Home Sellers Get Realistic in Australia; Mining Companies Going Bust in Record Numbers; Australia Headed for Disaster Zone
The prices of some Sunshine Coast properties have been slashed by a million dollars as owners look to shift homes that have been stewing on the market for up to four years.
A Sunshine Beach property that was on the market in 2008 for $2.6 million has been reduced to $1.595 million while a Cooroy property for sale for $3.15 million in 2009 has been discounted $1.155 million.
A list of the top 25 discounted properties from the SQM Research shows prices discounted between 24% and 40%.
The head of SQM Research, Louis Christopher, said the discounting was the result of vendors being forced to correct unrealistic price expectations.
"Many are not willing to accept where the buyers are at. They can't handle, psychologically, that this is what their property is worth," he said.
The discounting on the Sunshine Coast was not confined to any area or price range. SQM's list showed price cuts at beachside locations from Mooloolaba through to Noosa Heads and Rainbow Beach, and out to the hinterland villages of Mapleton, Cooroy and Imbil.
ONE of Europe's biggest banks today warned of the growing risk of recession in Australia in 2013, as prices for its key commodities such as iron ore and coal spiral lower.
The warning by Deutsche Bank comes amid rising concern that Australia's mining investment boom, which has insulated the commodity-rich economy from a global slowdown, is waning, leading to mine expansions being scaled back and mounting job losses.
Policy makers are "dangerously complacent" about the risk now arrayed against the $1.4 trillion economy, which relies heavily on prices paid for its biggest exports - iron ore, coal and gas - for its prosperity.
The assessment stands in stark contrast to the upbeat appraisal by the RBA, which earlier this month upwardly revised its forecast for economic growth in 2012 to 3.5 per cent, from 3 per cent.
The RBA today said it expected the mining investment boom to peak during 2013-14, but added the timing of the peak was uncertain.
Also today, corporate insolvencies hit a record high in the year to June 30, according to the Australian Securities and Investment Commission. Mining states are among the worst hit, it said.
"We see one of the mining boom states, Queensland, showing one of the most dramatic increases in corporate failures," ASIC said. "Western Australia's financial year company failure figure is also the highest on record for that state."
Iron ore prices have fallen to their lowest since late 2009 as steelmakers in Europe curtail purchases, forcing miners to sell their output in the congested Asian market.
Iron ore traders and brokers said Vale of Brazil, the world’s largest iron ore miner, was diverting part of the material usually identified for European steel mills into the Asian spot market at the precise moment Chinese consumption slows down, forming a glut.
Iron ore has been a cash-cow for the mining sector during the past five years and the current drop in prices is affecting substantially the profitability of blue-chip miners Vale and London-listed Rio Tinto, BHP Billiton and Anglo American.
Cost of Chinese steel has also plunged to levels last seen nearly three years ago, emphasising the depth of the slowdown in the world’s second-biggest economy.
Analysts at Nomura said they were “very concerned” that Chinese steel mills had increased production at the same time as prices fell and many of them had struggled to make a profit. “The recent collapse in steel and iron ore prices suggests to us that we have reached the point in the cycle where a major destock is required,” Nomura said. “If production is not cut voluntarily, imbalances will continue to build, increasing the risk of a large, involuntary cut in steel production.”
Last month the China Iron and Steel Association said domestic steelmakers saw profits plunge 96 per cent in the first half compared with a year ago, turning the industry into a “disaster zone”.