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This is an edited version of a live discussion with Leith van Onselen, Chief Economist at Nucleus Wealth, and co-founder of Macrobusiness. Leith has been leading the charge in highlighting how high migration is killing the property market. Tonight we look at the latest economic trends, and also will compare New Zealand with Australia.
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More from our property insider as we look at the divergence of the market in Sydney and Melbourne, the new state of origin quest between NSW and QLD, and how not to be bullied by agents desperate for a sale.
http://www.martinnorth.com/
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Today’s post is brought to you by Ribbon Property Consultants.
Recent property purchasers in New Zealand are more likely now to sell at a loss, according to property data company CoreLogic’s latest Pain and Gain Report.
The report found 7.4% of the residential properties sold across the entire country in the September quarter were sold for less than their owners paid for them. But in Auckland, where 11.3% of sales fetched prices below what owners had paid for them. Those least likely to make a loss were in Christchurch where the loss making rate was just 4.7% of total sales.
The proportion of loss making sales has increased rapidly since the beginning of 2021 and is now at its highest point since 2015.
The median size of the loss on properties sold for less than their purchase price was $45,000. However that would likely balloon out to $70,000 or more once selling expenses such as agent’s fees and legal expenses are added.
http://www.martinnorth.com/
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The ugly truth about inflation is households are having to pay more, to buy less.
We have seen this in a number of data points, the most recent is from the UK, where the Office of National Statistics just released their latest data for October. It revealed that UK retail sales fell unexpectedly, adding to the impression that a string of interest-rate hikes designed to beat down inflation is beginning to stymie economic activity.
This is an early indication that overall economic output will probably be weak in the fourth quarter.
Economists were expecting a rise of 0.4% for October. Instead, sales fell to their lowest since February 2021 when Covid restrictions were in place, with retailers citing the cost-of-living crisis and bad weather for the poor performance. It bodes ill for the “golden quarter,” the run-up to Christmas when stores can make a majority of their yearly profits.
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.
This is our weekly market update.
Here is the big question. Are U.S. stocks poised to continue their dramatic run, or is a pause ahead? That’s the question investors are asking as the S&P 500 heads into the close of the year with fresh highs possibly coming into view. A softer tone to U.S. economic data this week has fueled rate-cuts bets, pushing Treasury yields down and lifting equity markets. For the week, the S&P 500 added 2.2% while the Nasdaq composite rose 2.4% and the Dow climbed 1.9%.
This extended a rally that has seen the S&P 500 gain over 9% since late October. The index is now up nearly 18% for the year and less than 2% away from its year-high, reached in July. Its record closing level, from January 2022, is some 6% away.
Whether it can reach those levels in coming weeks depends in-part on how convinced investors are that the U.S. economy is on track for a so-called soft landing, where the Fed brings down inflation without badly damaging growth. So far, the economy has proven resilient in the face of tighter monetary policy, though some measures of employment and consumer demand have softened.
Leading global investors expect inflation and interest rates to remain high well into next year and are bracing for more volatile sharemarkets where easy returns will be hard to find.
Top fund managers, company founders and superannuation funds told the Sohn Hearts & Minds event at the Sydney Opera House on Friday that they were looking beyond big name, overpriced Wall Street stocks that would struggle to deliver growth.
Instead, investors willing to gamble on unloved and unpopular stocks would do best, they said. Many investors warn there is a huge insolvency risk lurking in private markets.
http://www.martinnorth.com/
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Time to act to save Australia from the Central Bankers’ Power grab. I discuss the impending legislation which would disable Parliament’s power to intervene on what the RBA does; with Robbie Barwick from the Australian Citizens Party.
We need to register our opposition to the bill which is being snuck in via the back-door of cross-party consensus. The very future of Australia as a democratic country is at stake. Call and email now!
Breaking news! Treasurer Jim Chalmers is preparing to introduce a bill to implement the RBA Review recommendations, including removing democratic accountability over the Reserve Bank, in two weeks – the last week of November.
Don’t let the major parties do a back-room deal to wave this bill through!
Help fight to protect the most important democratic protection in Australian law by calling and emailing three people immediately:
Tell them they have no right to repeal Section 11 of the RBA Act, which would give up the power of democratic accountability over the RBA and the banking system that political giants in history like John Curtin and Ben Chifley fought so hard to establish.
Robbie’s earlier video : https://youtu.be/EA7FhBZxfuM
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Australian employment came in much stronger than expected in October while the jobless rate edged higher as more people sought work, suggesting the RBA may have more to do to cool demand and inflation.
As Warren Hogan said: The RBA released updated economic forecasts less than a week ago which were finalised on 7 November – 9 days ago. They forecast employment growth in Dec 2023 of 2.5%. After todays labour force numbers they need employment to fall by 10k in each of November and December to achieve this. If you use quarter average YoY then you need an even bigger fall – something like a net fall of 50k in Nov/Dec. either way the economy keeps surprising on upside and their models will be screaming higher rates. It is their judgement and/or the board that is holding rates down.
On the other hand, a Sluggish increases in hours worked and declining job ads suggest that demand for workers is weakening along with the economy. Given record growth in the working-age population, something will have to give.
That said, Markets largely shrugged off the data. “Today’s figures don’t provide enough of a ‘smoking gun’ for a follow-up rate hike at the December board meeting and that seems to also be the market reaction,” said Diana Mousina, deputy chief economist at AMP Ltd.
“Another rate hike is still a possibility for February 2024 after the next round of quarterly inflation data, but we think the macroeconomic environment will be weaker” by then, she said.
New RBA Governor Michele Bullock recently described the labor market as “not as tight as it was,” noting that some leading indicators such as job vacancies have begun to ease from high levels.
But when you examine the data, we have more questions than answered, and as I discussed on my Tuesday live show, I wonder if the data as presented by the ABS really portrays the current state of employment. My surveys suggest that people are grabbing extra hours and jobs where they can, to help alleviate the costs of living, and of course with population growing thanks to high migration, we need at least 22,000 new jobs each month, just to stand still.
My best guess is the ABS is not picking up the huge immigration surge quickly enough. It is clear the labour market has dramatically loosened. As I say, something will have to give.
UK inflation tumbled to the lowest level in two years, prompting investors to firm up bets that the Bank of England will be able to cut rates as early as the Spring of next year.
Consumer prices rose 4.6% from a year earlier in October, down sharply from 6.7% in September and the slowest pace since 2021, the Office for National Statistics said Wednesday. The figures allowed Prime Minister Rishi Sunak to declare victory in his goal of cutting inflation in half in 2023.
“While it is welcome news that prices are no longer rising as quickly, we know many people are continuing to struggle,” Sunak said in a statement. “We must stay the course to continue to get inflation all the way back down to 2%.”
The drop was even sharper than the 4.7% reading economists had anticipated. It will strengthen expectations that the Bank of England is finished raising interest rates and refocus attention on a sharp slowdown in the economy.
http://www.martinnorth.com/
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Australian wages accelerated at the fastest pace in over 14 years in the three months through September and reached the Reserve Bank’s forecast peak, while still remaining well below the inflation rate. So in real terms average Australian wages continue to go backwards, against inflation at 5.4%. And productivity improvements are nowhere to be seen, as migration continues at a record pace and unit labour costs rise.
The ABS says the Wage Price Index rose 4% in the third quarter from a year earlier, above economists’ expectations of 3.9% and matching the RBA’s forecast for year’s end, On a quarterly basis, wages grew 1.3%, the highest in the 26-year history of the index.
Annually, seasonally adjusted private sector wages growth was higher than the public sector (4.2% compared to 3.5%). This was the highest annual growth for the private sector since December quarter 2008 and for the public sector since June 2011.
One of the reasons that economists expect Australia will avoid the sort of wage-price spiral that has erupted in some other developed countries is surging immigration that is boosting labor supply and likely reducing the bargaining power of employees.
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.
This is an edited version of a live discussion about our latest financial stress modelling and analysis.
Original live stream here: https://youtube.com/live/bBujFeWj6JM
If you want a specific post code dataset, contact me via the DFA Blog. https://digitalfinanceanalytics.com/blog/
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