Economics – Page 3 – Digital Finance Analytics (DFA) Blog

Looking Beyond The Rate Cut Hype…

Yesterday we got the first RBA rate cut in four years rate of a quarter-percentage point to 4.1% as inflation has eased from more than 6% to 3.2% underlying, but the bank also stressed it won’t ease as aggressively as the markets anticipate and also flagged significant but as yet unquantifiable geopolitical and policy uncertainties globally.

The media seemed almost over jubilant at the cut, talking of massive relief for households with the much-recited data from Canstar showing that a million dollar mortgage would be $154 dollars a month cheaper in interest payments. Remember most Australian mortgages fluctuate with the RBA rate.

Then today we got the latest wage growth data from the ABS which showed that Australia’s wage growth slowed further in the final three months of last year, up an annual 3.2% in the fourth quarter of 2024, compared with an upwardly revised 3.6% in the prior period and matching economists’ estimate, the biggest wages slowdown for any full year since 2009.

Politicians are quick to see any opportunity to spruik, and in a press conference in Canberra Treasurer Jim Chalmers said that the rate cut was “the soft landing that we have been planning for” and offers a “relief that Australians need and deserve.” Bullock distanced herself and the board from politics, but I suspect they are all too aware of the political currents. The recent JWS opinion poll shows and cost-of-living and housing have been among the top concerns for the electorate.

Like the RBA, the treasurer didn’t declare victory in the fight against inflation, sharing the central bank’s concerns about the uncertain economic outlook going forward.

Forget the media hype, there is a long slow road for households mortgaged up to the hilt, and little here to reignite the fuse on the housing market; at least for now.

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Digital Finance Analytics (DFA) Blog

Looking Beyond The Rate Cut Hype…

00:00 / 00:12:43

DFA Live Q&A Replay: Will Rate Cuts Quell Australia’s Economic Storm? With Leith van Onselen

This is an edited version of a live discussion with Leith van Onselen, Chief Economist at Nucleus Wealth and Joint Founder of MacroBusiness.

We reacted to the RBA rate cut decision, plus looked at the expected trajectory of the economy, ahead of the election. What could blow us off course, and what are the implications for property, monetary and fiscal policy? We touched on energy strategy and housing strategy in particular.

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Digital Finance Analytics (DFA) Blog

DFA Live Q&A Replay: Will Rate Cuts Quell Australia's Economic Storm? With Leith van Onselen

00:00 / 01:33:25

Its Edwin’s Monday Evening Property Rant!

This week we look at the list of property “announcables” from Labor and talk about the elephant in the room – demand for property, which is not being addressed. The consequences of all this is obvious for those willing to look beyond the headlines.

Ahead, looks like demand will stay strong, and with more people waiting for the election and RBA cuts, supply of quality property is on the decline.

Today’s post is brought to you by Ribbon Property Consultants.

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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.

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Digital Finance Analytics (DFA) Blog

Its Edwin's Monday Evening Property Rant!

00:00 / 01:16:32

The Housing Hunger Games Moves Centre Stage!

The political games are in full swing now, ahead of the RBA’s rate call on Tuesday and if they do cut, many are calling the starting gun for the election which must be run by May 17, will go off very soon.

So, no surprise at all then to see that housing was in the spotlight again over the weekend, as Housing Minister Clare O’Neil announced that Labor would ban foreign investors from buying established homes for at least two years, replicating the promise made by Opposition Leader Peter Dutton in his budget reply speech last May. The housing minister, said the government had to orient all its efforts into securing home ownership for more young Australians. Nice dog-whistle, right there!

Australia’s housing is some of the most unaffordable in the world and soaring property prices will be a key election issue amid a broader cost-of-living crisis, especially among young voters who fear they will never be able to buy a home.

The government recently passed housing reforms, including a shared equity scheme and tax incentives for developers, to ease cost pressures and achieve a target of building 1.2 million new homes by 2030.

The truth is, throttling back migration to better match the number of new homes being built, and reducing the tax breaks for property investors, and build to rent schemes would have a far greater impact. But then to remind you again, O’Neil all but said she does not want to see prices fall, which they would need to do if more normal affordability ratios were reestablished.

All up this is more about annoucables, than real strategic policy change.

Today’s post is brought to you by Ribbon Property Consultants.

Digital Finance Analytics (DFA) Blog

The Housing Hunger Games Moves Centre Stage!

00:00 / 00:12:09

The Housing Hunger Games Moves Centre Stage!

All up this is more about annoucables, than real strategic policy change.

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.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

Markets Still Peaking Into Infinite Uncertainty: As Rules Are Broken!

This is our weekly market update, where we start in the US, cross to Europe and Asia and end in Australia, covering commodities and crypto along the way. This week markets were bullish, with the MSCI global index up 1.7% across the week, and up 0.3% just on Friday. Even the European STOXX 600 which fell 0.24% on the final trading day of the week managed another rise of 1.96% across the week, for a year-to-date gain of 8.82%. Australia’s ASX joined the party with a new high, and up 0.52% across the week.

But why, we should ask? Well, traders seem caught in the Trump announcement blizzard, though some are still asking is the market about to peak? Did DeepSeek mark the end of the AI bullish cycle? Are tariffs about to slash market gains? And is this the time for a Big-Short type of move?

Clearly no one knows – despite all the opinions out there among the talking heads. And frankly, if you are running your investments chasing these headlines, you will probably be in for a rude awakening when the market suddenly flips on its head, as it will at some point, because valuations do not support current levels, period. Meantime rules are being broken.

In the US, the fabled soft landing is morphing into a “no landing” as the 100 basis points worth of interest rate cuts from the Federal Reserve boosts the US economy, and keeps inflation sticky. Further Fed rate cuts are rapidly being priced out for the rest of the year, with just one more expected in December. Some economists are even muttering darkly about the possibility of a rate rise, if Donald Trump makes good on his moving feast of tariff threats. The latest of these would see the US place reciprocal tariffs on any country that currently taxes US goods

Australia’s ASX 200 rose 0.5% to a record high of 8,615.20 points, on gains across most heavyweight sectors. Local stocks were boosted by growing confidence that the RBA will likely cut interest rates by 25 basis points at a meeting next week, and kick off a shallow easing cycle on concerns over a slowing Australian economy. Though its not a done deal, as core inflation remained well above the central bank’s 2% to 3% target range after Government support for households pushed inflation down, at a cost, ahead of the upcoming election.

The RBA will also release new economic forecasts in an updated Statement on Monetary Policy. On Friday, RBA governor Michele Bullock will appear before the House of Representatives Standing Committee on Economics in Canberra. [She also will hold a press conference on Tuesday.]

Not to be outdone, across the ditch the Reserve Bank of New Zealand’s policymakers will meet on Wednesday, and they are expected to approve a third straight 50 basis point cut in the official cash rate.

In Crypto, Bitcoin is still muddling around the sub USD 100,000 level and was last at USD 97,576.

http://www.martinnorth.com/

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

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Digital Finance Analytics (DFA) Blog

Markets Still Peaking Into Infinite Uncertainty: As Rules Are Broken!

00:00 / 00:24:33

Propaganda Says Rental Crisis Is Easing; But Don’t Believe it….

Those in the rental sector of the property market, a growing proportion of the population, are in the crosshairs of the affordability crisis. Indeed, as discussed in my live show on Tuesday, around 76% of those renting have a cash-flow deficit, or are in rental stress.

The latest data from the ABS reported that Rental prices Rental prices rose 6.4 per cent over the 12 months to the December quarter, down from 6.7 per cent in the September quarter. Rental price growth continues to reflect low vacancy rates and a tight rental market. However, the September quarter results showed a partial impact of the CRA changes, while the remaining impact has been reflected in the December 2024 quarter. Excluding the changes to CRA, rents would have increased by 7.8 per cent over the 12 months to the December 2024 quarter.

The recent headlines about Australia’s rental crisis is easing on the back of data from both the ABS and CoreLogic. “Finally, renters are seeing some relief after a period of extreme rental growth,” Tim Lawless said. “Over the past five years capital city rents have surged by 37%. The previous five-year period saw rents rise by just 5%.”

And to cap it all, according to a recent Yahoo Finance article, some rental properties in Sydney and Melbourne are offering free rent to try and entice new tenants, as the market passes its recent boom.

Let’s be clear, the data shows that growth in rents is moving up faster than overall CPI, which is falling, somewhat, and real wages growth. So, can we really say things are improving in a sustainable way?

Now, SQM Research managing director, Louis Christopher said the sharp decrease in rental vacancies strongly indicated Australia’s rental market crisis was not over and could deteriorate further. “It looked like there was an easing in the vacancy rate at the end of 2024 and we were coming out of the rental crisis, but that’s not the case now,” he said.

“Could there have been another surge in migration levels in recent weeks? We don’t know for sure but clearly something has driven this retreat in rental vacancies”, Christopher said.

If the federal government continues growing the population faster than new homes can be built, the rental market will remain tight. The number one solution to Australia’s rental crisis is to significantly lower net overseas migration to a level compatible with the nation’s ability to build housing and infrastructure.

But don’t expect to hear that as a policy platform in the upcoming election, because more people flooding into the country is the only way to avoid a real recession. Expect the rental crisis to continue and Australian tenants to bear the brunt.

http://www.martinnorth.com/

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Digital Finance Analytics (DFA) Blog

Propaganda Says Rental Crisis Is Easing; But Don’t Believe it….

00:00 / 00:12:58

The Credit Monster Which Is Strangling Australia!

As foreshadowed, housing has become a major battleground for the main parties, as record prices, an acute shortage of rental properties and high interest rates combine to significantly reduce affordability. We know that on an international basis, household debt to income ratios in Australia are significantly higher, than even New Zealand and Canada, who both have severe housing crises. Well, done Australia, a direct result of 30 years of bad policy, and overleverage. And weirdly even now, according to IFM data the surge in average loan sizes is behind the inexorable growth in Australian home prices.

Today I want to look at the latest data on new loans from the ABS, in a release which has now gone from monthly to quarterly, so data released this week covers the October to December quarter 2024. Talk about lagged data! The RBA gross debt levels for January reported a significant uplift, especially for investor loans, as I discussed in a recent post. “Is The RBA Really All In For A Rate Cut In February?”

On the way to this analysis though we need to pause on The Treasurers recent announcement that It will soon become easier for Australians with student loan debt to get a mortgage after Treasurer Jim Chalmers instructed the prudential regulator to relax how HECS was treated when banks conducted mortgage serviceability tests.

So we are seeing mortgage debt ballooning, to the benefit of the banks – see CBA’s recent results. When interviewed conveniently the CEO denied that growth in mortgage lending had any significant impact on house prices. But we know of course the strong credit impulse is one of the main drivers of home price growth, supported by greater demand from high migration, tax breaks for investors (many of whom are losing money on a cash flow basis) and lack of appropriate supply.

The whole housing issue is now an election battleground, with The Coalition opposition promising to allow home buyers to raid their superannuation savings for a deposit, and it has committed to watering down responsible lending obligations.

Both sides have policies which will boost housing demand and increase mortgage debt, driving prices higher. As a result, they would make the affordability situation worse.

Remember the word “mortgage” comes from the Old French phrase “morgage” which translates to “death pledge”. The term refers to the pledge ending, or “dying”, when the loan is paid or the property is foreclosed. Given the longer terms of new mortgages, and the later age of getting one, Mortgage defined as a death pledge has never been truer.

But then does ordinary Australians who want a home have any choice but to play this game? Frankly no, because the game is rigged!

http://www.martinnorth.com/

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

Digital Finance Analytics (DFA) Blog

The Credit Monster Which Is Strangling Australia!

00:00 / 00:13:14

The Credit Monster Which Is Strangling Australia!

Both sides have policies which will boost housing demand and increase mortgage debt, driving prices higher. As a result, they would make the affordability situation worse.

But then does ordinary Australians who want a home have any choice but to play this game? Frankly no, because the game is rigged!

http://www.martinnorth.com/

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

Economic Update: February 2025

This is my monthly summary of recent global and local economic events, based on an edited conversation I record with Nuggets News. This time we look at the Trump effect, higher for longer interest rates, and the impact of tariffs. Plus the local impact of poor housing policy and the upcoming election. Some important questions about what the real agenda is, and who is calling the shots.

http://www.martinnorth.com/

Details of our one to one service are here: https://digitalfinanceanalytics.com/blog/dfa-one-to-one/

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

Digital Finance Analytics (DFA) Blog

Economic Update: February 2025

00:00 / 00:38:23