This is an edited version of a live discussion with Damien Klassen, Head of Investments at Walk The World Funds and Nucleus Wealth. Given the recent movements in bond yields, and the strong US$, markets are in the doldrums, and we will explore the current dynamics in play.
Original version here: https://youtube.com/live/VbBSqRZf3xo
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I caught up with Steve again following the RBA no change announcement on Tuesday, and we discussed the implications, in the light of new research from Canstar about the state of play of household finances.
Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.
A belated edition of our property Rant this week, as I am joined by Edwin to look at the latest news and data on the market. Listings seem to be wilting, rental properties are becoming as rare as Edwin’s chickens…
[Note next weeks Rant will also be released on Wednesday due to the long weekend in some states].
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Its Edwin's Wednesday [Monday] Evening Property Rant!
This is an edit of a live discussion with mortgage broker Chris Bates. Chris started as a Financial Adviser back in 2007 and sold his Financial Advice business in 2020. Over the past 9 years, Chris has grown into one of Australia’s top Mortgage Brokers and is passionate about taking the product providing industry to a trusted advice based profession.
In 2022, Blusk won the Connective Broker of the year award. Connective is arguably Australia’s leading and largest Mortgage Aggregator. Chris has been finalist for the past three years. Chris was #1 with most loans settled in NSW and #2 nationally out of over 3,500 brokers.
In the UK, Annual growth in regular pay (excluding bonuses) is the highest we have seen since comparable records began in 2001. The Office for National statistics said In May to July 2023, annual growth in regular pay (excluding bonuses) was 7.8%, the same as the previous three-month period and the highest regular annual growth rate since comparable records began in 2001.
Annual growth in employees’ average total pay (including bonuses) was 8.5% in May to July 2023; this total growth rate is affected by the NHS and civil service one-off payments made in June and July 2023. But we can see workers are chasing real wages growth, as inflation eases, just a little with annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay up for the year by 1.2% and for regular pay a year on year rise of 0.6%.
In Australia, The Fair Work Commission released their latest data on Monday which revealed that average pay rises in new collective agreements in Australia have soared to a high of 4.7 per cent, closing in on inflation and putting pressure on wage forecasts. The increase is the highest average recorded since the commission’s data series began in mid-2022, surpassing previous highs of 4.4 per cent and is based on 174 deals lodged from August 12 to August 25, extended to 63,553 employees.
But with inflation at 6% on the quarter to June 2023, and the monthly series at 4.9%, on average workers are still going backwards in terms of real take home pay after inflation.
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I have discussed before the spate of announcables from the current Government – events and releases which give the impression of taking bold actions which grab headlines, but which in reality signifies very little at all. Housing was a standout example, but now we have another, the jobs plan.
Which in fact was a scene resembling The Hollowmen. It took 260-pages and six cabinet ministers to announce the jobs plan, and according to Jim Chalmers he wants to reduce the non-inflationary jobless rate so 2.8 million people who are not working, or wanting to work more hours, can bolster the labour market and improve their wellbeing.
So, the federal government will put “full employment” at the heart of Australia’s policy frameworks and institutions, to drive down structural unemployment over time and keep unemployment as low as possible. And they say the benefits of a strong labour market are not equally shared.
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An important debrief on the past weeks Senate Inquiry into Regional Branch closures, use of cash and other banking issues, with Robbie Barwick from the Australian Citizens Party.
In a week where Central Bankers did not lift rates in the US, UK, or Japan, although the ECB did last week, the key message coming though was simple. Expect rates to stay close to current levels for some time, and if inflation does prove stickier, then rates might still go higher. But the real action this week was in the Bond markets, with yields out along the curve up, as prices fell.
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Whatever announcables may come from the Government, the truth is housing crisis in Australia is far from over.
As I discussed with Leith van Onselen on Tuesday, high migration is the root cause of the problem – a problem created by bad policy and ultra-high migration. Yet some are arguing we should import more construction workers to build more homes. Sounds like shoot ready aim, to me.
Sure it is true that as Australia’s housing affordability crisis worsens, governments are spending more on housing. But as a recent The Conversation article says, without coordinated action to increase supply, government grants will have little practical effect on house affordability anytime soon.
Victoria’s Andrews government has announced a suite of reforms (such as boosting social housing and making planning processes faster) in an effort to get 800,000 extra homes in Victoria over the next decade.
Federally, the Albanese government’s A$10 billion Housing Australia Future Fund, or HAFF, has passed the Senate with the help of the Greens, who supported the bill in exchange for another A$1 billion for social housing. And this year’s federal budget has expanded eligibility for the Home Guarantee Scheme so more people can buy a home with a smaller deposit. But is Australia ready for a house construction boom?
Supply chain constraints say no. Ballooning construction costs and labour shortages have already claimed well-known building firms across the country. Delivering thousands of extra new homes in the coming years will not be easy.
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Today’s post is brought to you by Ribbon Property Consultants.
This week we get Central Bank Decisions from the Bank of England, The Federal Reserve and the Bank of Japan. The European Central Bank delivered a 10th consecutive hike last week, though signaled that the peak may have been reached. We also are getting further floods of data, and we know that Central Bankers are being data dependent, perhaps too much so.
For example, a Bank of Canada official said she sees evidence higher rates are working to cool the economy, blaming a hotter-than-expected inflation reading on monthly volatility driven in part by energy and rental costs.
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