Author: Martin North

Martin North is the Principal of Digital Finance Analytics

DFA Live Q&A HD Replay: Its Edwin’s Christmas Cracker…

This is an edited version of a live Christmas discussion with our property insider Edwin Almeida, as we reflected on the property market over the past year, and look ahead into 2024.

We covered underquoting, property price trends, auctions, service charges and granny flats as well as the risks from EV’s.

https://www.ribbonproperty.com.au/

Go to the Walk The World Universe at https://walktheworld.com.au/

A Death, A Legacy And A Quest…

On the 23rd December 2021 Gill, my wife of 28 years died as a result of exposure to Asbestos and the cruel disease of mesothelioma.

There are articles in a number of places, including The Daily Mail, about her story:

https://www.dailymail.co.uk/news/article-10341353/Husbands-farewell-Gillian-North-warned-home-renovators-died-asbestos-related-cancer.html

And her story is also told on the video I made, incorporating A Current Affair footage back in 2021.

In memory of her we continue to run Asbestos Awareness Australia, a charity Gill launched before her death, to help to raise awareness in the community of the scourge of asbestos, which still remains in about one home in three.

Home

It kills several thousand people each year and around 800 of which are from mesothelioma in Australia. In 2022, it is estimated that there were 761 deaths from mesothelioma in Australia.

So, the legacy of Gills death is our commitment to continue to raise awareness of this pernicious product, continue to lobby Government for better reforms – Gill published a series of research papers on just this point – available from the Asbestos Awareness Australia web site, and the Quest is to ensure that ordinary Australians are better aware of the risks stemming from Asbestos.

And while its good to know that engineered stone, which has caused problems for those working in that industry is to be banned, Asbestos is the elephant in the room still killing thousands each year, and it’s in one third of homes across the country. And no, it is not just multiple exposures, one exposure to a few fibres is sufficient, and even undisturbed asbestos continues to deteriorate over time, so there is no such thing as safe asbestos if its left in situ. And it can take years for the disease to show.

Think Asbestos!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Markets Gyrate Into Christmas After A Two Year Round Trip!

This is our weekly market update.

In the last trading day before the Christmas break, U.S. stocks gyrated to a mixed close on Friday having digested cooler-than-expected US inflation data which firmed bets for Federal Reserve interest rate cuts in the new year.
That said, all three indexes turned less decisive in light trading as the afternoon progressed, after an initial rally on data showing inflation is easing closer to the U.S. central bank’s target.

The Dow Jones Industrial Average fell 0.05%, to 37,385.97, the S&P 500 gained 0.17%, at 4,754.63 and the Nasdaq Composite added 0.19%, at 14,992.97. Small caps handily outperformed the broader market, with the Russell 2000 ending up 0.8%.

Of the 11 major sectors in the S&P 500, consumer discretionary was the sole loser, while consumer staples enjoyed the largest percentage gain.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

A Year Of Contradictions: With Tarric Brooker…

In our final Friday afternoon chat, for the year Journalist Tarric Brooker and I look back at 2023, with all its ups and downs, and consider the year ahead, which Schrödinger’s cat like could go down quite different paths.

And we look at the most burning question: When Could Australian Interest Rates Be Cut?

Tarric’s slides and articles is here: https://avidcom.substack.com/p/the-most-burning-question-answered.

Thanks to all those who follow and subscribe, and please like and share the show. We will be back in 2024 for more charts and chat.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Will Rising Household Wealth Drive Interest Rates Higher?

The ABS reported that Household wealth rose for the fourth straight quarter (+2.3 per cent or $339 billion) in the September quarter 2023. What you say, we are not feeling it!

The key of course is distribution across households, and the nexus is property values. The ABS says “Household wealth is supported by house prices which have continued to grow despite increases in interest rates” so that total household wealth was $15.3 trillion in the September quarter, which was 7.0 per cent ($998 billion) higher than a year ago. This was largely driven by residential land and dwellings, which contributed 1.7 percentage points to quarterly growth.

And the growth in household wealth was also supported by seasonal tax refunds coming in at the start of the financial year, with deposits increasing 3.4 per cent ($52.8 billion) over the September quarter.

Deposits into accessible transaction accounts (known as Transferrable Deposits) made up $24.4 billion of this increase, with most going into offset accounts. Another $26.1 billion was invested in high interest Non-Transferable Deposits, including term deposits.

So, if you are in the right cohorts, with savings, mortgage free houses, and other assets, you are doing well, whereas many others are simply not. If you are a renter, or mortgaged up to the gills your wealth could well be minimal, while debts are building. So actually, this a symptom of the building inequality in the system.

This puts the RBA in a tricky position. And in fact, while markets doubt the Reserve Bank of Australia will deliver any more rate rises, with current cash rate at 4.35%, the central bank warned on Tuesday it may need to deliver another cash rate increase if inflation remains too high.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

UK Inflation Surprises On The Downside…

Prices rose by 3.9% in the year to November, down from 4.6% in October according to data from the ONS today, driven by positive base effects mainly across oil products. Remember that falling inflation also does not mean most goods and services are cheaper, but rather prices are rising less quickly.

That rise compares to a more-than four-decade high rate above 11% reached last year. The last time inflation in the UK was lower than 3.9% was in September 2021 when it was 3.1%. Most economists had expected UK inflation to fall to 4.3% last month. As a result, UK inflation has fallen to its lowest level for more than two years, driven largely by a drop in fuel prices.
The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 4.2% in the 12 months to November 2023, down from 4.7% in October. On a monthly basis, CPIH fell by 0.1% in November 2023, compared with a rise of 0.4% in November 2022. Within that energy prices fell, but rent and council tax were higher.

Slowing price rises for food, including staples such as pasta, milk and butter, as well as for household goods were also behind the fall.

But while inflation, which is the rate prices rise at, is now well down from its peak in 2022, it is still almost double the Bank of England’s 2% target.

UK inflation remains higher than in other countries including the US and Germany but the gap is narrowing. The fall to 3.9% in November puts the UK on level footing with France, but ahead of the EU’s average rate of 3.1% and the US’s 2.1%.

The softer inflation data prompted Goldman Sachs to bring forward its expectation for the first BOE rate cut to May from June previously.

Ahead, of course the impact of potentially higher Oil prices thanks to the closure of the Suez Canal for some ships, which have driven oil prices higher, and the removal of Government support for higher power prices might turn the inflation gauge higher in the months ahead. So again, markets are ahead of themselves, it will be some time before inflation is approaching the 2% target.

Kiwi’s More Bullish On Home Prices, Despite…

Despite the recent recessionary news from New Zealand, low consumer confidence and high interest rates with floating rates around 8.63%, the latest ASB Housing Confidence survey shows that “for the first time in eighteen months, more New Zealanders expect house prices to increase than decrease”. Aucklanders continue to be the most bullish in their house price expectations with a net 39% anticipating prices will rise.

They say more bullish housing market sentiment is very much a New Zealand-wide story. All of the regions we survey are anticipating prices will rise by a net margin of 30-40%. While the housing demand/supply balance varies from region to region, other factors are likely to be driving prices higher – the likelihood mortgage rates are close to peaking and the prospect of a more stimulatory government policy regime – are national in scope.

They conclude, “With recent data generally showing prices no longer falling, Kiwis tend to think the housing market has reached a turning point” Despite this, There’s been little change in the net balance of Kiwis who think now is a good time to buy a house, with that figure unchanged at 6%. Still, that’s a far cry from the mood of the market over much of last year, where by a 20-30% margin, respondents felt it was a bad time to buy.

But the key to this expectation is the high migration flows.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

DFA Live Q&A HD Replay: Cameron Murray: Mates, Power, Politics & Economics

This is an edit of a live discussion with Dr Cameron K. Murray, an independent economist who publishes at Fresh Economic Thinking https://www.fresheconomicthinking.com/. We discussed housing policy and economics in general.

Here is the link to Cameron’s new book, out February 27th 2024 https://www.amazon.com.au/Great-Housing-Hijack-keeping-Australia/dp/176147085X

He recently republished his book from 2017 Game of Mates: How favours bleed the nation as Rigged “How Networks Of Powerful Mates Rip Off Everyday Australians”.

This book will open your eyes to how Australia really works. It’s not good news, but you need to know it.’ – Ross Gittins

‘You’ll be shocked at how far the Mates have their hand in your pocket.’ – Nicholas Gruen

Australia has become one of the most unequal societies in the Western world, when just a generation ago it was one of the most equal. This is the story of how networks of Mates have come to dominate business and government, robbing ordinary Australians.

Every hour you work, thirty minutes of it goes to line the Mates’ pockets rather than your own. Mates in big corporations, industry groups, government departments, the halls of parliament and the media skew the system to suit each other. Corporations dodge taxes, so you pay more. You pay more for your house and higher interest rates on your mortgage, more for your medicines and transport, and more for your children’s education and insurance, because the Mates take a cut.

Rigged uncovers the pattern of political favours, grey gifts and information-sharing that has been allowed to build up over two decades. Drawing on extensive economic research, it exposes the Game of Mates as nothing less than cronyism on a grand scale across Australia and how we have fallen behind other countries in combating it.

https://www.bigw.com.au/product/rigged-by-cameron-murray-and-paul-frijters/p/235646

Go to the Walk The World Universe at https://walktheworld.com.au/