 1996 levels: Insolvency and Trustee Service of Australia 

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A regional family-owned construction company in New South Wales responsible for redeveloping regional hospitals across Australia has collapsed, placing 180 jobs at risk.
On Monday afternoon, National Buildplan temporarily ceased work on its projects as administrators Martin Green and Peter Krejci of insolvency firm BRI Ferrier were appointed.
Initial investigations by the administrators have revealed many of the company's 50 active projects have been unprofitable, with four major projects taken on by National Buildplan resulting in substantial financial losses for the company.
A statement on National Buildplan's website says the company was placed in administration after "recent strategies to restructure the company and secure additional funding" were unsuccessful.
In an interview with ABC Radio yesterday, Krejci said the losses from the unprofitable projects are in the millions.
Krejci also said the company, which originally started in the regional New South Wales town of <a href="https://www.urban.com.au/property-observer" target="_blank">Armidale</a>, employs 180 people and so far 110 jobs will be lost.
He said 70 employees will stay on to "ensure we maximise the value we get for those contracts" already in existence.
He said the unprofitable projects caused the firm to seek extra funding from its bank, but the bank decided not to extend the funding.
In November last year, National Buildplan and Watpac Construction secured a $65 million contract to expand the <a href="https://www.urban.com.au/property-observer" target="_blank">Port Macquarie</a> Base Hospital.
The company also won an $8 million contract for works on the <a href="https://www.urban.com.au/property-observer" target="_blank">Dubbo</a> Base Hospital and has a variety of other projects across regional New South Wales, Western Australia and Queensland.
There have also been reports of the company owing sub-contractors thousands of dollars. Krejci said sub-contractors in government projects will likely receive their money.
"The good news for a lot of the sub-contractors are those contracts would need to be continued with and whether the government decides to continue with the company under administration or find another builder, my understanding is it's the government's policy to ensure a lot of these sub-contractors are paid," he says.
The past year has seen a <a href="https://www.smartcompany.com.au/construction-and-engineering/054290-construction-company-collapses-owing-18-million-as-insolvency-figures-show-industry-in-for-more-pain" target="_blank">high number of collapses</a> within the construction industry and, in late January, the NSW Government inquiry into the industry listed 44 recommendations in an attempt to curb insolvencies.
These recommendations included establishing a new regulatory body, requiring contractors to set up and administer project trust accounts and strengthening the security of payment legislation.
Fairfax Media has reported National Buildplan made $152.41 million in revenue last financial year, but only made a net profit of $1.09 million.
This article originally appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Jobs at risk following collapse of NSW construction company

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The controversy surrounding Gold Coast-based funds management firm LM Investment Management has continued, with administrators revealing the business lent its founder, Peter Drake, a loan worth $17 million.
The company has already been accused of <a href="https://www.smartcompany.com.au/financial-services-and-insurance/054792-queensland-fund-management-business-collapses-following-damning-four-corners-report" target="_blank">breaching Corporations Law</a> by ABC's Four Corners. The collapse has meant investors face <a target="_blank" href="https://www.propertyobserver.com.au/developments/irregularities-suspected-in-lmim-s-maddison-estate-mortgage-fund-reports/2013040160117?utm_source=po&amp;utm_medium=aida&amp;utm_campaign=latestnews">exposures worth more than $740 million in total</a>.
In its first report on the investment company, administrators from FTI Consulting said the firm had lent a total of $301 million to Drake and his companies, and had raised $740 million from retail investors. The loans were made from the LM Managed Performance Fund.
In total, LMIM loaned six parties millions of dollars, according to the report:
<ul>
<li>
Peter Drake – $17 million
</li>
<li>
LM Administration – $200,000
</li>
<li>
LM Capalaba – $18 million
</li>
<li>
Maddison Estate – $249 million
</li>
<li>
Australian International Investment Services – $15.7 million
</li>
<li>
Aalto Apartments – $1.7 million
</li>
</ul>
The administrators are currently reviewing all the loans, but say the most significant project under review is the Maddison Estate Development, which was lent $249 million. This was the main vehicle of the company's LM Managed Performance Fund.
An FTI Consulting spokesperson told SmartCompany investigations into the loans remain ongoing.
"There are various issues around the regulatory status of MPF [Managed Performance Fund] that have been raised by ASIC," the administrators say in the report.
"In particular, MPF has to date been operating as an unregulated fund outside of the Corporations Act."
The $740 million in LMIM assets is in the form of cash, foreign currency, direct real property, commercial loans secured by first or second mortgages and listed shares.
The company was founded by Drake in 1997 and on March 19 this year administrators John Park and Ginette Muller were appointed.
The first meeting of creditors was held yesterday afternoon in Broadbeach and the administrators announced they are seeking an extension of the standard 30-day period allowed before a second meeting.
Administrators told creditors they have petitioned for a 90-day extension due to complex company structures, as they need more time to complete their initial investigations.
The administrators also intend to apply to the Queensland Supreme Court on April 12 to take control of the LM Managed Performance Fund as its receivers, due to concerns over the legality of its operations.
This article originally appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Administrator investigates $17 million loan to LM Investment Management founder

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The property market is continuing to <a target="_blank" href="https://www.smartcompany.com.au/property/054444-hope-rises-for-property-market-on-yet-more-solid-auction-sales">grow in strength</a>, as Melbourne and Sydney recorded another weekend of positive results on the back of low interest rates and an improving economy.
Sydney recorded its fourth weekend of clearance rates above 70%, with 75% of the 450 houses up for grabs sold at auction on Saturday and Sunday, according to Australia Property Monitors figures.
Melbourne, the auction capital of Australia, also continued to perform well, with the Real Estate Institute of Victoria reporting a clearance rate of 69% for the 806 auctions listed.
APM senior economist Andrew Wilson told SmartCompany the prestige market in Sydney is just starting to respond after an extended slow period – and described the year so far as being "exceptional".
"Certainly the trend is consistent over the year so far, averaging about 70% for clearance rates, the highest since the beginning of 2010.
"Next weekend is one of the biggest weekends for auctions for the year and the scene is set for a very big day of sales if the current trend is upheld. There is no reason for the trend not to be, as the market appears to be strengthening," he says.
Over the weekend, APM reported seven properties selling in Sydney with values over $2 million.
The most expensive house sold at auction in Sydney, a four-bedroom home in <a target="_blank" href="https://www.urban.com.au/property-observer">Vaucluse</a>, went for $3.35 million, but it was beaten for the title of top auction result by a Lavender Bay property which went for $5.6 million following negotiations after it was passed in.
Wilson says, overall, Sydney's bayside and inner city suburbs continued to do best, with these areas having clearance rates of about 80% and the eastern suburbs having a rate of 89%.
Next weekend, over 700 properties are expected to be auctioned in Sydney. Over 1,200 auctions are expected in Melbourne, which the REIV says is likely to be the fifth highest on record.
Wilson says Melbourne, like Sydney, is seeing a greater spread of activity.
"Similar to Sydney, we're seeing a bit more of a spread. The middle ring, north eastern and eastern suburbs of Melbourne had clearance rates of around 70%.
"We're reasonably confident these trends will continue, with <a target="_blank" href="https://www.smartcompany.com.au/property/054665-low-interest-rates-strengthen-overall-property-market-but-resistance-remains-rba">low interest rates fuelling increased demand</a> and confidence in the market place," he says.
In Victoria, the REIV reports the total value of residential sales at auction is at $1.8 billion, compared to $1.5 billion this time last year. The value of private sales is also estimated to have risen from $3.9 billion to $4.5 billion.
Melbourne's top five sales were all above $2 million.
However, while the property market flourishes in Melbourne and Sydney, it continues to struggle in Canberra.
RP Data estimates sales of houses and units were down 20% on the five year average in 2012 and down 13% from 2011.
Wilson says the local economy has impacted the market in Canberra.
"I do believe the main driver in a smaller market like Canberra is what's happening in the local economy. A rise in unemployment and job losses in the public sector does trickle into the property market," he says.
This article originally appeared on <a target="_blank" href="https://www.smartcompany.com.au/index.php">SmartCompany</a>.
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Auction boom continues in Sydney and Melbourne

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The Westpac Index of Consumer Sentiment dropped by 5.1% in April, despite rises over the past two months and some recent positive economic news.
The move is a surprise, considering the <a href="/property-observer" target="_blank">Reserve Bank decided to keep interest rates on hold at 3%</a> during last week’s meeting.
Over the previous two months consumer sentiment had risen by 9.9% and while economists believed sentiment the momentum would have slowed, a fall of this nature wasn’t expected.
Westpac senior economist Matthew Hassan said there had previously been signs of a cyclical recovery in consumer sentiment.
“The drop of 5.1% was quite surprising. Economic factors such as retail sales and job numbers in the past month had been positive and there was also just a slightly better vibe,” he said.
“Clearly there were also negatives, but given how things were tracking in sectors like the property market, we didn’t think we’d see such a decline.”
Hassan said the result shows “consumers are fragile” and the ongoing recovery is “shaky”.
“There has been more speculation about the potential for interest rates to rise, if this is the case it indicates sentiment is influenced by interest rates, which is something the Reserve Bank should be aware of,” he says.
All five sub-indexes were also down. The outlook for family finances over the next year fell 0.2%, while the outlook for economic conditions over the next 12 months dropped 4.5%.
The outlook for conditions over the next five years dropped 8.3%.
The largest decreases in consumer sentiment were from households earning an income of between $40,000 and $60,000 and from those who are renting a property.
Consumer sentiment among people earning between $40,000 and $60,000 dropped by 17.3% this month. This income bracket is the only one to have recorded an overall decline in sentiment since this time last year.
Westpac chief economist Bill Evans said in a statement consumers could be concerned over a potential rise in interest rates, with the index tracking views on ‘time to buy a dwelling’ down 11.4%.
“Rising house prices can have a mixed impact on assessments on 'time to buy' with the potential for capital gains acting as a positive, but reduced affordability for potential first home buyers acting as a negative.”
“However, the sharp decline in April may be further evidence around the fragility of the consumer and its nervousness around any suggestions of rising interest rates,” Evans says.
The RBA is due to meet on May 7 and Evans does not expect there will be a change in interest rates – but there may be a move later this year.
“The Board retains an easing bias but the tone of various communications from the Board suggests it is comfortable to remain on hold. Westpac is forecasting that growth in the Australian economy in both 2013 and 2014 will be around 2.5%, well below potential of around 3.25%.
“With inflation firmly under control that suggests that there is a need for the economy to get more stimulus. Accordingly, we expect that rates will come down further in 2013,” Evans says.
This article originally appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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Yolanda Redrup

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