This is why environmental risks should be on the homebuyer agenda via BuyersBuyers.com.au here:
You can check out the Affordable 10-Year Property Plan here.
Sunday, 31 January 2021
Saturday, 30 January 2021
Friday, 29 January 2021
Investors begin to return to housing
Credit growth ticks up
Housing credit growth jumped in December to an 18-month high of 3.54 per cent.
Housing credit growth jumped in December to an 18-month high of 3.54 per cent.
Owner-occupier credit growth increased to 5.6 per cent.
Monthly investor credit growth increased for a fifth consecutive month, albeit in annual terms investor credit growth was only flat and recovering from record lows.
With the share of interest-only loans now at series lows, more debt is being paid down.
But even so, the housing credit impulse is pointing to higher capital city housing prices in 2021 as investors return.
Overall, 2020 was a dismal year for credit growth at just 1.8 per cent, with broad money growth surging to 12.6 per cent driven by stimulus.
---
Loan holidays ease
In other news, deferred loans continued to decline to 1.9 per cent in December, according to APRA's latest figures.
Source: APRA
Housing loan deferrals were generally down to around 2 per cent or lower, except in post-lockdown Victoria where deferrals were considerably higher.
Source: APRA
Catastrophising commentators are still hanging their hats on a 31 March day of reckoning, but realistically there's very little incentive for lenders to foreclose on the few remaining deferred loans.
Mortgage deferrals have plunged from nearly $200 billion to $42.9 billion - the riskier remaining loans deferred are probably those relating to high-rise units in CBD towers, where rental vacancies have been high.
Wednesday, 27 January 2021
Inflation below target for 5 years
Inflation rebounds
After the huge +1.9 per cent plunge in Q2, headline inflation rose again in Q4 by +0.9 per cent.
Trimmed mean inflation came in at just +1.19 per cent for the year - the slowest year on record - and underlying inflation increased a little to finish the year at +1.27 per cent.
The 2-3 per cent inflation target has now been missed for five long years as policy has instead favoured leaning against the wind of asset prices.
Capital city rents fell modestly by -1.3 per cent in 2020, although mortgage repayments fell considerably more.
What little inflation there is was largely seen in non-tradables, especially tobacco (driven by another lift in excise), with childcare prices returning to pre-COVID levels towards the end of the year.
Tradables inflation was negative over the calendar year.
If inflation is supposed to average 2-3 per cent over the medium term, there's some significant catching up to be done.
And that's especially so if the Reserve Bank is to focus on actual (rather than projected) inflation outcomes, suggesting that talk of tapering is premature, at least until the damage to the labour market is repaired.
Detailed analysis, as always, here with James Foster.
---
In other news, CoreLogic will report home values rising by about ½ per cent in January.
Source: CoreLogic
Likely to be leading the way will be Brisbane (+0.8 per cent) and Perth (+0.8 per cent), followed by Adelaide close behind.
Over the past quarter, prices have turned the corner in all capital cities, plus Gold Coast.
Source: CoreLogic
What to expect from property in 2021
Bullish sentiment
International borders could remain shut for quite some time yet, as vaccinations are steadily rolled out.
But low interest rates were always going to be a gamechanger for housing markets.
I guest-blog for Rich Harvey at Propertybuyer here today on what to expect over the year or two ahead (or click on the image below):
Monday, 25 January 2021
Podcast Episode 30
Bursting bubbles
Before we move on to discuss economics, in Episode 30 we discuss the results of bursting bubbles.
Tune in here (or click on the image below):
You can also tune in at Soundcloud, Stitcher, or Spotify.
Don't forget to leave us a friendly review, as it helps us to get the word out. Cheers!
You can also order a copy of our book here, and download a free chapter here.
Saturday, 23 January 2021
Reverse engineering
Inversion technique
A short post on how to solve deep-seated problems - see here (or click on the image below):
Thursday, 21 January 2021
Unemployment rate falls to 6.6pc
Unemployment falls again
An excellent labour force result in December with another +50,000 jobs added, mainly full time, taking total employment all the way back up to 12.9 million.
Job ads have been so strong lately that total employment in Australia could conceivably hit a record high in the first quarter of 2021.
It's clear that zero immigration in the latter part of 2021 has impacted New South Wales and Victoria most of all, while the Queensland economy is faring remarkably well (thousands of Victorians relocated to Brisbane in 2020).
The participation rate increased yet again to 66.2 per cent for a remarkable turnaround since the middle of 2020.
Yet with total unemployed persons declining again from 942,100 to 912,000 in December the unemployment rate still dropped to 6.6 per cent.
The peak was seen in July 2020 at a lower than expected 7.5 per cent, and the unemployment rate in the first quarter of 2021 is going to be way, way better than Treasury's forecast.
Hours worked in December were still slightly lower than a year earlier, but overall it's been a brilliant recovery.
With no growth in the labour force from net overseas migration the unemployment rate should continue to fall comfortably in 2021 with the right policy settings in place.
Australia is the envy of the world right now, but with the US, UK - and now many other countries - ramping up their vaccination programmes apace, there will be some challenging policy decisions lying ahead.
Wednesday, 20 January 2021
Job ads rose for 8th month
Guns for hire
Job advertisements continued their strong trend in December 2020, rising for an 8th month, despite a modest decline in Victoria, according to Department of Employment figures.
Advertisements rose by +2,300 to 171,500, to be an impressive 11 per cent higher than a year earlier.
Source: LMIP
Things are looking especially strong in the resources states.
Sydney and Melbourne have been the powerhouse economies since 2012, but have suffered from a lack of immigration in 2020.
NSW mortgage size hits record
Lodgements at record high
Australia's largest mortgage aggregator reported a record quarter of $19.9 billion in lodgements in the final quarter of 2020.
The average mortgage size in New South Wales surged to a record high, while Queensland also reported a record high average mortgage size.
It was a strong quarter for lending in New South Wales, Queensland, Victoria, and Western Australia.
With record low mortgage rates more borrowers than every before are opting to pay down mortgage debt, with a record high 88 per cent of borrowers choosing principal and interest products.
With interest-only loans fading out this is keeping a useful lid on debt loads and ratios.
But this was a huge quarter for AFG, with volumes 30 per cent higher than the corresponding quarter of the prior year.
Tuesday, 19 January 2021
Payrolls keep climbing over the year
Jobs return
Payrolls experienced the usual seasonal dip in December, but take a look at the December results compared to a year ago.
Total employment looks set to recapture record highs in 2021 in Australia, which is a remarkable effort in such a short period of time.
Source: Fabo, Macquarie
New home sales have also soared as buyers rushed to beat the year-end deadline for the HomeBuilder stimulus.
December house sales were up 92 per cent in the month to be 100 per cent higher than a year earlier.
Source: HIA
This is the biggest lift in new home sales in two decades.
Meanwhile listings are being mopped up at a fast pace, taking stock on market towards record lows on CoreLogic's figures:
Source: CoreLogic
Only post-lockdown Melbourne has more listings than a year ago - almost everywhere else has seen monster declines.
Roy Morgan's latest survey showed consumer confidence with regards to future finances rising to a 15-month high.
All this continues a steady stream of positive economic data for Australia.
But with no clear plan emerging to allow international travel...airlines, aviation, and tourism businesses face insolvency, and, with international students now leaving the country, the higher education sector also faces disarray.
Podcast: how to spot bubbles
Podcast series: bubbles
We're back on the podcast airwaves: tune in here (or click on the image below):
You can also tune in at Soundcloud, Stitcher, or Spotify.
Don't forget to leave us a friendly review, as it helps us to get the word out. Cheers!
You can also order a copy of our book here, and download a free chapter here.
More Oz leavers than arrivals
Population outflows
The provisional December 2020 figures from the ABS showed more people leaving Australia than arriving.
There were an estimated 35,100 arrival trips in December, 17,800 of which were returning Australian citizens.
This is the highest monthly arrivals figure since the shutdowns began in April last year, with tens of thousands of expats still waiting to find a viable route home.
However, there were an estimated 49,900 departure trips, more than 12,000 of whom were international students on temporary visas, largely returning to China, India, and other parts of Asia.
Source: ABS
Even if net immigration was zero the population of Australia will still be grow by about +150,000 per annum or +0.5 per cent, due to deaths being lower than normal this year, and births continuing roughly as normal.
But there will be some interesting compositional shifts, with fewer students and backpackers around (cf. the desperate student rentals and short-stay markets) and ultimately more returning expats.
Saturday, 16 January 2021
Affordable 10-year property plan
WePlan: affordable property plan
Check out our affordable 10-year property plan here: (or click on the image below):
Friday, 15 January 2021
Housing lending surges to record
Lending surges
First homebuyers commitments hit the highest level since the Rudd stimulus of 2009 in November 2020, as Victoria rebounded strongly post-lockdown.
Owner-occupier lending is exceptionally strong in New South Wales, Queensland, and Western Australia.
And, as expected, investment lending is now increasing, up by 6 per cent in November to be higher than a year ago, also driven by strength in New South Wales and Queensland.
RBA research showed that a permanent 100 basis point decline in the cash rate would likely result in a 30 per cent increase in real housing prices after about three years, which looks eminently possible from these figures, with supply-constrained markets with a concentration of investors seeing the largest effect.
