The property downturn is expected to drag down the wider economy, fuelling predictions that interest rates will remain steady for much of this year, reports the SMH. Approvals for new houses have slumped to their lowest level in almost four years as the fallout from March’s interest rate hike sent the apartment market into freefall, reports The Australian.

But while some are hurting, others are gloating over the property puzzle, says Elizabeth Knight in the SMH. In the six months to March, St George Bank grew its home-loan book by a hefty 12%, though it admits the market is slowing – albeit at a seemingly gentle pace. On the other side of the property ledger, Mirvac had its share price slashed 12% yesterday after it told the market its 2005 earnings would be about $231 million compared with an expected $269 million.

St George Bank boss Gail Kelly has again failed to douse widespread speculation that she’s a contender for the CEO’s job at one of the nation’s Big Four banks – most likely at her former employer Commonwealth Bank, reports The Australian. Some of the best judges of CEO performance in Australia have evaluated all the major bank CEOs and found none of them is better than Kelly. She has reduced St George’s costs below all other banks and is generating strong revenue and customer loyalty – but it’s still too early to tell whether Kelly can be classed as one of Australia’s great bank chief executives, says Robert Gottliebsen in the Oz.

Meanwhile Alan Kohler in the Smage says the Future Fund could turn out to be Peter Costello’s greatest legacy – as long as he can keep sticky ministerial fingers out of it – but also, paradoxically, his greatest danger.

Alarmist commentators continue to speculate that output is about to stall due to a lack of skilled labour but what is happening is perfectly normal, says economic consultant Barry Hughes in the AFR. Surveys showing the biggest shortages of skilled labour in decades simply reflects that unemployment is at its lowest for decades, rather than spelling an imminent choking of growth.

On Wall Street, US stocks were mixed after the Federal Reserve omitted a key phrase on inflation from the statement accompanying its latest interest-rate decision – leaving investors uncertain about future interest-rate moves. Marketwatch has a full report here.

Peter Fray

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