The latest edition of our finance and property news digest with a distinctively Australian flavour.
In today’s show we look at the latest CPI data for the June 21 quarter, reflect on NSW’s booming stamp duty take, visit Westpac’s thoughts on future property price movements, and also look at soaring construction costs, and a recent report which says that Australia’s heavy reliance on export of fossil fuels made the nation’s economy extremely vulnerable to changes in other markets’ emissions policies under the current settings.
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.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
The Consumer Price Index (CPI) rose 0.5 per cent in the September 2019 quarter, according to the latest Australian Bureau of Statistics (ABS) figures. This follows a rise of 0.6 per cent in the June 2019 quarter.
All groups CPI seasonally adjusted rose 0.3%.
The trimmed mean rose 0.4%, following a rise of 0.4% in the June 2019 quarter. Over the twelve months to the September 2019 quarter, the trimmed mean rose 1.6%, following a rise of 1.6% over the twelve months to the June 2019 quarter.
The weighted median rose 0.3%, following a rise of 0.4% in the June 2019 quarter. Over the twelve months, the weighted median rose 1.2%, following a rise of 1.3%over the twelve months to the June 2019 quarter.
This is well below the RBA target.
The most significant price rises in the September 2019 quarter were international holiday, travel and accommodation (+6.1 per cent), tobacco (+3.4 per cent), property rates and charges (+2.5 per cent) and child care (+2.5 per cent).
The most significant price falls this quarter were automotive fuel (-2.0 per cent), fruit (-3.1 per cent) and vegetables (-2.5 per cent).
ABS Chief Economist, Bruce Hockman said: “Despite the price falls for fruit and vegetables this quarter, the drought is impacting on the prices for a range of food products. Prices rose this quarter for meat and seafood (+1.7 per cent), dairy and related products (+2.2 per cent) and bread and cereal products (+1.3 per cent).”
The CPI rose 1.7 per cent through the year to the September 2019 quarter. This follows a through the year rise of 1.6 per cent to the June 2019 quarter.
“Annual inflation remains subdued partly due to price rises for housing related expenses remaining low, and in some cases falling in annual terms. Prices for utilities (-0.3 per cent) and new dwelling purchase by owner-occupiers (-0.1 per cent) both fell slightly through the year to the September 2019 quarter, while rents (0.4 per cent) recorded only a small rise,” said Mr Hockman.
Main contributors by city:
Sydney (+0.5%)
International holiday, travel and accommodation (+6.9%)
Tobacco (+3.4%)
Wine (+2.6%).
The rise was partially offset by:
Automotive fuel (-2.2%)
New dwelling purchase by owner-occupiers (-0.6%). The fall in
new dwelling purchase by owner-occupiers is mainly driven by base price
reductions due to weak market conditions.
Sports participation (-3.5%) due to the introduction of a
second $100 Active Kids sports voucher for school aged children in New
South Wales.
Melbourne (+0.5%)
International holiday, travel and accommodation (+5.5%)
Tobacco (+3.5%)
Gas and other household fuels (+3.5%) due to the seasonal switch to peak winter gas prices.
The rise was partially offset by:
Electricity (-4.1%) due to the introduction of the Victorian Default Offer from 1 July 2019.
Motor vehicles (-2.0%)
Automotive fuel (-1.8%).
Brisbane (+0.6%)
International holiday, travel and accommodation (+4.7%)
Tobacco (+3.2%)
Electricity (+2.6%) driven by the $50 asset ownership dividend that was applied to consumers’ electricity bills last quarter.
The rise was partially offset by:
Automotive fuel (-2.6%)
Fruit (-2.7%).
Adelaide (+0.7%)
International holiday, travel and accommodation (+6.3%)
Tobacco (+3.4%)
Wine (+3.5%).
The rise was partially offset by:
Domestic holiday, travel and accommodation (-2.4%)
Insurance (-3.5%) due to the Compulsory Third Party insurance market being opened to competition on 1 July.
New dwelling purchase by owner-occupiers (-0.7%).
Perth (+0.5%)
International holiday, travel and accommodation (+6.8%)
Tobacco (+3.5%)
Electricity (+1.7%).
The rise was partially offset by:
Automotive fuel (-2.6%)
Fruit (-6.5%).
Hobart (+0.5%)
New dwelling purchase by owner-occupiers (+2.3%) due to a strong housing market.
International holiday, travel and accommodation (+6.2%)
Tobacco (+2.6%).
Hobart is the only capital city to record a rise in automotive fuel this quarter (+0.5%).
The rise was partially offset by:
Domestic holiday, travel and accommodation (-7.0%)
Vegetables (-2.5%).
Darwin (+0.3%)
Domestic holiday, travel and accommodation (+4.4%) due to increased demand during the peak tourist season this quarter.
Tobacco (+3.1%)
International holiday travel and accommodation (+4.6%).
The rise was partially offset by:
Rents (-1.8%); due to continued high vacancy rates
Other financial services (-3.2%) due to the introduction of the
Territory home owner discount (THOD), which offers a discount on stamp
duty when purchasing a dwelling for owner-occupier purposes from May
2019.
Sports participation (-9.0%) due to the biannual $100 sports voucher provided to school aged children in the Northern Territory.
Canberra (+0.7%)
International holiday, travel and accommodation (+6.5%)
Property rates and charges (+7.9%) due to reductions in stamp
duty for property purchases being replaced by increases in general
rates.
Domestic holiday, travel and accommodation (+3.2%).
The rise was partially offset by:
Other financial services (-7.6%) due to the introduction of the home buyer concession scheme.
The annual average retail petrol price in 2018–19 was the highest in
real terms (i.e. adjusted for inflation) in four years according to the
ACCC’s latest report on the Australian petroleum market for June quarter 2019.
The report shows that in the five largest cities, Sydney, Melbourne,
Brisbane, Adelaide and Perth, the average annual petrol price in 2018–19
was 141.2 cents per litre (cpl), nearly 7.0 cpl higher than last year.
In nominal terms (i.e. with prices not adjusted for inflation) it was
the highest annual average price in five years.
Annual average retail petrol prices in the five largest cities in nominal and real terms: 2000–01 to 2018–19
“The most significant contributor to this increase was the
depreciation over the year in the AUD-USD exchange rate, which decreased
by USD 0.06 to USD 0.72,” said ACCC Chair Rod Sims.
“This was the lowest annual average AUD-USD exchange rate in the last
15 years. The AUD–USD exchange rate is a significant determinant of
Australia’s retail petrol prices because international refined petrol is
bought and sold in US dollars in global markets.”
A significant development in the petrol industry in the first half of
2019 has been the change in price setter at both Coles Express, to Viva
Energy, and Woolworths, to EG Group, retail sites.
The report found that compared with market average prices, Coles
Express prices were lower in most capital cities after Viva Energy began
setting prices. However, they remained above the market average price
in all eight capital cities. At Woolworths, prices were higher in most
capital cities after EG Group took over the retail sites, although in
the majority of cities, prices were still below the market average
price.
“The ACCC will monitor prices at these retail sites very closely in future,” Mr Sims said.
Mr Sims said it was important for motorists to shop around for cheap
fuel by using the available fuel price websites and apps. For those
motorists in the five largest cities, they can also use information
about petrol price cycles on the ACCC website to time their purchases.
Retail petrol prices in the three smaller capital cities; Canberra,
Hobart and Darwin, are typically higher than prices in the five largest
cities. However, the report noted that, in the first half of 2019, there
were periods when prices in Darwin and Canberra were below prices in
the five largest cities.
Monthly average retail prices in Darwin were lower than in the five
largest cities between February and May 2019, and monthly average retail
prices in Canberra were lower than in the five largest cities in both
April and May 2019.
“This was the first time monthly average prices in Canberra were
below the average price in the five largest cities since April 2012,” Mr
Sims said. “The reduction in prices in the Darwin and Canberra is good
news for motorists in those locations.”
The lower prices in Canberra may have been influenced by the
possibility of greater regulation of the petroleum industry arising from
the current ACT Legislative Assembly petrol inquiry. The situation in
Canberra is similar to that in Darwin in 2015, when the decrease in
petrol prices coincided with increased local scrutiny of petrol prices
by the NT Government.
The report noted that in the June quarter 2019, average retail petrol
prices across the five largest cities were 145.3 cpl, an increase of
15.0 cpl from the March quarter 2019. The principal driver of the
increase was rising international crude oil and refined petrol prices in
the quarter. These continue to be influenced by the agreements made
since late-2016 by the Organisation of Petroleum Exporting Countries
(OPEC) cartel, and some other crude oil producing countries, including
Russia, to cut production.
Other petrol fast facts:
Brisbane petrol prices were higher than the other large Australian cities.
The city–country petrol price differential decreased in the quarter to 1.5 cpl.
Analysis of NSW’s Coffs Harbour petrol prices shows there are a range of prices available to motorists if they shop around.
Diesel and automotive LPG prices in the five largest cities both increased.
