Broken City!

Home builders are falling off the perch at an alarming rate with high rates of insolvency among construction firms, many of whom were homebuilders, to 3,000 in the past year. While many of these were small firms, we are still seeing a spate of larger firms going under. We are encountering more people in our 1:1 discussions with people coping with half built projects, no builder to take over the work, rising costs and blown out completion dates. No wonder people prefer to buying existing property.

The latest quarterly data on the value of construction work done also fell by 0.1% over Q2 to be 2.9% lower year-on-year.

More broadly, The Albanese Government is a complete mess on housing with the three bills that comprise its $32bn Housing for Australia plan blocked in the senate. These include The Help to Buy shares equity scheme. The Housing Future Fund equity investment vehicle to build just 13,000 houses per year. And the Build to Rent legislation which is designed to assist corporate to get tax breaks to build and then rent units, probably at higher than market rents. After all they are designed to make profits for those investing corporates and superfunds.

Prime Minister Anthony Albanese has threatened to use the Senate’s obstruction of Help to Buy as a trigger for a double dissolution election. Welcome to that time of the political cycle where we find ourselves burrowing into the election date speculation rabbit hole.

The real fix of course is to cut immigration significantly, as this would ease the rental shortage and lower rental inflation; which in turn would take pressure off the RBA to hold rates higher for longer enabling builders to clear the huge backlog of approvals and easing pressure on households. And on that front, Moody’s says that Australian mortgage delinquency rates, which increased over the June quarter, will continue to rise moderately over the rest of this year as high interest rates and sticky inflation put financial stress on households.

Standing back, the policy errors made by the current government are literally hitting home, and with the prospect of more political tricks on all sides of politics, the real impact on people will continue. They should be held to account for their mistakes.

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.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Broken City!
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DFA Live Q&A HD Replay: Tony Locantro: In A Time Of Financial Crisis

This is an edited version of a live discussion with Investment Manager Tony Locantro, as we kick over the current issues facing markets and households. Tony offers several financial services, such as investment management, financial planning, stock selection and fundraising. Tony has helped countless investors and organisations with strategic investment strategies over the last two decades.

His understanding of market psychology has ensured valued investment strategies in bull and bear markets. Because of his ability to understand the small cap market space, Tony has been featured in dozens of well known publications across Australia, such as Small Caps, Sky Business, Digital Finance Analytics, and many more.

Original stream and chat here: https://youtube.com/live/t8AcR69APfM

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.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
DFA Live Q&A HD Replay: Tony Locantro: In A Time Of Financial Crisis
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Its Edwin’s Monday Evening Property Rant! – An Albo Special!

In this weeks edition property insider Edwin Almeida looks around Albo’s investment property which is on the market to highlight some important issues around building inspections, plus we discuss the Misinformation Bill while we still can and also look at a horrid case of underquoting.

Truth is, whether you are a vendor looking to sell, or a buyer wanting to buy, it is vital to do due diligence on the way through. Not doing so can cost thousands!

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.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Its Edwin's Monday Evening Property Rant! - An Albo Special!
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Look Who’s Wealthy Now!

One of the factors I see in my household surveys is wealth transfer from one generation to another, stoked by the paper wealth created by the massive upswing in home prices. We see more first-time buyers being assisted by the Bank of Grandparents, alongside the Bank of Mum and Dad. This means there is a historic wealth transfer is under way in Australia, for those fortunate enough to have parents or grandparents with assets, tough on those with none of those onramps to property and wealth. With a large chunk of that wealth stored in residential property assets, the shift is already reshaping property market activity, and will intensify in the years to come.

In my surveys I encounter a theme quite often, households who cannot get into the property market while their friends and colleagues seem able to do so. So how come some can and some cannot?

Well, it could be that others are simply just better at saving. Hustling. Investing. Negotiating salary. The second: they’ve got a loan of cash injection from the Bank of Mum and Dad or Grandparents (though often its not clear whether they will have to pay it back. And third, they are a beneficiary of the great intergenerational wealth transfer.

Demographic research firm McCrindle just published a report and they say Baby Boomers are passing on an estimated $6.2 trillion of capital to their children and grandchildren.

Since 2013, the percentage of 25 to 34-year-olds who think that Australia is a land of economic opportunity, where hard work brings a better life, has fallen from 80 per cent to 51 per cent. The same trend was observed across all age groups.

“Belief in the fair go … appears to be declining. We estimate that overall agreement that Australia is a land of economic opportunity has declined by 16 percentage points since 2013,” the researchers found.

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

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Look Who’s Wealthy Now!
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Will The FED Stoke Inflation And Drive An Even Greater Wedge Between Rich And Poor?

This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, whilst covering commodities and crypto on the way. I do this to keep track of what is going on in today’s complex markets, so expect lots of data not superficial waffle. You have been warned. If that’s not for you, then look elsewhere for more cute cats!

We are, it seems, at the pointy end of the FED’s decision to cut rates when they meet next week as US shares rallied on renewed expectations that they could opt for a half percentage point cut. Futures have it as 50/50 for a half or quarter point cut, but everyone is now expecting the first of several ahead.

While the renewed hopes for a bigger cut were boosting large cap indexes on Friday the optimism seemed most evident in the Russell 2000 small cap index (RUT), which rose 2.5% on the day and 4.4% for the week. Smaller companies are more sensitive to rate changes as they depend more on borrowed money and floating rate loans.

The Dow Jones Industrial Average rose 0.72%, to 41,393.78, the S&P 500 gained 0.54%, to 5,626.02 and is just 1% shy of its July record while the Nasdaq Composite gained 0.65%, to 17,681.55. The potential for a large rate cut helped drive utilities, materials and industrials higher. Twenty-four of the Dow’s 30 components were higher; Techs mostly lagged.

All three major U.S. benchmark indexes ended close to roughly two-week highs and logged solid weekly gains. For the week the S&P 500 rose 4.02% and the Nasdaq climbed 5.95%, with both marking their biggest weekly percentage gains since early November. The Dow added 2.60% for the week.

European stocks rounded off the week on a positive note, supported by technology, real estate and mining shares, while investors shifted their focus to the U.S. Federal Reserve ahead of a long-awaited monetary easing at its meeting next week. Technology and real estate gave the market its biggest boost, followed by miners that advanced 1.3%, as copper prices hit a two-week high on buying ahead of a Chinese holiday and amid stimulus hopes.

Australian shares extended gains on Friday, but stopped short of a closing high as a drag in banks offset a strong push in mining stocks as commodity prices rose. The benchmark S&P/ASX 200 ended up 0.3 per cent to 8099.9, bringing weekly gains to 1.1 per cent.

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

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Will The FED Stoke Inflation And Drive An Even Greater Wedge Between Rich And Poor?
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Listen, You Can Hear Home Prices Falling!

The mythology that home prices always rise has been busted before, because the high-level indices which are the fixation of the media, ignore the real variations, at a granular level.

The latest data from Corelogic shows that at the aggregate level there were small falls in Canberra, Darwin, Hobart, and Melbourne, while there were stronger rises in Brisbane, Adelaide and Perth (especially Perth) and a small rise in Sydney.

But now, the people at Corelogic who release one of the main indicators of prices included in their Housing Chart Pack, the September ‘Chart of the Month’ which takes a granular look at value falls over the three months to August from a quarterly study of 3,655 suburbs across the country and found that house prices in almost one-third (29.2 per cent) had fallen. In comparison, in the three months to August last year prices had dropped in 17.2 per cent of suburbs. They say that Melbourne (79.1%) and regional Victorian suburbs (73.8%) made up the majority of falls over the quarter. Values also decreased across more than half of the suburbs in Hobart (54.3%), Darwin (51.2%), and Canberra (51.6%), while all suburbs in Perth saw values rise over the quarter.

The company said declines were becoming more common as high interest rates as well as cost of living and affordability challenges continued.

So, what’s ahead then? Well of course this depends on the trajectory of interest rates, remembering that the current higher rates have depressed the typical borrowing capacity of the first-time buyer by as much as 40% from just a couple of years back. Inflation in Australia remains significantly higher than in many other countries, so the RBA is sticking to its view there will be no rate cuts anytime soon.

To try and highlight the potential sensitivities of interest rates, we run three scenarios, and look three years out, to illustrate the sensitivities across units and houses by state.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Listen, You Can Hear Home Prices Falling!
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Controlled! Shut Up, Say Nothing: Obey….

Well now we have next bit of the controlling infrastructure being put in place to control free speech, and perhaps even what we think! The Orwellian nightmare with severe consequences for freedom of expression is being rolled out for all to see.

I have already talked about the dystopian future being drip fed on society, with the removal of cash so financial transactions can be monitored, the introduction of a non-mandatory but effectively mandatory of a digital ID, and of course there is the move to restrict youngsters access to socials.

But now we have the next piece of the puzzle, as Today in Canberra, Minister Rowland tabled the Labour Government’s latest version of the “Combatting Misinformation and Disinformation Bill”.

This bill defines ‘serious harm’ as:
(a) harm to the operation or integrity of a Commonwealth, State, Territory or local government electoral or referendum process; or
(b) harm to public health in Australia, including to the efficacy of preventative health measures in Australia; or
(c) vilification of a group in Australian society distinguished by race, religion, sex, sexual orientation, gender identity, intersex status, disability, nationality or national or ethnic origin, or vilification of an individual because of a belief that the individual is a member of such a group; or
(d) intentionally inflicted physical injury to an individual in Australia; or
(e) imminent:
(i) damage to critical infrastructure; or
(ii) disruption of emergency services; in Australia; or
(f) imminent harm to the Australian economy, including harm to public confidence in the banking system or financial markets; that has:
(g) significant and far-reaching consequences for the Australian community or a segment of the Australian community; or
(h) severe consequences for an individual in Australia
If the platforms do not silence the above content, they could be slapped with a range of penalties, including a maximum fine of 5 per cent of their global revenue. That’s a very big stick which will undoubtedly result in algorithms which silence a large amount of factual content.

Frankly, in the light of this, my ability to analyse and yes criticise Government Policy, Monetary Policy or even economic analysis more generally could be caught in the draconian umbrella. Even reporting on financial pressures on households could be caught. My voice would be silenced online and the government talking points would continue to spread unchallenged.

Then just add the Central Bank Digital Currency into the mix, the total control by Government is complete. This is anti-democratic nonsense and needs to be stopped. Before its too late, if its not already!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Controlled! Shut Up, Say Nothing: Obey….
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Latest CPI Data Says Services Inflation Is Still Riling!

On Wednesday the BLS released the latest US inflation data and top line, it appears the post-pandemic spike in U.S. inflation eased further last month as year-over-year price increases reached a three-year low. However, while the spike in goods, food and energy prices is over, services inflation remains uncomfortably high.

Core prices rose 3.2% in August from a year ago, the same as in July. And on a month-to-month basis, core prices rose 0.3%, a slight pickup from July’s 0.2% increase. Core of course is closely watched by economists as it typically provides a better read of future inflation trends.

But it is important to look at the elements which flowed into the headline cpi. For example, a key reason for last month’s drop in overall inflation was the third drop in gas prices in the past four months: Average gas prices fell 0.6% from July to August and are down 10.6% from a year ago.

Importantly, the tick-up in core inflation from July to August reflected an acceleration in housing costs and some spikes in the prices of air fares and hotel rooms. Shelter highlights another serious issue — the high level of “sticky” inflation for services and commodities whose prices take a long time to change. Including shelter, this measure, calculated by the Atlanta Fed, remains above 4%. If shelter is ignored, it’s below 3%, making it far easier for the Fed to start easing!

But the big question now is whether we are in a pre-recession period in the US. Markets continue to expect big cuts ahead and bond yields are responding accordingly.

For Australia, where inflation is higher, and rates are unlikely to change this year from the current 4.35%, the economy will be buffeted by weaker demand from China, and rate cuts in other places. Which once again highlights the dilemma we are in thanks to poor monetary and fiscal policy in recent times. And again, the neutral rate does appear to be higher now, so we should not expect rates to miraculously slide towards zero. We are now in a higher rate for ever environment.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Latest CPI Data Says Services Inflation Is Still Riling!
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Solve The Housing Crisis By Building Smaller, Darker, Higher Homes?

Housing affordability is one of the biggest pressures facing the Australian community and the Government has committed to building 1.2 million new, quote well-located homes across Australia by mid-2029. This is all but impossible, on current trends, and of course housing pressures have been exacerbated by super-high migration.

The NSW Productivity and Equality Commission just released a report: Review of housing supply challenges and policy options for New South Wales.

In summary, New South Wales needs to build 377,000 homes by mid-2029 under its housing targets. The Productivity and Equality Commission recommends Higher-density zones around train stations would double in size and extend further into Sydney’s eastern suburbs and north shore. They are recommending design standards be relaxed to allow the construction of smaller apartments without access to parking, storage or direct sunlight. They say government spending priorities would shift from infrastructure projects like new metros and motorways, to projects that support rapid housing supply. And there would be more migration opportunities for construction workers, to address a critical skills shortage.

Even then I suspect targets wont be met. But to me, by not talking about the demand side of the equation – driven by too high migration they are missing the elephant in the room. As a result, they are proposing we build higher, smaller darker homes – as high-rise living is forced more widely on the population. This risks further degrading the standards of living for many. True while some may be willing to pay less to get anything to live in, the trade-off and compromises are enormous.

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.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Solve The Housing Crisis By Building Smaller, Darker, Higher Homes?
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DFA Live Q&A Replay: Stressed: A Deep Dive Into The Latest Household Data

This is an edited version of a live discussion about the findings from our surveys and models as we look at the latest in mortgage, rental, investor and overall financial stress across Australia. We will have our post code engine online so you can suggest specific post codes to examine.

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.

Please consider supporting our work via Patreon: https://www.patreon.com/DigitalFinanceAnalytics

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
DFA Live Q&A Replay: Stressed: A Deep Dive Into The Latest Household Data
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