APRA Warns Albanese On House Prices
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APRA Warns Albanese On House Prices

The regulatory body’s government briefing wary of a rapid shift in the economic outlook.

By Kanebridge News
Thu, Jul 28, 2022 1:49pmGrey Clock < 1 min

With further steep rate rises likely, and a number of over-leveraged households on the brnk of financial distress, property prices will fall according to the Autralian Prudential Regulation Authority’s briefing to the Federal government.

In its May brief, the agency that monitors the health of the banking system warned of a rapid shift in the economic outlook.

“Inflationary pressures and increases in interest rates will increase the cost of finance for business and housing,” the briefing said.

“More broadly, frequent natural disasters, increasing geopolitical tensions and cyber threats, and the lingering impact of COVID-19 are creating volatility in financial markets, increasing cost pressures for all industries and heightening risks in the financial system.”

The briefing also spoke of risks in the nation’s now $10 trillion housing market and said households had become increasingly leveraged due to years of historically low-interest rates.

The brief went on the describe the housing markets as “cyclical”, with interest rate increases placing vulnerable households in financial distress.

“The faster-than-expected emergence of inflationary pressures and a rising interest rate environment is likely to place some strain on household balance sheets and place a number of households in financial distress.”

Further, the body suggested the rate rise will impact housing prices stating: “More generally, high interest rates will reduce borrowing capacity, increasing the likelihood of a decline in Australian housing prices”.

However, the document was optimistic in its assessment of the Australian economy’s ability to handle the stress of both inflation and rising interest rates and is keen to closely monitor the lending standards ongoing.

”APRA will continue to actively monitor lending standards and evolving risks in housing markets and review its macroprudential response in consultation with [Council of Financial Regulators] agencies.”



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The Lifespan of Large Appliances Is Shrinking

Appliance technicians blame a push toward computerisation and an increase in the quantity of components inside a machine

By RACHEL WOLFE
Thu, Feb 22, 2024 4 min

Our refrigerators, washing machines and ovens can do more than ever, from producing symmetrical ice cubes to remotely preheating on your commute home. The downside to all these snazzy features is that the appliances are more prone to breaking.

Appliance technicians and others in the industry say there has been an increase in items in need of repair. Yelp users, for example, requested 58% more quotes from thousands of appliance repair businesses last month than they did in January 2022.

Those in the industry blame a push toward computerisation, an increase in the quantity of individual components and flimsier materials for undercutting reliability. They say even higher-end items aren’t as durable.

American households spent 43% more on home appliances in 2023 than they did in 2013, rising from an inflation-adjusted average of $390 to $558, according to Euromonitor International. Prices for the category declined 12% from the beginning of 2013 through the end of 2023, according to the Labor Department.

One reason for the discrepancy between spending and prices is a higher rate of replacement, say consumers, repair technicians and others. That’s left some people wishing they had held on to their clunky ’90s-era appliances and others bargaining with repair workers over intractable ice makers and dryers that run cold.

“We’re making things more complicated, they’re harder to fix and more expensive to fix,” says Aaron Gianni, the founder of do-it-yourself home-repair app Plunjr.

Horror stories

Sharon J. Swan spent nearly $7,000 on a Bosch gas range and smart refrigerator. She thought the appliances would last at least through whenever she decided to sell her Alexandria, Va., home and impress would-be buyers.

That was before the oven caught fire the first time she tried the broiler, leading to a 911 call and hasty return. The ice-maker in the refrigerator, meanwhile, is now broken for the third time in under two years. Bosch covered the first two fridge fixes, but she says she’s on her own for the latest repair, totalling $250, plus parts.

“I feel like I wasted my money,” says the 65-year-old consultant for trade associations.

A Bosch spokeswoman said in an emailed statement that the company has been responsive to Swan’s concerns and will continue to work with her to resolve ongoing issues. “Bosch appliances are designed and manufactured to meet the highest quality standards, and they are built to last,” she said.

Kevin and Kellene Dinino wish they had held on to their white dishwasher from the ’90s that was still working great.

The sleeker $800 GE stainless steel interior dishwasher they purchased sprang a hidden leak within three years, causing more than $35,000 worth of damage to their San Diego kitchen.

Home insurance covered the claim, which included replacing the hardwood down to the subfloor and all their bottom cabinetry, but kicked the Dininos off their policy. The family also went without access to their kitchen for months.

“This was a $60 pump that was broken. What the hell happened?” says Kevin, 45, who runs a financial public-relations firm.

A GE Appliances spokeswoman said the company takes appliance issues seriously and works quickly to resolve them with consumers.

Increased complexity

Peel back the plastic on a modern refrigerator or washing machine and you’ll see a smattering of sensors and switches that its 10-year-old counterpart lacks. These extra components help ensure the appliance is using only the energy and water it needs for the job at hand, technicians say. With more parts, however, more tends to go wrong more quickly, they say.

Mansoor Soomro, a professor at Teesside University, a technical college in Middlesbrough, England, says home appliances are breaking down more often. He says that manufacturers used to rely mostly on straightforward mechanical parts (think an on/off switch that triggers a single lever). In the past decade or so, they’ve transitioned to relying more on sophisticated electrical and computerised parts (say, a touch screen that displays a dozen different sensor-controlled wash options).

When a complicated machine fails, technicians say they have a much harder time figuring out what went wrong. Even if the technician does diagnose the problem, consumers are often left with repairs that exceed half the cost of replacement, rendering the machine totalled.

“In the majority of cases, I would say buying a new one makes more economic sense than repairing it,” says Soomro, who spent seven years working at Siemens , including in the home-appliances division.

These machines are also now more likely to be made with plastic and aluminium rather than steel, Soomro says. High-efficiency motors and compressors, too, are likely to be lighter-duty, since they’re tasked with drawing less energy .

A spokeswoman for the Association for Home Appliance Manufacturers says the industry has “enhanced the safety, energy efficiency, capacity and performance of appliances while adding features and maintaining affordability and durability for purchasers.” She says data last updated in 2019 shows that the average life of an appliance has “not substantially shifted over the past two decades.”

When simpler is better

Kathryn Ryan and Kevin Sullivan needed a new sensor to fix their recently purchased $1,566 GE Unitized Spacemaker washer-dryer. GE wasn’t able to fix the sensor for months, so the couple paid a local technician $300 to get the machine working.

The repairman also offered them a suggestion: Avoid the sensor option and stick to timed dries.

“You should be able to use whatever function you please on a brand new appliance, ideally,” says Sullivan, a 32-year-old musician in Burbank, Calif.

More features might seem glamorous, Frontdoor virtual appliance tech Jim Zaccone says, but fewer is usually better.

“Consumers are wising up to the failures that are happening and going, ‘Do I really need my oven to preheat while I’m at the grocery store?’” jokes Zaccone, who has been in the appliance-repair business for 21 years.

He just replaced his own dishwasher and says he bought one with “the least bells and whistles.” He also opted for a mass-market brand with cheap and readily available parts. Most surprisingly, he chose a bottom-of-the-line model.

“Spending a lot of money on something doesn’t guarantee you more reliability,” says Zaccone.

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