This is an edited version of a live discussion, with Robbie Barwick from the Australian Citizens Party as we look at the latest in the war on cash, and the current claims we are in a “pre-war” environment more generally. What, or who is driving the narrative and what does this say about our economic and social freedoms, and the way politics is played?
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!
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Against the backcloth of higher rates for longer, many of the Australian banks will provide trading updates over the next couple of weeks. As a group, they currently have the highest set of valuations seen for decades, but then, their earnings have held up relative to expectations. So what is ahead? And are all banks equal?
Some analysts are saying that although banks have flat to negative growth coming up for this year, from a capital management perspective, they’ve all got excess capital, so there will be more buybacks and special dividends to come. So the high valuations are just fine. But not everyone is convinced. Citi’s downgrades come a month after Macquarie told its clients to “underweight everything” in the banking sector.
But it’s worth highlighting that not all banks are created equal, because regional banks including Bendigo and Adelaide Bank, and Bank of Queensland are under the pump and look to be dying a slow death because of higher cost of funds compared with the big four banks, higher capital requirements, the upward pressure on costs from upgrading technology and lack of scale.
Treasury, the RBA and APRA need to ask themselves whether they are happy to ultimately have a financial services sector dominated by the big four banks and Macquarie. This is why a public bank, providing essential banking services to communities should be part of the solution, something which we hope will be tabled in the final report from the Senate looking in Regional Branch closures. As major banks leave smaller population centres without services, we need a valid alternative. We will discuss this again on Tuesdays live show at 8pm Sydney with Robbie Barwick.
Meantime, the larger players continue to buttress their profits, at the expense of ordinary Australians, and while the market like the high valuations, Australia INC is the poorer.
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Journalist Tarric Brooker and I discuss the latest data, as inflation reasserts itself, and higher for longer seems the play. We discuss the consequences for Australian households, and delve into the charts to understand what is really going on.
Here is the link to Tarric’s slides: https://avidcom.substack.com/p/dfa-chart-pack-26th-april-2024
Here is the link to the recent discussion with Leith van Onselen, which we mentioned in the show. Inside The Property Twilight Zone! https://youtu.be/OxA_G4Fqw5w
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The truth is that recent high rise construction in many Australian cities, are riddled with defects, and someone needs to pay for rectification. This surge in high-rise apartment construction happened as building certification was privatised, costs cut and poorly trained workers employed.
As a result, we have a litany of increased building flaws and quality concerns, such as cracked foundations, water leaks, balcony defects, and flammable cladding. According to the NSW Building Commission strata survey, more than half of newly registered buildings since 2016 had at least one significant issue that will cost an average of $331,829 to correct.
The Strata Community Association NSW found that waterproofing was the most common major issue, followed by fire safety. It also discovered that around one out of every ten buildings had structural and enclosure difficulties, such as roof or facade flaws.
Examples include Sydney’s Opal and Mascot Towers, which were evacuated due to extensive cracking.
Building regulation consultant Bronwyn Weir cautioned that an “enormous” problem had developed whereby “thousands and thousands of apartments have serious defects in their buildings”. “Some of these buildings could potentially be a write-off. We have what is now you know, a systemic failure that is quite difficult to unravel”, she said.
Engineer Leith Dawes warned that purchasing an off-the-plan apartment in Australia had degraded into a game of “Russian roulette” because of the numerous building faults that are frequently overlooked.
Similar structural problems have been uncovered across Melbourne, including leaking buildings, mould, and faulty balconies, Canberra, Gold Coast and many other areas too.
These problems have cost owners and taxpayers millions of dollars to rectify. But the problems are widespread, and many individual property owners are caught in the crossfire.
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Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Rate cuts anytime this year in Australia, are now hanging by a thread, given the latest inflation data came in hotter than expected, despite the annual rate falling thanks to base effects from months ago, and some changes in the weightings.
The upside surprise came via a smaller than expected fall in utilities, but stronger than expected increases in health, car prices and insurance. Sticky inflation has become a reality, leaving the RBA board’s decision last month to abandon its stated tightening bias looking premature. Most concerning for the RBA will be the surprising strength in trimmed mean inflation, its preferred measure of underlying price pressures, which rose 4%, also higher than forecast and well above the RBA’s 2-3% target.
The ABS reported that the Consumer Price Index (CPI) rose 1.0 per cent in the March quarter, higher than the 0.6 per cent rise in the December 2023 quarter. Annually, the CPI rose 3.6 per cent to the March 2024 quarter. While prices continued to rise for most goods and services, annual CPI inflation was down from 4.1 per cent last quarter and has fallen from the peak of 7.8 per cent in December 2022.
RBA governor Michele Bullock did warn there will be bumps on the journey back to target, and while one quarterly increase in underlying inflation does not mean disinflation is over it is an early warning sign that Australia could be going the way of the United States, where inflation is proving hard to tame. At very least this higher-than-expected result in the first three months of 2024, suggesting price pressures are proving stickier and bolstering the case for the central bank to hold interest rates at a 12-year high.
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This is an edited version of a live discussion, Adam Stokes, a crypto advocate in which we discussed the recent halving, and what may happen next.
Last weekend marked the highly anticipated Bitcoin halving event, which reduces the supply of new coins. While the short-term impact may be muted, long-term investors remain optimistic due to its historical correlation with price surges. But Bitcoin remains trapped within the consolidation phase that began in March. If a fresh wave of selling erupts due to global events, the critical support at $60,000 will be in focus.
Since last summer, Bitcoin has been heavily influenced by ETF inflows. Investors have placed more than $US12 billion into cryptocurrency exchange-traded funds listed in the United States in the last month alone. Initially, spot Bitcoin ETF anticipation drove the price. Later, the launch of such ETFs accelerated institutional buying, propelling Bitcoin to pre-halving highs. With institutions now holding a significant amount of Bitcoin, any slowdown in ETF sales could delay the halving’s positive impact.
The halving last weekend marked the fourth event of its kind since the first bitcoin was produced on January 3, 2009. Following the halving, the number of bitcoin being “minted” globally each day will drop from around 900 to 450. The price of bitcoin has generally risen after each previous halving event.
Despite tracking sideways for much of the last month, the price of the cryptocurrency is still up more than 50 per cent since the start of the year. That compares to a 5.6 per cent return from the S&P 500 index and -0.1 per cent return from the ASX 200 since January 1.
Once again, our Monday evening chat with property insider Edwin Almeida pulls apart the rubbish being spoken though official channels and gets to the heart of the issues facing property buyers, especially first time buyers.
You could not make this stuff up!!!
Apologies for glitches on the audio tonight, the connection to Edwin was steam powered as we discuss in the show!!!
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Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
The combination of high prices and interest rates is seeing affordability become extremely stretched at a time when cost-of-living pressures more generally are also constraining incomes, according to a recent Westpac Survey.
In response, would-be buyers are pushing the timing of their planned purchases back – less than 10% expect to transact in the next 6mths, the lowest share across all survey waves.
The prospective flow of first home buyers is showing the biggest response to these pressures, planned purchases down materially on last year. Just 2% of those surveyed expecting to become a first time owner in the next year.
Outside of the first home buyer space the story looks to relate more to the interest rate situation. Prospective investor buyers have pared back plans for the next six months.
And sales results for this weekend confirms the slowing market, despite some properties still exceeding reserves in some places. As reported in the AFR, the prospect of interest rates staying high has spooked many buyers, making them less likely to spend above their budgets.
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Today’s post is brought to you by Ribbon Property Consultants.
On Thursday Australia’s jobless rate rose to 3.8 per cent in March, which was broadly in line with the market’s expectations, and ahead of crucial March quarter inflation data due next Wednesday. The economy added 27,900 full-time roles and lost 34,500 part-time jobs in the month.
This very slight rise in the unemployment figure to 3.8 per cent last month showed February’s unexpected drop to 3.7 per cent was not an aberration after all. It’s further evidence of the continued strong state of the Australian labour market.
So, forget rate cuts for now, as this can only make it harder for the Reserve Bank to consider any start to rate cuts in the foreseeable future. Reserve Bank governor Michele Bullock’s mantra is that the path of interest rates will depend on the data. And this is one more data point indicating the resilience of the economy. Actually, despite record immigration, the employment-to-population ratio fell marginally in the month but is still at close to the historically high levels of last year.
This continues what I think is a really wonky series on employment, as I have discussed before. As in many economies, thanks to sample issues, and definitional issues they are hard to read. Indeed, Australia’s labor market report is a volatile series and both economists and policymakers tend to look through month-to-month fluctuations. So, Thursday’s data was widely anticipated following holiday season-affected readings since December. The ABS noted that employment flows have now returned “to a more usual pattern” after recent instability. The incoming and outgoing samples this time around were certainly a little less volatile. But I still take the results with a truck load of salt!
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