Social Trends – Page 16 – Digital Finance Analytics (DFA) Blog

Retail Sales Scream Recessionary – If You Look Under The Hood!

We got the January 2024 retail data from the ABS today, and they reported that Australian retail turnover rose 1.1 per cent (seasonally adjusted) in January 2024. This follows a fall of 2.1 per cent in December 2023 and a rise of 1.5 per cent in November 2023.

Economists were divided on what to expect, with some looking for 1.5% monthly rebound, while others like Westpac were expected just a 0.3% rise.

The National Retail Association said the latest trade figures reveal the uphill struggle retailers face in 2024 if consumer sentiment remains low and trade continues to slow, despite Australia’s population boom. While data reveals that retail turnover has stalled, population growth and increasing costs of doing business show retail growth has actually fallen in real terms.

The ABS said “The rebound in January follows a sharp fall in December when consumers pulled back on spending after taking advantage of Black Friday sales in November. Retail turnover is now back at a similar level to September 2023.

But as Westpac notes, the pattern reflects difficulties the ABS is having adjusting for shift in seasonal patterns associated with the increasingly popular ‘Black Friday’ sales. Pinpointing these shifts is difficult and typically requires the accumulation of more months of observations. Volatility is progressively smoothed as this happens – notably today’s release again saw a softer profile through November (initially estimated as a 2% surge) and December (initially reported as a 2.7% drop).

However, this volatility has concealed a material slowing over the three months. On a 3mth basis, nominal retail sales growth has slowed to just 0.5%qtr, 1.4%yr, neither keeping pace with price inflation.

http://www.martinnorth.com/

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

Property: The Dark Truth Politicians Don’t Want To Hear!

The RBA minutes just out included a discussion about the case to raise the cash rate further. It centred on the observation that it would take some time for inflation to return to target and the labour market to full employment. Inflation was expected to take a further two years or so to return towards the midpoint of the target range under the central forecast. In the end, they held the cash rate target unchanged at 4.35 per cent, and the interest rate on Exchange Settlement balances unchanged at 4.25 per cent. But this is an important signal.

Yet the 13 RBA driven rate hikes have had a perverse impact on property. Since January last year, Australian property prices have been rising in many parts of the country, recouping almost all the losses incurred after the Reserve Bank of Australia began raising interest rates in 2022. They might be slowing a bit, now, but that was not meant to happen.

In fact, there is strong demand for property, buoyed both by increased population and a resurgence in demand from cashed-up older generations. Yet supply is not keeping up, and mortgage lending is tighter now for many as the costs of a mortgage rise. The signals are clear – we have a major crisis in housing. Renters are caught in the cross-fire, but purchasers are also in the firing line too.

Housing rapidly is becoming a lightning rod for a generation staring down the prospect of having next to no hope of buying a residence under their own steam. We may see ourselves as an egalitarian society with a universal education and health system that provides opportunities for anyone willing to have a go. Housing is broken, and politicians won’t tackle the real issues.
Could it be that the fact they are much more likely to own investment property stop them from acting, or is it the fact that this would require real action, not political spin?

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.

The Rental Market Is Broken…

In my latest surveys we showed that cash flow stress among households has risen to an all time high of 73.47% or more than 2.27 million households.

Mapping the Market data from CoreLogic shows the high proportion of areas where house rents have risen by 20% or more across Sydney, and Melbourne, those here, some areas especially to the east of the city did not follow suite. House rents in Brisbane showed more diversity, though central Brisbane saw consider considerable hikes. Adelaide and Perth also had many hot spot areas across house rentals, with some areas to the east of both CBD’s reporting slower growth rates over the past year.

That said, Canberra and Hobart bucked the trend with little or no growth – of course there are rents controls in the ACT which helps to moderate rents.

All this means that for many renters the ability to house themselves has become even more expensive, and this of course flows through into the inflation data with all rents – not just new rents running close to 10% annualised. It’s a real mess, and leading to real social consequences.

Then again, there are some winners as according to data from SQM Research residential landlords in some inner-city and middle ring suburbs pocketed up to $56,000 extra rental income in the past 12 months as rents hit record highs across the major capital cities.

A critical factor here is that some landlords, sitting on strong capital gains, are looking to crystalize their paper profits so have listed their rental property for sale, a trend we see most strongly in Melbourne, but it is spreading elsewhere. In addition, higher rents are not enough to cover the increased mortgage costs, even after negative gearing, so the supply on rental property is on the decline at a time when migration continues to run hot.

The Rental Market Is Broken but do those in political circles want to tackle this critical issue? Lip-service apart, I suspect not. So to that extent, Australia in broken too.

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.