This is an edited version of a live discussion with Chief Economist at Nucleus Wealth, Leith van Onselen, who is also the co-founder of Macrobusiness. Given the raft of property related announceables from the politicians, will it make any difference, or are we set for a slow-down, or worse?
Original stream with live chat here: https://youtube.com/live/zRxdM8_o8JE
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
Digital Finance Analytics (DFA) Blog
DFA Live Q&A HD Replay: Can Property “Save” The Australian Economy? With Leith van Onselen
Earlier this week in my live show I discussed the current Misinformation and Disinformation Bill which is subject to Senate review. https://youtu.be/yIS1vJxvo6E which around 15,000 submissions.
This show is an edit of last Fridays Senate hearing, during which significant issues were exposed, including that of censorship, the fact the bill could be applied to individual creators, and other matters.
Bottom line is simply this bill must be defeated!
Full hearing here: https://youtu.be/1Ri3IgZW6Rk
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
The UK CPI read for September 2024 as reported by the Office of National Statistics came in at 1.7%, which was below the Bank of England’s 2% target, and lower than analysts had been expecting. The BOE had estimated at 2.1% back in August. On a monthly basis, CPI was little changed in September 2024, down from a rise of 0.5% in September 2023.
The largest downward contribution to the monthly change in the CPI annual rates came from transport, with larger negative contributions from air fares and motor fuels; the largest offsetting upward contribution came from food and non-alcoholic beverages.
Services inflation in particular fell significantly thanks to air fares and hotel accommodation being cheaper, coming in at 4.9% compared to the 5.2% read which was expected.
This all but locked a further rate cut from the Bank of England when the Monetary Policy Committee next meets. The September read is also used to set the uplift in benefits next spring.
The UK Pound slipped against the USD, while yields on both the 2-year and 10-year gilts moved lower.
Overall inflation may be down, for now, but the pace of food price increases rose for the first time since early last year while the costs associated with living in your own home grew at the fastest since 1992. For homeowners and those looking to get a mortgage, therefore, the prospects of lower interest rates will certainly be welcome. But the Bank of England will continue in cautious mode, as they expect inflation to pick up again in the months to come.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Last Tuesday in my live show about the latest from our surveys, we walked through our scenarios, for property prices over the next 3 years, by each state. I’ll recap that segment from the show, but before I do here is a screen grab from Sydney Auctioneer Tom Panos, who says “The Sydney Real Estate Market is in a price fall. It’s a great time to buy in the next few months”. Well, it’s certainly looking like a buyers’ market, but not sure I would rush in now. Even Albo switched from an auction to private treaty for the sale of his investment property in Dulwich Hill! As Tom Panos put it, “they are not going to get crazy bidding on the day”.
Real Estate.com published an article on the 12th October 2024 with the title “$75k down in 3 months” The inner-city hotspots in freefall. The article referred to Brisbane.
Pressure on households is leading to a fall in consumption and savings. Second, consumer confidence is in the gutter, and third business investment is flat, suggesting that we may see unemployment rising ahead. In the light of that, I will let you decide which of our three scenarios looks most likely to eventuate. Oh and of course the RBA seems to be holding firm on higher for longer interest rates as bond rates also move higher.
So the bottom line, it’s a time for extra caution, especially as more investment properties on a net cash flow basis are under water. But as always its important to go granular and get the local data as each market is different, and also do due diligence on a property if you do decided to make an offer, as capital appreciation might be limited at best for the foreseeable future.
I will be discussing this further on my Monday Rant with Property Insider Edwin Almeida, so look out for that show tomorrow.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
The Falls In Home Prices Are Accelerating: What Next?
In tonight’s show we emphasize the need to do real due diligence when considering property and listen in to a live call with an agent on this important topic. We also discuss the latest political debates around the property market, and Edwin’s tip of the week should spark some ideas!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
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.
This is our weekly market update, a data-packed show where we start in the US, cross to Europe and Asia and end in Australia, covering crypto and commodities along the way.
The wild ride on the markets continued this week, with the S&P 500 and the Dow scoring record closing highs on Friday, thanks to big boosts from financial stocks after banks reported strong quarterly results despite the fact the latest inflation data fueled expectations for a smaller U.S. Federal Reserve rate cut in November. Traders kept bets steady for a roughly 88% probability the Fed would cut rates by 25 basis points at its November meeting, and a 12% chance it will leave rates unchanged. A slower pace of interest rate cuts potentially presents pressure on Wall Street, given that U.S. stock valuations scaled record highs on expectations of a sharp reduction in rates.
Major financial companies kicked off earnings season with upbeat comments from their top executives that should further ease investor worries that elevated borrowing costs were weighing on consumers and pushing the economy to the cusp of a downturn.
The US reporting season will gather momentum over the next three weeks amid general optimism. Still, concerns persist that stock prices have risen too fast, that the labour market is weakening fast and investors are on alert for geopolitical and US presidential election shocks.
European stock markets traded marginally higher on Friday, as investors digested lackluster British growth data.
China’s highly anticipated announcement of financial stimulus plans on Saturday was big on intent but low on the measurable details that investors need to ratify their recent return to the world’s second-biggest stock market. Saturday’s news conference by Finance Minister Lan Foan reiterated Beijing’s broad plans to revive the ailing economy, with promises made on significant increases to government debt and support for consumers and the property sector.
The Australian share market edged lower on Friday as traders awaited further signs of direction in the global economy after evidence of weakness once again reared its head in the US.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
More Records Broken, As Markets Swing Positive, For Now…
When you are totally data dependent, as the FED is, noise in the incoming data is always going to be an issue, because signal and noise might not be aligned. There was a classic case yesterday as we got the latest read on the Consumer Price Index for the US from the Bureau of Labor Statistics.
Superficially at least, underlying US inflation rose more than forecast in September, representing a pause in the recent progress toward moderating price pressures, boosted by housing and food, which accounted for over 75% of the advance. Goods prices rose as well after reliably falling over the past year.
I have discussed before the disconnect between real lived experience of inflation and the official figures before, but if we break down inflation into its four main components, we find that it’s substantially all about services at this point. That’s been true for a while. Goods prices are deflating, but helped cause some of the disappointment because that’s happening less quickly than earlier in the year. In fact, food prices and air fares rose more than expected, even as shelter costs eased. That would make continued jumbo interest rate cuts difficult.
While the great spike in price rises that came the year after the pandemic has run its course, what remains is grinding down the services inflation that followed the rest, and that tends to be driven by wages.
So whether the CPI data is really signalling a slowing in reductions to inflation is questionable, but it does suggest the FED might be reluctant to go 50 basis points next meeting. And actually, the latest bond pricing suggests markets are also changing tack.
When all you have is data dependence, expect more volatility as the data or noise shifts around.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Poor Kiwi’s have been hit by some of the highest interest rates in the western world, thanks to the aggressive OCR hikes from their Central Bank, as high migration stoked inflation, but still saw a recession. Then the RBNZ turns turtle and started to cut rates, as migration started to fall, along with home prices, and now they have another rate cut to contend with, as the economy remains weak, and international factors could push inflation higher again.
All up New Zealand’s economy has stalled, unemployment is rising and house prices are falling as the prolonged period of high borrowing costs curbs demand. Economists say inflation is now slowing rapidly, and some have warned it may undershoot the 2% midpoint of the RBNZ’s 1-3% target range. It’s a mess, and an object lesson in the impacts of long and variable lags.
This week, New Zealand’s central bank cut interest rates by half a percentage point, stepping up the pace of easing as policymakers become more concerned about the economic slowdown.
The Reserve Bank’s Monetary Policy Committee lowered the Official Cash Rate to 4.75% from 5.25% Wednesday in Wellington. It is the RBNZ’s second straight reduction after it began its easing cycle with a quarter-point cut in August. The decision was a policy review, which is not accompanied by fresh economic forecasts or a press conference.
ASB’s inflation forecast suggests a risk that inflation undershoots the 2% midpoint of the 1% – 3% inflation target. The fallout of aggressive monetary policy will stay with Kiwi’s for a long time. And the road remains bumpy at best. No wonder the number of New Zealand citizens leaving is up significantly!
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
Too Late! Kiwis Get Another Large Rate Cut, With More To Come...
The RBA after the September monetary policy meeting suggested that the official cash rate would remain on hold for the foreseeable future, noting that the underlying inflation rate of 3.9% over the year to the June quarter “is still some way above the midpoint of the 2%–3% target range”.
The RBA has started to talk about scenarios, and this was reemphasised in the minutes of the meeting which was released Tuesday. As well as their current stance, the Minutes considered two scenarios that would justify financial conditions needing to be less restrictive than currently:
(i) if the economy proved to be significantly weaker than expected and this placed more downward pressure on underlying inflation than expected (due to higher household savings and/or if the labour market weakened more sharply than forecast); or
(ii) if inflation proved less persistent than assumed, even without weaker-than-expected activity.
So that begs the question, is the RBA about to pivot?
Well, CBA’s Gareth Aird who has been consistently forecasting rate cuts sooner for months now, than most of the other bank economists (I wonder why) suggests that We believe the introduction of these two scenarios that would justify less restrictive financial conditions provide an insight into the Board’s reaction function that could see the RBA commence an easing cycle this calendar year (in line with our base case).
Deputy Governor Andrew Hauser speaking at an event hosted by the Walkley Foundation said that despite the September minutes removing the line that “it was unlikely that the cash rate target would be reduced in the short term” the Bank had not change its tune arguing that its meeting minutes were not a particularly dovish message. The minutes also showed that board members discussed scenarios whereby interest rates risked remaining higher for longer or could be tightened further, conferring further pain on borrowers. It all boils back to the demand supply problem in the economy, where if demand remained stronger (perhaps thanks to tax cuts or government handouts – that’s my side-note) or stronger than expected performance of the jobs market. In this case the cash rate might need to be noticeably higher than the market path underpinning the August forecasts.
So bottom line, the RBA minutes does not change the game on quick rate cuts, and we must continue to wrestle with higher for longer.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
This is an edited version of a live discussion about findings from my household surveys as we look at the financial impact of recent changes in tax, government support and costs. How are households coping, and where are the pressure points?
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts
Please consider supporting our work via Patreon: https://www.patreon.com/DigitalFinanceAnalytics
Digital Finance Analytics (DFA) Blog
DFA Live Q&A: Maxed Out - Latest Household And Post Code Analysis
