Housing affordability continues to fall, Qantas defends executive pay: Economy Roundup

Housing affordability has once again continued to worsen due to higher interest rates and the rolling back of government grants, according to new figures from the Housing Industry Association.

The HIA affordability index fell 3.3% during the September quarter, a larger fall than the 0.4% decline recorded during the previous quarter.

”The outlook for affordability is not a good one,” HIA senior economist Ben Phillips said in a statement. “Interest rates are on the way up, the first home buyers boost is being wound back, and progress in reducing the structural barriers to increasing new housing supply is slow.”

“If we don’t succeed in significantly lifting the level of new home building over the next few years then there is a very real risk that we will return to the woeful affordability levels of 2007 and 2008.”

The average monthly loan repayment for a typical first-home mortgage moved up to $2,087 during the quarter from $1,983, representing a 5.2% increase.

The Australian sharemarket has opened lower today following negative results in the US, where a string of corporate results have continued to bring stocks down.

The benchmark S&P/ASX200 index was up 2 points or 0.04% to 4840.6 at 12.00 AEST. The Australian dollar remained steady at US92c.

ANZ shares fell 0.2% to $23.80, while Commonwealth Bank shares gained 0.1% to $54.51. Westpac gained 0.8% to $26.57 as NAB lost 0.4% to $31.06.

Santos records 5% jump in quarterly output

Australian’s third-largest oil and gas company, Santos, has recorded a 5% jump in quarterly output and has maintained its production guidance for the 2009 financial year of between 53 and 56 million barrels.

Santos chief executive David Knox said in a statement that the company’s performance during the quarter has been satisfactory.

“The base business delivered a solid production performance in the September quarter which positions the company to meet its 2009 production guidance of between 53 and 56 million barrels of oil equivalent.”

Meanwhile, ports and roil operating company Asciano has said it is cautious about the rest of the year, and is still waiting for any signs of recovery.

“We are yet to see signs of a sustained underlying recovery, and continue to take a cautious view on the remainder of this financial year,” Asciano chief executive Mark Rowsthorn said in the September quarter operating update.

“Our businesses are clearly experiencing some limited benefits from the rebuilding of inventories following the significant ‘de-stocking’ process last year,” he said, but also warned that trading conditions are full of risk.

Qantas defends executive remuneration

Meanwhile, Qantas has defended the remuneration of its executives saying former chief executive Geoff Dixon’s $10.7 million salary package was justified. Referring to a $3 million payment to Dixon as compensation for the changes to superannuation tax rates, chairman Leigh Clifford said at the company’s AGM that the payments were appropriate.

“It certainly has received wide publicity,” Clifford said. “Geoff’s final termination payments were in accordance with a contract put in place years before and to ensure management continuity… He was a chief executive who, by any standards, had done a good job.”

In the US, stocks have fallen after a string of pessimistic corporate results including Boeing’s. Additionally, a warning from analysts to sell Wells Fargo shares prompted a sell-off in financial stocks. The Dow Jones Industrial Average fell 92.12 points or 0.92% to 9949.36.

Meanwhile in the US, sources have told Reuters that top executives at financial and auto companies that have been bailed out by the US Government will see their remuneration cut.

In an attempt to quash public outrage over the massive remuneration packages, salaries will be cut by an average 90%, according to the two sources. The plan is being led by US remuneration czar Kenneth Feinberg, who White House economic advisor Lawrence Summers said earlier this week would deliver a sound review.

“[Feinberg will] produce an outcome where they will be very substantially reduced,” Summers said.