In today’s deep dive, Elisa Barwick from the Australian Citizens Party shares her research on why housing has become so expensive, and what can be done about it. But this is not the normal discussion of high migration or currently government policy, rather it sheets the cause to a chapter of history dominated by neo-liberalists, austerity and the rise of technocrats who still now dominate our lives.
This weeks rant got a bit controversial as Edwin and I dissected a couple of recent bathroom renovations, considered the root causes of social unrest, and discussed whether housing should be a human right. We also looked at the latest numbers and recent media reports, ahead of the RBA decision tomorrow.
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This is an edited version of a live discussion with Robbie Barwick from the Australian Citizens Party, as we explore the current status of the war on cash, regional banking, post offices, and the need to revolutionize the financial system for ordinary people.
As the wackiness continues, property insider Edwin Almeida and I pick over the bones of the market, as expectation of rate hikes harden, people are starting to talk about weakness in some places, while the media continue to spruik as though their lives depended on it.
We also look at fascinating insights from Chinese students in Australia and how they manage their finances.
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Today’s post is brought to you by Ribbon Property Consultants.
If you chose to look below the hood, you can see some changing dynamics across the property market which may indicate the recent rises in some areas are easing, to the point where the boss of the country’s biggest real estate group has cautioned that vendors may need to rein in their price expectations this spring, after property price growth eased in July amid concerns of another interest rate rise.
CoreLogic’s Daily Home Value Index shows capital city house prices are up 0.4 per cent over the first 27 days of July, compared with growth of 0.7 per cent in June. As the AFR reported, “Vendors need to be careful regarding price growth expectations,” Ray White Group managing director Dan White said.
Another factor we are seeing playing out is the number of investment properties coming onto the market a feature we noted first in Melbourne where rules on investment property were tightened by the state government.
There net investment yields ( that’s the costs to service the property relative to the rental received) is negative for more than half of properties. Trouble is, many of these properties are also lemons, given they often need more than just a bit of TLC, given many have poor wiring, leaks, asbestos and worse.
Now, NSW Premier, who has been talking about making property in Sydney more affordable, announced the introduction of a ban on no-reason evictions, and an extension of mandatory notice periods to 90 days from 60 days. In other words, owners who use legally permitted grounds for eviction – including if they want to live in their own homes – will have to give three months’ notice. In these cases, their renters can walk out, at any time, without penalty. The NSW changes are slated to start early next year.
It already looks like some property investors are leaving the field, thus reducing the supply of rental property. True a first time buyer might step up, but lending standards at higher rates make borrowing capacity an issue. And the risk I see playing out is that well meaning first time buyers will be buying lemons, alongside some ill-informed property investors who still weirdly believe property only ever goes up in value. Just look across the ditch for a dose of reality, as I highlighted recently. There, thanks to slower migration and high interest rates, prices are nose-diving. Will we see a similar scenario in Australia, or will the Government play another card to keep prices buoyant, or APRA reducing lending buffers. Frankly on both counts its likely, but remember folks, a lemon remains a lemon, so in the current environment buy with great care, and prepare for the cracks to swallow up potential prices rises ahead.
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Today’s post is brought to you by Ribbon Property Consultants.
Digital Finance Analytics (DFA) Blog
Watch For Lemons: Are Cracks Appearing In The “Unstoppable” Property Market?
Another outing with Journalist Tarric Brooker, as we pick over the latest data, with a focus on what is happening in the real economy. We also discuss the real race many are running in terms of no real income growth, and the political and economic implications of this ahead.
You can find Tarric’s charts at https://www.burnouteconomics.com/
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Digital Finance Analytics (DFA) Blog
Welcome To The Alternative Olympics: With Tarric Brooker
A new report from the Finance Industry Peak Body, UK Finance, which represents more than 300 firms in the UK, reveals that cash remained the second most popular payment method, after debit cards – with an estimated three million people still relying on it. Their research suggests 1.5 million mainly used cash in 2023, up from 900,000 the previous year.
This was it appears an unexpected jump in the number of people who mainly use notes and coins for their daily spending, despite all the propaganda that the UK moving closer to becoming a cashless society. A UK Finance spokesperson said it would monitor the situation regarding people who mainly used cash to see if this was the start of a trend or merely a “statistical blip”. We think it’s more than that.
As I highlighted in a recent post the chaos caused by the global IT outage last week underlines the risk of moving towards a cashless society. Even if the data forecasts that cash will represent only 6% of payments in a decade’s time, it’s critical if other systems go down, as we saw with the outage last week” UK Finance said. This is as close to the Swedish message of make sue you keep cash on hand in case of emergencies as it gets, without saying it!
In Australia, as I reported recently there was also a rise in cash usage, despite the banks best worst efforts, and the recommendation from the recent Senate Inquiry into Regional Branch closures also recommend making access to cash an essential service.
Its simple really people, keep using cash, and we retain a backup in case of emergency. We also know people using cash regularly has a better handle on their finances, teaches kids the real value of money, and acts as an antidote to tap tap credit based society, where banks make a dollar from every transaction, which costs us all. While the war on cash is far from over, use it, or lose it. Its that simple!
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Digital Finance Analytics (DFA) Blog
Cash Transaction Usage On The Rise (Despite The Banks’ Best Worse Efforts)!
This is an edited version of a live discussion with Dr Cameron Murray, Independent Economist over at Fresh Economic Thinking.
Fresh Economic Thinking is Australia’s newest think-tank, with independent and insightful takes on major economic debates.
Cameron thinks economics could be much better than it is so he often writes very fine technical critiques of economic theory and comments on the nature of the profession. He specialises in property and housing markets, environmental economics, and corruption. I dabble in just about everything: macro, money, institutions, evolutionary economics, and more.
For the past four years, he was a Post-Doctoral Research Fellow in the Henry Halloran Trust at The University of Sydney.
In our latest show we pull apart some of the recent property spruiking, look at the latest numbers and deep dive into the gap between the “speak” from policy makers and the “reality” of what they do. As a result we underscore the need to go local, and not be misled by high-level waffle!
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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.
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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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Well, last week we got a glimpse of the vulnerability of global IT systems, including payment systems, the latest and perhaps most significant of a chapter of accidents, ranging from banks systems going down, through to disruption from floods and fire, when only physical payments in cash were accepted. US cyber-security firm CrowdStrike said it was responsible for the mayhem, which started on Friday after sending a ‘defective’ update to machines running Microsoft apps. Microsoft has suggested customers try rebooting their computers 15 times to resolve the issue.
The IT outage prompted federal politician Bob Katter to demand cash remains in circulation amid the “danger” of relying on digital technology. “This a wake-up call that the risk associated with a cashless society is too high for us to pay,” Mr Katter said.
According to a recent online survey, titled Cashless Future 2024’ while fewer payments may be made in cash these days, Australians are still expressing serious concerns about heading towards a cashless society. Seven in 10 say they’ve concerned, while two in five Aussies are extremely concerned about notes and coins becoming relics.
Significantly, even people who don’t use cash can be concerned about moving towards a cashless society for reasons including privacy concerns, security risks and dependency on technology. This includes concerns about their transaction data being tracked and analysed by corporations or government agencies, and digital payment systems can sometimes be vulnerable to technology outage, hacking or fraud. A recent report said: “Concerns about technological glitches, network outages, or power failures could lead to worries about being unable to make payments in the absence of cash.”
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Digital Finance Analytics (DFA) Blog
Cash: Wake Up, Its The Antidote To Digital Dystopia!
