Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
This is my edit of my monthly economic discussion with Nuggets News.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
One stunning chart which I keep coming back to is the change in income and home prices overtime. It shows simply that housing is becoming more and more unaffordable. We also know that more households have bigger mortgages and so are heavily exposed to higher rates, and that many will still have mortgages well into retirement. Our debt ratios are some of the most extreme across the world, as I have been reporting for years. Great for banks, as they reap interest payments, bad for society. In fact, I believe we are at the point where the drawbridge is being pulled up making it harder than ever to get on to the property ladder or stay there.
Few policies are more harmful to young Australians seeking a place to live than forcing them to compete for housing with hundreds of thousands of new migrants each year.
Future Australians will have to make do with cramped shoebox homes owned by corporations and landlords.
Essentially, the property ownership drawbridge is being progressively raised – but this is by design, not accident. I hope post the voice, Albo and Co will get serious about correcting their mistakes, but frankly I am not holding my breath.
http://www.martinnorth.com/
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Today’s post is brought to you by Ribbon Property Consultants.
This is an edited version of a live discussion with Cameron who republished his book from 2017 Game of Mates: How favours bleed the nation as Rigged “How Networks Of Powerful Mates Rip Off Everyday Australians”.
This book will open your eyes to how Australia really works. It’s not good news, but you need to know it.’ – Ross Gittins
‘You’ll be shocked at how far the Mates have their hand in your pocket.’ – Nicholas Gruen
Australia has become one of the most unequal societies in the Western world, when just a generation ago it was one of the most equal. This is the story of how networks of Mates have come to dominate business and government, robbing ordinary Australians.
Every hour you work, thirty minutes of it goes to line the Mates’ pockets rather than your own. Mates in big corporations, industry groups, government departments, the halls of parliament and the media skew the system to suit each other. Corporations dodge taxes, so you pay more. You pay more for your house and higher interest rates on your mortgage, more for your medicines and transport, and more for your children’s education and insurance, because the Mates take a cut.
Rigged uncovers the pattern of political favours, grey gifts and information-sharing that has been allowed to build up over two decades. Drawing on extensive economic research, it exposes the Game of Mates as nothing less than cronyism on a grand scale across Australia and how we have fallen behind other countries in combating it.
https://www.bigw.com.au/product/rigged-by-cameron-murray-and-paul-frijters/p/235646
We also discuss housing policy and economics in general.
Dr Cameron K. Murray was a Research Fellow in the Henry Halloran Trust at the University of Sydney and an economist specialising in property and urban development, environmental economics, rent-seeking and corruption. Professor Paul Frijters teaches at the London School of Economics and was previously Professor of Health Economics at the University of Queensland. He is now an independent economist.
Go to the Walk The World Universe at https://walktheworld.com.au/
The latest edition with our property insider Edwin Almeida. We look at the latest “plans” to boost housing, celebrate a 60th anniversary, dissect the latest numbers, and explore why investor property is not working for so many investors as they chose to sell.
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.
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.
In my stress surveys I have been calling out the pressures on renters and property investors, especially in the Centre of Melbourne and other inner-city areas across the country. The math is obvious. Despite rental increases, there is a limit on how much property investors can lift them, as renters are under pressure already. And property investors are also faced with significantly higher interest charges and other costs, to the point that the proportion of investors making cash flow positive returns has dropped to an all time low. Given that capital appreciation, the only other growth lever, is at best anemic, and in some cases non-existent, and the fact that you can now get 5 per cent of more on other investments, including term deposits and bonds, investors are continuing to bail. Inner City apartments are on the front line, as listings grow.
The AFR picked this topic up in an recent article, saying low capital gains and the large increase in holding costs are prompting more residential property investors to bail out of inner Melbourne and Sydney markets, data from CoreLogic shows.
The portion of investor-owned listings has ballooned to 60 per cent across Melbourne city over the three months to the September quarter, up from 56.7 per cent from the previous quarter and a sharp jump from the 50.9 per cent share a year ago.
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.
US stocks mostly finished lower on Friday as tech shares fell and volatility surged, despite earnings from three major banks – JPMorgan, Wells Fargo and Citigroup helping to offset some of the negative sentiment.
Morgan Stanley’s Mike Wilson sees a rebound in earnings in the latter half of 2024 but for now, his message to investors is stick to the stock picker’s playbook as things are going to get worse before they get better.
The downward slide in US equities after the market peaked in July is set to continue with the catalysts for more declines already in place, according to the prominent equity bear who was ranked No. 1 in last year’s Institutional Investor survey after correctly predicting the 2022 stocks sell-off. His year-end target for the S&P 500 Index implies about a 10 per cent drop from the current level.
Oil on the other hand was more than 5 per cent higher, with WTI at 87.69 a barrel as concerns about the conflict between Israel and Hamas widening to include Iran flared. Some economists now estimate oil prices could soar to $US150 a barrel and global growth drop to 1.7 per cent — a recession that takes about $US1 trillion off world output if the conflict between Israel and Hamas widens to include Iran. Brent crude surged 7.5% in the week since the conflict began, posting its highest weekly gain since February, and was last at 90.94. All very inflationary.
Meantime gold surged more than 3 per cent back with the Gold contract above $US1900 an ounce to 1945.90 and the volatility index was more than 20 per cent higher at one point. The VIX was 15.8 per cent higher to 19.32 at the end of trade. The yield on the US 10-year note slid 8 basis points to 4.61 per cent in New York.
“This may be the most dangerous time the world has seen in decades,” JPMorgan boss Jamie Dimon said in a statement with the firm’s third-quarter results.
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Wall Street’s main indexes closed lower on Thursday after a U.S. Treasury auction sent bond yields higher while investors were already digesting data that showed consumer prices rose more than anticipated in September.
After the data, the S&P 500 spent the morning zig-zagging between red and green. It turned decisively lower after a 1 p.m. EDT (1700 GMT) auction of 30-year U.S. Treasuries met weak demand.
US consumer prices advanced at a brisk pace for a second month, reinforcing the Federal Reserve’s intent to keep interest rates high and bring down inflation. Expectations ahead of Thursday’s publication of consumer price index numbers for September were for a continued clear reduction that would eliminate the last concerns that the Federal Reserve would be forced to raise interest rates once more. In the event, the market responded as though it had received a nasty shock, with bond yields surging higher while stocks sold off. An imminent Fed hike still looks unlikely — but evidently, many in the markets were hoping for any such chance to be extinguished.
The number was dominated by housing costs. Shelter inflation, on a year-on-year basis, is still above 7%. The clearest reason for disquietcomes from the “supercore” measure that Fed Chair Jerome Powell has emphasized in recent months — services excluding shelter. This category is heavily led by wage inflation, as labor is a large share of costs for such businesses.
Sentiment reversed after the 30-year Treasury auction, which drew weak demand and weighed heavily on the broader market sentiment. Swap contracts linked to future interest-rate decisions pushed the odds of another quarter-point hike back to about 50%, up from about 30% as recently as Wednesday.
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.
Growing difficulty entering the housing market has led to the most first home buyers tapping into the federal government’s Home Guarantee Scheme since its inception four years ago, according to the National Housing Finance and Investment Corporation.
The scheme, which offers three types of guarantees, allows first home buyers to purchase a home with a minimum deposit of 5 per cent to avoid paying mortgage lenders’ insurance. The remaining amount for a 20 per cent deposit – which is required to be exempt from paying the insurance – is guaranteed by the federal government.
The number of first home buyers who used the scheme increased to 45,000 for the 2023 financial year, according to the NFHIC’s fourth annual trend and insights report.
The increase meant almost one in three first home buyers needed access to the scheme to enter the housing market, which is an increase from one in seven in the year prior.
Arrears under the scheme meanwhile have remained at less than 0.1 per cent, which is less than the market average for high LVR (loan-to-value ratio) lending. But the growing cost of living meant the scheme’s arrears were expected to rise in line with the broader home loan market, NHFIC warned.
http://www.martinnorth.com/
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Today I want to dissect some the latest data from New Zealand. In summary, inflation and costs of living continue to bite, more households are in financial distress, inward migration is at a record high, but the property market remains in the doldrums. Worth thinking about ahead of the general election at the weekend.
http://www.martinnorth.com/
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The Reserve Bank of Australia’s (RBA) Assistant Governor (Financial Markets), Christopher Kent, gave an Address to Bloomberg on Wednesday where he expressed why the RBA is reluctant to lift the official cash rate further.
https://www.rba.gov.au/speeches/2023/sp-ag-2023-10-11.html
The RBA is in its “third phase” of monetary policy tightening as it assesses the impact of interest-rate rises to date, he said. The current stage is “an opportunity to see how the economy and how the data is evolving,’’ he said, reiterating that further rate increases may still be needed.
Much of the presentation concerned the lags as monetary policy takes effect. Basically, the RBA expects further impacts on the economy as the lagged effects of the 4.0% of monetary tightening delivered over the past 18 months flows through.
A ‘built in’ monetary tightening in Australia is one reason why the RBA is reluctant to lift the official cash rate further. Australia’s monetary system will tighten on its own as more pandemic era fixed rate mortgages reset from rates of around 2% to variable rates of more than 6%.
But that means those with big mortgages are being worst hit, while others are still enjoying their savings buffers and will continue to spend.
And the question will be, whether the current settings will crush inflation, or whether more rate hikes are needed. As I discussed the other day, there are significant pressures on the RBA to lift further, and some economists are expecting another one or two hikes into 2024.
Either way, there is little rate relief on the horizon for the next year plus.
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.
