Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
In our latest rant Edwin and I tease apart the news surrounding the budget “announcables” relating to housing, discuss the rise of the “distressed sale” and examine how the WeChat Chatters are calling out Victoria as a place to exit.
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Today’s post is brought to you by Ribbon Property Consultants.
The Budget on Tuesday evening comes at an interesting time in the life of the current Government, as well as for ordinary Australians.
With a year or so to go before the next election which must be held by May 2025 at the latest. (or sooner perhaps if Albo sees a window of opportunity) this would normally be a give-away budget to set the scene. Except that with inflation still strong and being driven by local factors such as wages growth and energy costs, as well as high housing costs thanks to very strong migration, the headroom is limited, at best.
The Announcables so far, which have continued through the weekend, are portraying it as a responsible budget aimed at containing inflation, supporting housing, and quote good for women.
Charlmers said this week his goal was to chart “the responsible middle course between those who want us to slash and burn in the budget, and those who think that it should be some kind of free-for-all of spending”.
Others less charitable might say it will contain a wadge of announcables, which sound good, but which are not tackling the real long term issues Australia faces.
Remarkably it seems further tax payer funds will flow to the construction sector. While the Governments goal of 1.2 million well-located homes built in five years starts on 1 July, remember just 12,850 homes were approved for construction in January. This seems a gulf which needs way more than announcables and political party tricks.
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Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
Housing affordability is shot, as we have been discussing, thanks to demand stoked by high migration, higher lending multiples as the financial system was deregulation, and higher interest rates mirroring the RBA’s battel to tame inflation. As a result first time buyers are delaying their purchase by several years, and more borrowers are leveraged up to the gills, despite first home grant schemes, and shared equity schemes, which as the Productivity Commission showed did help a few get into the market, but lifted prices for everyone else, so did not help structurally.
Australians are already among the highest carriers of household debt in the world. In fact, according to Domain’s 2024 First Home Buyer Report, an entry-price home in Melbourne costs $678,000. In Sydney, it jumps to $927,250. Looking outside the two major cities reduces the cost to $545,000. To be lucky enough to secure any of these options, a 20 per cent deposit will set you back between $109,000 and $185,000.
So where do prospective buyers get that sort of cash? Well some might be able to get help from the Family Bank, as I showed recently, the average is more than $106,000 now, great if you have wealthy parents. Others may be able to save, but it’s a long road, and whilst interest rates are higher than they have been for some time on deposits, it will take years, and longer still if rates are cut later. Then of course there is the old chestnut, use accumulated super.
This week we got a draft report from the parliamentary committee chaired by prominent superannuation critic Andrew Bragg which has upped the ante on the Coalition’s super for housing policy, suggesting first home buyers should be able to withdraw all their retirement savings to buy a house or use it as collateral to help borrow.
My view is that this is actually a proxy political war on the purpose and nature of superannuation, rather than a real honest discussion about how to fix the broken property market. It is in essence a mixture of misdirection – look over there, not here, and avoid the more critical issues of migration control and increased and better-quality supply of affordable housing. Or in other words, it’s a case of fiddling while Rome burns, again.
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Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
According to a recent report, Australian capital cities are becoming more segregated along socioeconomic lines. And the trend is worst in Sydney. Inequality is rising.
The Conversation published: Our cities are widening the divide between the well-off and the rest. How can we turn this damaging trend around? Written by three researchers from the University of Sydney.
They talked about the so called “latte line”, the infamous, invisible boundary that divides Sydney between the more affluent north-east and the south-west. Historically, people north of the line enjoy better access to jobs and education, and can capitalise on rising property wealth. This has reinforced economic inequality.
Sydney emerged as the most segregated and unequal of the five cities. The latte line is getting stronger. Other cities also showed rising inequality.
Bad policy is creating a more and more unequal society. The traditional idea of Australia as an egalitarian society is dying. The property market is the problem, but Governments are ignoring the consequences, and focussing on “announcables” as we discussed yesterday. We need to do better!
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Go to the Walk The World Universe at https://walktheworld.com.au/
Those following my regular Property Rants with Edwin will know we have been speculating that there would be budget measures announced next week to help property developers. Well, they could not wait it seems…
The 600,000 plus migrants arriving in Australia this past year are continuing to put more pressure on the housing sector, and helps to explain the fact that rising rents, interest rate hikes and surging living costs in the past few years have inflamed what was already among the world’s least affordable housing rental markets, where record numbers of people can no longer afford to buy after a surge in house prices.
In fact, the federal government wants to find tens of thousands of workers to help build new homes in an attempt to address Australia’s ongoing housing crisis, reacting to pressure from the Construction sector, which already employs about 1.35 million workers across the country.
Of course, the logical step would be to right size migration to match the capacity to build new homes, which with a following wind might be around 150,000 each year. That should be core Government Policy. But no.
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Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
This is our latest weekly market update.
Another wild week on the markets, driven by conflicting data, and a reactive FED, who has effectively given up on forward guidance, and who does not know where rates will go. But despite Powell’s protests to the contrary, some are suggesting Central Bankers are being swayed by political considerations from driving rates higher to quash inflation.
Apart from more strong big tech results this week, two events shaped the week. It started with fears of higher rates and inflation, driven by hot economic data, but turned after the FED held rates, and ruled out rate hikes, waiting for more data. Stubbornly high readings on inflation this year pushed Federal Reserve Chair Jerome Powell to say on Wednesday that it will likely take “longer than previously expected” to get enough confidence about inflation to cut interest rates.
But then in a “bad news is good news” swing, the Friday jobs report came is softer than expected in April, a sign that persistently high interest rates may be starting to take a bigger toll on the world’s largest economy.
In Australia the benchmark S&P/ASX 200 rose 0.55 per cent, to 7629 points to finish the week 0.7 per cent higher. The central bank on Tuesday is widely expected to keep the cash rate at a 12-year high of 4.35 per cent, but it may also reintroduce a soft tightening bias following last week’s hotter-than-expected inflation report.
But aT the end of another volatile and rudderless week, markets remain on edge, waiting for the next big shiny bit of news – of course big players benefit from these changes in sentiment, but ordinary investors will be perhaps rightly more cautious. Expect more rapid changes in trajectory in the weeks ahead, as data will continue to confuse. Meantime, the credibility of Central Bankers continues in my eyes to diminish, even as more ordinary households are being crushed. And more on that subject in my live stream on Tuesday.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Once upon a time, in a land down under, there was a Government who promised to build 1.2 million homes, over five years, or 240,000 per year or 60,000 homes per quarter. And he huffed and he puffed, but despite everything, the best he could manage, at least in the year to March 2024 was 162,600, homes approved, around 77,000 fewer than the Albanese government’s target and the lowest level since March 2013.
Dwelling construction has collapsed to at least decade-lows at the same time as population growth has surged by a record 660,000.
The only way to solve Australia’s housing shortage is to reduce net overseas migration to historical levels of less than 120,000 per year. Net overseas migration must be lowered below the nation’s ability to build housing and infrastructure.
If we did that, we could move from Albo’s fairy tales, to something more realistic, despite the reality that new construction will continue to grind lower, while existing projects are taking ever longer to complete.
It is truly a fine mess, created by at least 20 years of bad policy, but Albo is chief fairy on top of the tree. Time for mass policy change. Otherwise, population demand will forever exceed supply. And many ordinary Australians will be left out in the cold.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
We had important releases from Stats NZ and The New Zealand Central Bank, which combined highlights a weird and unsettling cognitive dissonance. It was perhaps a matter of perspective, because the focus was on the financial system, not individual households, but given the economy is so strongly connected to what households and businesses do, the stability report appeared unanchored from reality, especially given the prospects of higher rates for longer.
And many of the themes we look at here, are relevant to other economies, including Australia too.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
In this weeks rumble, we deep dive into property auctions, which will make agents cry, and also look at the smoke and mirrors in the media. Plus Dusty and Evan wreck Edwin’s studio, as well as discussing some eating advice!
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.
This is our latest weekly market update, starting in the US, UK, then Europe, Asia and Australia, and also covering Gold. Oil and Crypto. A comprehensive round-up of what is happening!
We are, it seems entering the twilight zone, as the scent of stagflation is spreading, as inflation becomes increasingly sticky, especially in services, while growth slows, leading to increased market volatility and questionable consumer confidence. Hopes of rapid Fed rate cuts have receded following a series of U.S. inflation readings.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/