More from our Property Insider Edwin Almeida, as we make our predictions for 2024 and discuss the latest property trends.
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Wishing all our followers and supporters a happy 2024. We will be back with daily shows on finance and property, and we briefly touch on some of the items on our new year agenda.
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This is our annual review of the financial markets, and weekly update.
As we close out 2023, the analysts are talking about the great market rally in the year (perhaps conveniently forgetting the falls of 2022.) The S&P 500 slipped in the final session of 2023 to end the year up 24 per cent, but the two-year trip is back to where it started. The Dow Jones Industrial Average and the Nasdaq Composite both dipped on Friday but were 13.7% and 43.4% higher for the year, respectively, while MSCI’s world share index posted a 20% gain, its most in four years.
True, this year might go down as one of the most unusual ever in financial markets – mainly because everything seems to have come good despite a lot of turbulence and many predictions turning out to be wrong. And this against the backcloth of more regional conflicts, pressure on the consumer, and rising Government debt.
U.S. Treasuries finished the year broadly where they started after major swings for the benchmark in 2023. In the bond markets, just a few months ago investors were expecting the Fed & Co to raise rates and leave them there while recessions rolled in. Now bond markets are looking to central banks to embark on a rate-cutting spree with inflation apparently beaten.
Equity markets have gone up so quickly that they’re highly vulnerable to a pullback if the US economy slips into even a mild recession, according to Royal Bank of Canada’s fund management arm.
The greatest risk to the stock market in 2024 (bonds & metals) is the scaling down of market expectations for rate cuts as a result of renewed gains in inflation. Any credible and consistent signs of renewed inflation (not one-off bounces or base effects) would be punishing for markets. But even if you think the probability of such inflation rebound is minimal, there is always the typical volatility in a US presidential election year.
According to seasonality studies stretching to 1900, April and May tend to be challenging months during US election years, but October fares worst as far as consistency of selloffs.
A third risk is that of persistently swelling budget deficits and the ever-expanding amounts of new debt issues to refund existing deficits. This could easily ignite another “bond market event” similar to September 2019, March 2020, or September 2022 in the UK.
Regional conflicts might well proliferate, causing more market turmoil. And finally, next year won’t be quiet on the political front. There are more than 50 major elections scheduled next year, including in the United States, Taiwan, India, Mexico, Russia and probably Britain. That means countries that contribute 80% of world market cap and 60% of global GDP will be voting. Taiwan kicks it off with elections on January 13, followed just a few days later by the New Hampshire primary for the 2024 U.S. Presidential race.
And remember from just before that stock panic in late February 2020 to mid-April 2022, the Fed ballooned its balance sheet an absurd 115.6% in just 25.5 months for crazy-extreme monetary inflation! Other central banks did the same. That monetary base more than doubling in a couple years is the dominant reason inflation has raged in recent years. The FOMC finally realized how dangerous its extreme monetary excesses were in mid-2022 as reported inflation soared. So the Fed has shrunk its balance sheet 13.8% since then. Yet crazily over these past four years, that monetary base has still skyrocketed 85.4% thanks to the previous decade’s growth! Inflation therefore is still in the system, “This is an era of boom and bust,” BofA said. “We are not out of the woods.”
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In this show, we examine the main reasons why it is likely property prices will fall next year – this is a counterpoint to my earlier show which went through the Five reasons why they will rise – as trotted out by the property spruikers.
In summary, the risks from higher unemployment or a recession, the exit of property investors, higher delinquency and defaults, higher mortgage rates for longer, and dire housing affordability are all reasons why prices could fall in 2024.
And let’s be clear, the great Australian dream of owning a home is now totally out of reach, and many who were pulled into the market in recent years are in strife, to the point where rental costs have gone though the roof, and tent cities are becoming a thing. The very soul of Australia is decaying, unfortunately, that is unless you are fortunate enough to have family wealth or an existing property portfolio, which could now potentially fall in value.
Of course, the actual trajectory of home prices will vary across states, locations and types of property, and averages mask important differences. Which is why in our modelling we go granular – to a post code level, and also consider various scenarios based of the relative weightings of the positive drivers to prices we discussed yesterday, and the downward drivers we looked at today. So the answer is: it depends.
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In this show, I will explore 5 reasons why home prices in Australia could rise in 2024.
If you take, low supply, high demand, easing lending, Government support and RBA/APRA stability concerns, the potential for home prices, especially houses to rise in 2024 seems pretty strong.
But in my next show, I will look at the arguments on the other side of the coin, because as you may have guessed, there are also a series of coherent arguments as to why prices might go sideways or fall!
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News.com.au reported that a staggering 2,349 construction firms have collapsed in the past year – with fears more may fall soon.
A “perfect storm” of high interest rates, soaring material costs and an ongoing worker shortage across the Aussie industry have sent tradies into freefall.
Insolvencies in the construction industry have reached an annual record this year, according to fresh data published by the corporate regulator ASIC. The September quarter was the worst for the industry in 2023, where 785 construction businesses traded as insolvent. Just this month four building companies went bust in the first three days of the month.
And amid a chronic shortage of housing fuelled by Australia’s record overseas migration intake, the collapse of builders, contractors and subcontractors will not only have an immediate impact but could crimp future supply of new homes.
We look in more detail at the numbers…
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This is an edited version of a live Christmas discussion with Investment Manager Tony Locantro, as we reflect on the markets over the past year, and look ahead into 2024.
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.
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.
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Digital Finance Analytics (DFA) Blog
Markets Gyrate Into Christmas After A Two Year Round Trip!
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.
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!
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