The value of new loan commitments for housing fell 4.4 per cent in June 2022 (seasonally adjusted) but remained at a historically elevated level of $31.0 billion, according to data released today from the Australian Bureau of Statistics (ABS).
The ABS said: “The value of new owner-occupier loan commitments fell 3.3 per cent in June 2022, while new investor loan commitments fell 6.3 per cent. These falls followed rises in May, attributed to a clearing of application processing backlogs by lenders.
Elsewhere the total number of dwellings approved fell 0.7 per cent in seasonally adjusted terms in June, following a 11.2 per cent rise in May, according to data released today by the Australian Bureau of Statistics (ABS).The ABS, said “the decrease in the total number of dwellings approved in June was driven by a fall in approvals for private sector dwellings excluding houses, which dropped 5.7 per cent.”
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My latest Monday evening chat with our property insider Edwin Almeida. We look at the latest from China, consider the rise in chickens at Edwin’s place, and reflect on the resignation of a Building Reform champion.
Plus the latest on the numbers, and a discussion on land banking. And you can play spot the pussy cat… somewhere through the show.
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Like it or not, we have been caught up in the global boom in gas prices, which have been driven by bad Government policy locally, and the Ukraine Russia conflict, with the latter using gas as a lever of coercion, reducing Nord Stream flows to 20% and forcing up the price of the commodity and for European countries to grab supplied at any cost from anywhere else.
Data from the Australia Energy Regulator highlights how much prices have risen, with prices significantly higher than a few years ago, based on $ per gigajoule. last week Natural-gas prices soared in European with the benchmark gas prices rising 12% to 198 euros per megawatt-hour.
There will be a very timely DFA Live show tomorrow night with David Llewlyn-Smith, the Chief Economist at Nucleus Wealth, where we are going to explore these issues and ask what can be done. There is, he says an answer which would reduce energy prices substantially across Australia, it just takes political will.
So today we look at the state of play and some of the levers which might be pulled. The ACCC has today released forecasts showing that the east coast of Australia could face a shortfall of 56 PJ in 2023. At the same time last year, their Gas Inquiry interim report found 2022 could face a 2PJ shortfall. “Our latest gas report finds that the outlook for the east coast gas market has significantly worsened. To protect energy security on the east coast we are recommending the Resources Minister initiate the first step of the Australian Domestic Gas Security Mechanism (ADGSM),” ACCC Chair Gina Cass-Gottlieb said. “We are also strongly encouraging LNG exporters to immediately increase their supply into the market.” The root cause problem is that much of the gas produced in Australia’s east coast is produced by companies that are also LNG exporters.
Thus, we are exposed to the worst of the global markets, as LNG (the liquified form of the Gas) is sold internationally. In fact, by value it recently became one of our biggest exports – especially to China. The ACCC’s report raises concerns about the high level of market concentration, noting that LNG exporters and associates had influence over almost 90 per cent of the proven and probable (2P) reserves in the east coast in 2021 through direct interests, joint ventures and exclusivity arrangements.
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This is a first take on the latest results from our models, which shows a further rise in mortgage and rental stress (defined in cash flow terms) across Australia. We examine the high-level results by state, segment and post code, and also present the latest stress heat maps, which highlight the growth of pressure in the newly developed zones across the country, as well as in some regional communities. Stress has risen thanks to rising costs of living, increasing mortgage and rents, while real incomes continue to fall.
We also include some suggestions as to how to manage stress. Call the National Debt Helpline on 1800 007 007 for free and confidential advice from professional financial counsellors. But be careful of those offering advice for a fee, it is big business, and many who are struggling are being conned.
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We unpick the “supply-side” problems which are often blamed for high home prices, and in the light of a recent report, find that Land Banking is a significant issue, as large players hold on to land parcels to exploit prices rises. This means you cannot solve affordability by changing planning rules! In addition, there is significant information asymmetry and financial players benefit from the current arrangements – while State and Federal Governments look the other way.
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In this week’s market review in what was a chaotic week, we look at how the financial markets reacted to bad news on inflation, and rising target rates from Central Banks, and solid earnings from tech megacaps which brought some solace to traders though worries about recession risk remain.
After Thursday’s data showed the U.S. economy contracted in the second quarter, stocks rose as traders bet rates would rise more slowly. But is this rally within a bear market or the start of a new bull market. I will give you a clue – hopium is driving things not logic.
But after a horrific first half, the S&P 500 had its best month since November 2020 and Nasdaq 100 had its strongest performance since April of that same year. But this could come to haunt the Federal Open Market Committee.
US financial conditions are looser than they were when Fed hiked in March. So the spike raises the question of when the rebound itself starts to work against the goal of draining bloat from the economy.
It’s an issue investors must weigh in calculating the recovery’s staying power. “Our view is that earnings for all equity classes likely will peak in 2022 and move lower as the economy weakens, revenue growth stalls and input costs remain elevated,” strategists with the Wells Fargo Investment Institute wrote in a note on Thursday.
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The truth is, Central Banks are caught – recession or kill inflation.
Meantime, the USD’s strength is strangling other economies.
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A quick update on the Fed moves overnight, as they lift by 75 basis points, with more to come. No, the US is not in recession Powell said, and there was a strong underlying economy, with high employment levels.
Hopium? We will see.
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The latest from the ABS on CPI to June 2022. Overall 6.1% but non-discretionary at 7.6%, so poor households are getting hit hardest. Some one-offs, especially in NSW helped lower the number too. We need monthly data and a better basis of calculation to avoid the Numberwang game!
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