I caught up with accountant, Allan Mason, who was Kerry Packer’s accountant and is the best-selling author of “Tax Secrets of The Rich”. As the tax year looms, its important to take charge of your tax affairs, and we discuss some of the main issues to consider.
I caught up with accountant, Allan Mason, who was Kerry Packer’s accountant and is the best-selling author of “Tax Secrets of The Rich”. As the tax year looms, its important to take charge of your tax affairs, and we discuss some of the main issues to consider.
In this show we will look at some of the recent data relating to the New Zealand economy, which is sitting in a high interest rate, recessionary condition, as the Reserve Bank of New Zealand wrangles inflation towards its targets. We saw a significant rise in people leaving the country, with New Zealand Citizens voting with their feet!
So, we will look at the latest on property prices, retail spending and the latest inflation and migration updates. Overall, things remain very tough, though inflation while remaining sticky, is easing slowly.
So, standing back, clearly the New Zealand economy is not out of the woods yet, but the Reserve Bank of New Zealand’s approach of lifting rates higher than Australia does appear to be pushing inflation in the right direction. The uptick in exits from New Zealand suggests perhaps that some are deciding to jump ship, because households are clearly feeing the pressures. And recent policy changes will likely continue to reduce net overseas migration, with potentially significant impacts on the jobs market, and demand for property.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
This is the first in a series of posts which deep dives into our latest survey results, with a focus on financial stress, which is rising further. This episode provides an overview, subsequent episodes will dive into the details of mortgage, rental, investor and financial stress.
If you want details of a particular post code, drop it in the comments below, and I will endeavour to add it to a later show.
The full 2,000 post code series is available by subscription from our Patreon channel below.
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Digital Finance Analytics (DFA) Blog
Financial Pressure Reports: May 2024 - 1. Overview
This is the first in a series of posts which deep dives into our latest survey results, with a focus on financial stress, which is rising further. This episode provides an overview, subsequent episodes will dive into the details of mortgage, rental, investor and financial stress.
If you want details of a particular post code, drop it in the comments below, and I will endeavour to add it to a later show.
The latest monthly data on inflation from the ABS which came out today reported Annual growth in the non-seasonally adjusted monthly CPI lifted from 3.5 per cent last month to 3.6 per cent, above market expectations, while seasonally adjusted CPI is even higher at 3.8 per cent, and annual trimmed mean inflation (which removes food, fuel and holiday travel) rose to 4.1 per cent, from a low of 3.8 per cent in January.
Consumers were hit with the biggest increase in health insurance premiums in several years, following the annual lift in health insurance premiums, bad weather caused fruit and vegetable costs to rise. The outcome was also driven by higher petrol prices, less household goods discounting, stamp price rises and rents. In fact, both goods and services inflation rose.
While the RBA still considers the quarterly CPI the best gauge of inflationary pressures, the new monthly indicator factors into the central bank’s interest rate decisions, particularly when it delivers an unexpected outcome.
Judo Bank chief economic advisor Warren Hogan said the latest CPI figures would test the RBA’s patience. “Inflation is not falling back to target with signs that inflation’s underlying ‘pulse’ might be picking up in 2024,” he said.
“The RBA was very close to hiking the rate earlier this month. This number could tip them over to raising rates at their next meeting on June 18.”
This is not the progress the Reserve Bank wants to see, especially given the weakness in consumer spending evident across the economy, whether in official retail sales data (which is going backwards in inflation-adjusted terms), or the big profit downgrades in the last week from the likes of listed car dealers Eagers Automotive and Peter Warren Automotive.
With inflation surprising to the upside and the Fair Work Commission to announce next week an increase in the minimum wage, UBS chief economist George Tharenou said there was a “lingering risk” the RBA could be forced to raise the cash rate in the coming months.
Households, already under pressure, continue to feel the pain, as the latest data from Roy Morgan on consumer confidence reported another fall, and the accumulating data from the DFA surveys for May will report a further distressing rise in financial stress: The first results will be reported in the Sunday show, with more detailed analysis to follow.
Markets reacted to the news, with the ASX 2000 down 1.3%, while the 2-year bond rate rose 0.84% to 4.183. The Aussie rose 0.13% against the USD to 66.56 cents. The ASX Rate tracker shows a slight rise to October, and cuts pushed well out into 2025.
So, higher for longer, again, and I would remind you that the RBA’s blunt instrument of interest rate rises is only indirectly hitting many of the sectors of the economy. More significantly, global shipping costs are rising again, with Drewry’s World Container Index up 16% to $4,072 per 40ft container this past week. All major routes are impacted.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Housing affordability is shot, as we have been discussing, thanks to demand stoked by high migration, higher lending multiples as the financial system was deregulation, and higher interest rates mirroring the RBA’s battle to tame inflation. As a result first time buyers are delaying their purchase by several years, and more borrowers are leveraged up to the gills, despite first home grant schemes, and shared equity schemes, which as the Productivity Commission showed did help a few get into the market, but lifted prices for everyone else, so did not help structurally.
Australians are already among the highest carriers of household debt in the world. In fact, according to Domain’s 2024 First Home Buyer Report, an entry-price home in Melbourne costs $678,000. In Sydney, it jumps to $927,250. Looking outside the two major cities reduces the cost to $545,000. To be lucky enough to secure any of these options, a 20 per cent deposit will set you back between $109,000 and $185,000.
So where do prospective buyers get that sort of cash? Well some might be able to get help from the Family Bank, as I showed recently, the average is more than $106,000 now, great if you have wealthy parents. Others may be able to save, but it’s a long road, and whilst interest rates are higher than they have been for some time on deposits, it will take years, and longer still if rates are cut later. Then of course there is the old chestnut, use accumulated super.
This week we got a draft report from the parliamentary committee chaired by prominent superannuation critic Andrew Bragg which has upped the ante on the Coalition’s super for housing policy, suggesting first home buyers should be able to withdraw all their retirement savings to buy a house or use it as collateral to help borrow.
My view is that this is actually a proxy political war on the purpose and nature of superannuation, rather than a real honest discussion about how to fix the broken property market. It is in essence a mixture of misdirection – look over there, not here, and avoid the more critical issues of migration control and increased and better-quality supply of affordable housing. Or in other words, it’s a case of fiddling while Rome burns, again.
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Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
Guess what, Bankers are looking at ways to ease lending standards to pump the market some more, as bank margins are under pressure at a time when lending growth is already strong, and more households are already in financial difficulty.
The value of new housing loans have risen by 17.9% since March 2023, to $27.6 billion dollars and were up 3.1% in March, according to the ABS.
The ABS also released their latest estimates of real living costs for households, they said Employee households recorded the largest annual rise in living costs of all household types with a rise of 6.5 per cent,
No surprise then that the DFA surveys for April showed a further rise in mortgage stress, to more than half of mortgaged borrowers, with many first-time borrowers and young growing families most exposed. In addition, rental stress remains very high, underscoring the pressures created by bad policy over many years, making housing unaffordable. On my live show coming up on Tuesday, we will look at this is more detail, and do a further post code deep dive.
AMP chief economist Shane Oliver says there might be scope to reduce buffers for people refinancing — the banks already have some room to do that — but cautions against significant changes to lending laws.
“We’ve gone through a very difficult time in the economy in terms of the massive rise in interest rates, and we’ve come through — so far anyway — at a relatively low level of arrears,” he notes.
“That partly reflects the responsible lending that the banks have been undertaking over the last few years. If we had to take a dramatic easing in lending standards, and the rules around that, the risk is that the next cycle could be far worse.”
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Digital Finance Analytics (DFA) Blog
As More Households Are Crushed, Bankers Talk Their Own Book On Easing Mortgage Lending Rules!
