Land tax wheeze shelved
Most of the local notice boards these days (Sunshine Coast) have been taken up by new arrivals seeking accommodation, with discussions ranging from over-crowded hostels and campervans to sofas and tents.
In this context, it was a relief to hear that the Queensland government has shelved its plans to tax interstate landlords out of the market at a time when Australia's temporary visa holders numbers are set to rebound by 600,000 or so.
There won't be a quick fix, however, with housing investor applications seeing the taps really turned off over the past 8 or 9 weeks.
This won't be apparent in the official figures for a few months yet, given the lag in processing times, but today's financial aggregates figures from the RBA point to what's coming.
Housing credit tightens
Overall, credit growth held up in August on heavy business borrowing, albeit private capital expenditure 'growth' is actually negative at the moment, with more building and development firms shuttering by the week (especially in Queensland, for various reasons).
Personal credit growth - which seems to be much harder to measure these days - has also been in positive territory over the past couple of months, holding up the annual result.
But, that having been said...
Broad money growth declined to 0.3 per cent in August.
Monthly investment housing credit has already slowed markedly since July on this financial aggregates index, and will be in further decline over the months to follow.
Total housing credit growth is already at the lowest level in 7 months, with sharp declines yet to be reported.
And the housing credit impulse is already in negative territory for a 2nd consecutive month.
Borrowing capacity has been tightened considerably over the past six months, so there will be some sizeable declines to be reported in these numbers over the months ahead.
Of course the rapid tightening in policy will see a reduction in the demand for credit from businesses and households going forward.
The wrap
In summary, in these figures there was simply confirmation of a sharp fall in housing credit, with building approvals having already collapsed, and many apartment projects being scrapped outright.
Economists are calling for a further 50 basis points hike in interest rates from the RBA next week, even though it's clear that in real time activity is already slowing markedly from the hikes delivered to date.
Overall, then, good news on the land tax being scrapped in Queensland, but there's no end in sight for rental shortages on these numbers, as the hurdles for investors coming into the market continue to rise.
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Skilled job vacancies appear to have crested around June 2022...except perhaps in Victoria?
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When will rate hikes end?
Inflation expectations in the US continue to break new lows now by the week.
As a very distant and outside observer it looks as though the US housing market (and thus in due course the economy) is being absolutely crucified by the pace of interest rate increases.
And actually there has been a slight easing in Federal Funds rate expectations of late, although the upwards trajectory still remains in place for the time being.
Pending home sales were down nearly 25 per cent over the year to August, and many of the US housing figures being reported are amongst the worst on record.
In brighter news, container prices have plunged back to January 2021 levels, while ocean freight rates dropped another 13 per cent this week alone...so inflation pressures are set to come off.
This is an unbelievable -74 per cent decline from the highs, and takes shipping costs back to August 2020 levels.
10-year inflation expectations have already plunged from above 3 per cent to an 18-month low of 2.19 per cent.
30-year breakevens have also seen some spectacular downward moves to new lows. Gosh!
For a whole range of reasons, inflation is going to plunge, then, it's just a matter of how soon, and how quickly.
We might not be at peak interest rate panic just yet...but hells bells, we must be getting close.
Have a super weekend!
PW
