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/

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
Digital Finance Analytics (DFA) Blog
Economic Update: February 2025
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Its Edwin’s Monday Evening Property Rant!

Despite the restrictions on what we can say (sic) Edwin and I are back for another Rant, looking at the latest industry tricks, and numbers. We also kick around the questions around auctions, including vendor paid advertising, and how to counteract the emotion drummed up at the event.

And, given the hopes of rate cuts, and the anticipated upcoming election, how is this playing into the market; as well as the impact of the lower exchange rate.

http://www.martinnorth.com/

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

Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts

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.

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Its Edwin's Monday Evening Property Rant!
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Who’s Really Calling The Shots? With Tarric Brooker

Journalist Tarric Brooker is back with charts, to parse the latest economic data, as we look at who is really calling the shots. Truth is, below the headline data there are some important issue to pick apart. And what we are being presented as the truth may be spin.

Tarric’s charts are available at: https://www.burnouteconomics.com/p/dfa-chart-pack-7th-february-2025

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
Digital Finance Analytics (DFA) Blog
Who’s Really Calling The Shots? With Tarric Brooker
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RBA Rate Cut Not A Done Deal Yet, But…

The RBA has held the cash rate at a 13-year high for more than a year, awaiting further evidence that inflation is irreversibly back to its 2 per cent to 3 per cent target. Markets since Mr Trump returned to the White House are on a roller-coaster ride as I discussed on my live show on Tuesday. Now Beijing has hit back with tariffs on US goods in a swift response to new American levies on Chinese imports. Earlier, Mr Trump suspended his threat of hefty tariffs on Mexico and Canada for a month. So what will the RBA do?

While one factor in play is Donald Trump’s chaotic trade policies, we also have the “adjusted real inflation rate looking though the Government support for electricity, rents and medicals. Is the inflation really well anchored in the 2-3% band, a signal the RBA is seeking?

The December quarter inflation report did little to counter the RBA’s consistent message demand in the economy is still too high.

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
Digital Finance Analytics (DFA) Blog
RBA Rate Cut Not A Done Deal Yet, But…
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Kiwi Unemployment Rate Rises To 5.1%, Highest Since 2020!

The New Zealand unemployment rate continues to climb, reaching 5.1% in the December 2024 quarter, according to the latest Stats NZ figures – the highest level it’s been since 2020. It’s up from 4.8% in the September 2024 quarter.

Men accounted for 85% of the annual decrease in employment, reflecting substantial falls in the male-dominated occupation groups of technicians and trades workers, and machinery operators and drivers. Within the overall decrease in seasonally adjusted employment for men, there was also a shift from full-time to part-time work. While the number of men in full-time employment fell by 36,000 annually, the number in part-time employment grew by 9000.

While politicians throw rocks across the aisle, the one lever of interest rates at the heart of monetary policy is deeply flawed.

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
Digital Finance Analytics (DFA) Blog
Kiwi Unemployment Rate Rises To 5.1%, Highest Since 2020!
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RBA Rate Cut Not A Done Deal Yet, But…

The RBA has held the cash rate at a 13-year high for more than a year, awaiting further evidence that inflation is irreversibly back to its 2 per cent to 3 per cent target. Markets since Mr Trump returned to the White House are on a roller-coaster ride as I discussed on my live show on Tuesday. Now Beijing has hit back with tariffs on US goods in a swift response to new American levies on Chinese imports. Earlier, Mr Trump suspended his threat of hefty tariffs on Mexico and Canada for a month. So what will the RBA do?

While one factor in play is Donald Trump’s chaotic trade policies, we also have the “adjusted real inflation rate looking though the Government support for electricity, rents and medicals. Is the inflation really well anchored in the 2-3% band, a signal the RBA is seeking?

The December quarter inflation report did little to counter the RBA’s consistent message demand in the economy is still too high.

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/

Will Cost Of Living Be The Epicentre Of The Upcoming Election?

With Parliament back after the summer break, if Parliamentary Question Time anything to go by, the issue of costs of living pressures will be front and centre of the upcoming campaigns. Worth reflecting how effective Trump proved to be in the US asking the question, are you better off now, or previously,

Of course words and figures can differ, not least because the data may not all point in the same direction, and can be spun vigorously. For example, inflation may be coming down from its highs, but the accumulated additional costs of pretty everything still hangs heavy on household budgets. And whilst cost of living support, like power rebates or rental assistance can help fudge the headline figures and even perhaps bounce the RBA into a rate cut, data still shows we have a problem.

For example, the latest from my household surveys, looking at financial stress in cash flow terms shows that around 76% of those in the rental sector are under pressure, and just under half with mortgage payments are in the same boat. Others are doing significantly better, so averaging masks the extremes we are seeing.

The latest data from the ABS on Household spending shows that it rose 0.4 per cent in December, seasonally adjusted following a 0.8 per cent rise in November and a 1.0 per cent rise in October. Or in other words a slowing of spending.

Today the ABS published their Selected Costs of Living Cost Indices. Over the twelve months to the December 2024 quarter, the LCIs rose between 2.5% and 4.0% despite all the Government support measures. Of the household types, Employee households had the largest annual rise in living costs, up by 4.0 per cent, with mortgage interest charges up 14.7 per cent over the year.

Cost of Living could be fixed by a stroke of a pen, if the Government reserved east coast gas for Australians, rather than shipping it off shore, (or worse also having to re-import gas at international prices), and also start taxing those exports properly. If politicians are serious about costs of living why not start Question Time with a gas related debate? The answer is simple, neither side of politics wants to admit their policy errors in this space, preferring to gaslight costs of living pressures for political advantage. This will I think come back to bite them as households wake up to the truth. Much of the costs of living pain are self-inflicted due to plain stupid policy and self-interest.

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
Digital Finance Analytics (DFA) Blog
Will Cost Of Living Be The Epicentre Of The Upcoming Election?
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Will Cost Of Living Be The Epicentre Of The Upcoming Election?

With Parliament back after the summer break, if Parliamentary Question Time anything to go by, the issue of costs of living pressures will be front and centre of the upcoming campaigns. Worth reflecting how effective Trump proved to be in the US asking the question, are you better off now, or previously!

Of course words and figures can differ, not least because the data may not all point in the same direction, and can be spun vigorously. For example, inflation may be coming down from its highs, but the accumulated additional costs of pretty everything still hangs heavy on household budgets. And whilst cost of living support, like power rebates or rental assistance can help fudge the headline figures and even perhaps bounce the RBA into a rate cut, data still shows we have a problem.

For example, the latest from my household surveys, looking at financial stress in cash flow terms shows that around 76% of those in the rental sector are under pressure, and just under half with mortgage payments are in the same boat. Others are doing significantly better, so averaging masks the extremes we are seeing.

The latest data from the ABS on Household spending shows that it rose 0.4 per cent in December, seasonally adjusted following a 0.8 per cent rise in November and a 1.0 per cent rise in October. Or in other words a slowing of spending.

Today the ABS published their Selected Costs of Living Cost Indices. Over the twelve months to the December 2024 quarter, the LCIs rose between 2.5% and 4.0% despite all the Government support measures. Of the household types, Employee households had the largest annual rise in living costs, up by 4.0 per cent, with mortgage interest charges up 14.7 per cent over the year.

Cost of Living could be fixed by a stroke of a pen, if the Government reserved east coast gas for Australians, rather than shipping it off shore, (or worse also having to re-import gas at international prices), and also start taxing those exports properly. If politicians are serious about costs of living why not start Question Time with a gas related debate? The answer is simple, neither side of politics wants to admit their policy errors in this space, preferring to gaslight costs of living pressures for political advantage. This will I think come back to bite them as households wake up to the truth. Much of the costs of living pain are self-inflicted due to plain stupid policy and self-interest.

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/

Its Edwin’s Monday Evening Property Rant!

In tonight’s show we catch up on Edwin’s predictions – does NOSTRADAMUS walk among us? We look at the massive rise in Council Tax, and also the rise in listings, but only in some places.

And given the upcoming election we examine some of the early promises being made in the quasi campaign, despite the gap between the promised 1.2 million well sited homes over 5 years and what is happening on the ground.

Edwin also highlights an important issue for a prospective property purchaser – get your paper work in order!

http://www.martinnorth.com/

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

Find more at https://digitalfinanceanalytics.com/blog/ where you can subscribe to our research alerts

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

Digital Finance Analytics (DFA) Blog
Digital Finance Analytics (DFA) Blog
Its Edwin's Monday Evening Property Rant!
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