Pressure cooker
Very strong auction results were reported for the inner suburbs of Sydney and Melbourne by agents and media alike this weekend, especially for properties located within 15 minutes commute of the Central Business District.
CoreLogic found that every single apartment in Sydney's city or inner south taken to auction this weekend sold under the hammer, which is remarkable.
For freestanding inner-suburban houses, it was a bit of a frenzy.
CoreLogic found that every single apartment in Sydney's city or inner south taken to auction this weekend sold under the hammer, which is remarkable.
For freestanding inner-suburban houses, it was a bit of a frenzy.
Industry doyenne Cate Bakos explored why we're seeing this phenomenon in her Sunday blog here (always worth reading):
Clearly there will be an element of long-term pressure on inner-suburban land values as the respective populations of the big cities rise relentlessly from 5 million towards 8 million.
The impact of slashed interest rate expectations has not yet been fully understood, either.
Slowly at first, and then all of a sudden, markets aren't pricing for interest rates to increase significantly for decades into the future.
With term deposits not paying much above 2 per cent and returns from both corporate and government bonds having crashed, investors are going to need somewhere to put their dough.
And for as long there has been data available, Aussie housing has been notably sensitive to changes in interest rate shifts.
Not only are cash rate expectations at record lows, the spread of the 3-month BBSW to OIS has more than unwound the increases of 2018, as discussed many times here previously.
In fact, the spread is now tracking at multi-year lows:
Automation headwinds
Automation and artificial intelligence will lead us into a period of hope, promise, and challenges, with potentially very significant implications for shifting trends in the labour force.
A somewhat soothing report by McKinsey Global concluded that the pace of technological change hasn't picked up materially in recent decades, and in their base case scenario enough new jobs will be created to replace those lost between now and 2030.
In developing countries the middle class will continue to explode in size, which is a positive for aggregate demand, while productivity gains can also benefit developed economies, generating greater wealth and profits for business.
The lower prices experienced through technological improvements can themselves boost demand, such as seen through the development and eventual popularity of the Model T Ford motor car.
But what will be the future shape of jobs in developed economies such as Australia?
From the lamplighters to loom-weavers and Luddites progress has often been feared or even despised, but historically new roles have been created to replace the old through what Schumpeter described as 'creative destruction'.
McKinsey's report found that in developed economies most of the productive employment growth will be in sectors that are already high-paying: CEOs, healthcare specialists, some finance roles, tech and software engineers, electrical engineers, other specialised trades, and so on.
On the other hand jobs that are predictable and repetitive and more likely to be displaced, and as such there is a risk of a growing income polarisation between the haves and the have-nots.
