New year's revolutions
Some new themes for 2019?
Here's one: wages growth returning, finally.
Wages growth is already off the lows and with the unemployment rate now trending down to 7-year lows there is likely to be some further improvement in 2019.
In Sydney the unemployment rate at 3½ per cent is the lowest across the entire data series, so unless someone has reinvented the laws of supply and demand there should be some upwards pressure on wages here.
ANZ's latest report on the 2019 outlook is worth a read - see here at Property Update - with leading indicators pointing to further declines in the unemployment rate.
There will be a further boost to exports, with the world's largest floating LNG platform (Prelude) now starting up production, and a lower Aussie dollar set to send export values to record levels.
This housing market cycle has been unusual in that it wasn't curtailed by interest rates hikes (rather a credit squeeze), so people should still have plenty of dough to spend into the consumption economy, should they feel so inclined (and they're borrowing less to boot).
ANZ's house search index leading indicator has burst back into positive territory, and the time to buy a dwelling index has also powered back into the black.
It seems that nothing cures lower prices quite like lower prices.
As ANZ has pointed out, when wages rise and prices decline - as they have in Sydney and Melbourne - then affordability tends to improve quickly.
As ANZ has pointed out, when wages rise and prices decline - as they have in Sydney and Melbourne - then affordability tends to improve quickly.
The unknowns still remain, however: namely the conclusions of the Royal Commission, with the final report due on 1 February, and then Federal election uncertainty (including a potential overhaul for the way investment housing is taxed).
