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Friday, 22 May 2015

Holden redundancies

Jobs cut

The first Holden workers will be forced to take redundancy packages from the Adelaide plant this week.

Last month Holden called for 270 redundancies, but only 180 volunteers applied for the redundancy packages on offer.

The voluntary departures are also expected to take effect from today.

It is expected that further forced redundancies will be announced ahead of the closure of manufacturing operations by the end of 2017.

Elizabeth in Adelaide now has by a wide margin the highest capital city unemployment rate in the country at around 33 per cent. 

Manufacturing malaise

This forms part of a broader structural change as manufacturing jobs continue to be shed in aggregate.

This tends to be damaging to economies such as Adelaide which has traditionally had a strong manufacturing base.

Over the past four years, while Greater Sydney and Melbourne have added a combined total of more than 300,000 new jobs on a net basis, Adelaide has been stuck in reverse gear.

Cumulatively Adelaide has seen a net contraction in total employment over the same period of 5,660.


Adelaide property revival?

It's been a fairly dejected six years or so for most real estate markets in Adelaide, although the ABS series shows that median prices are now 14 per cent higher than they were at the end of 2008.

From a residential property market perspective owner-occupiers have been understandably reluctant to extend themselves given elevated levels of unemployment and ongoing uncertainty.

Despite record low borrowing rates, the number of owner-occupier loans written in South Australia March increased by only one.

On the other hand, there is some evidence that investors are tentatively seeking out bargains in South Australia, with a dearth of construction activity seeing vacancy rates tighten and a so-termed "landlords' market" returning.

Indeed, the latest round of Lending Finance data revealed investment loans written in South Australia spiking to a record high after a subdued few years.


Cooling measures

This investor revival may be short-lived, however, with a raft of new measures being implemented this week by lenders in order to pare back investor lending.

Certain banks will now require 20 per cent deposits for investment loans, while others will ratchet up their investment lending rates a notch to help scale back the surging growth of their investor mortgage books.

It seems unlikely at this stage that property markets will be dried up dramatically - after all, the economy wants and needs folk to borrow and spend (just ideally not in such a heavily skewed manner towards one asset class).

However, the regulator is keen to take the speculative edge off investment lending and we can expect this sector to calm somewhat in due course.