Population growth passes the peak

Rapid population growth

Over the year to March 2024, Queensland saw net inbound interstate migration of +31,000 (the inverse of the net -31,000 outbound interstate migration from New South Wales).

It looks like the interstate exodus has moderated towards historic norms now, which makes sense at this point in the cycle.

Net interstate migration for Victoria has, meanwhile, turned slightly positive, as some of the pandemic refugees return home, while Western Australia mopped up the rest of the interstate movers over the year to March.

Net overseas migration was a huge +510,000 over the year, still about +18,000 higher than a year earlier.

These are obviously still extremely high numbers...but it does at least look as though the peak of population growth has now passed. 

Over the year to March, the estimated resident population increased by +619,000, down from the record annual growth of +667,000 six months earlier. 

This slight slowdown clipped about -40,000 from the Aussie population clock, and puts the estimated resident population today at around 27.4 million.

Totting this all up equates to enormous annual population growth for New South Wales (+167,700), Victoria (+184,000), and Queensland (+135,00), while Western Australia's population growth rate was a ferocious +3.1 per cent.

On the way down from here, then, but still rather too high for comfort from the government's perspective. 

Unemployment rate remains at 4.2pc

Jobs market holding strong

Total employed persons was reported at a new 'high of 14,458,600 for August.

Those with an eagle eye will note that this was actually lower than the 14,469,000 reported last month, but after revisions to earlier figures this was reported as a monthly increase for August of +47,500.

Over the year, the increase was +455,400 or a very strong +3.2 per cent.

All of the increases this month were reported as part-time, while full-time employment fell.

Looking through the noise, the 3-month average increase in employment was a bit lower than was reported last month, but still very solid at +48k.

As correctly anticipated by Westpac, the unemployment rate fell slightly over the month, although at 4.16 per cent the figure still rounded off to 4.2 per cent.

The cycle low was extremely tight, at below 3½ per cent in mid-2022, and we've been trending higher since then.

The underemployment rate increased modestly over the month from 6.3 per cent to 6.5 per cent.

The wrap

Hiring continues at very solid levels, overall, despite the very sluggish economy.

The government has come under a fair bit of fire for its loose spending habits, and this has translated to a marked expansion in the number of public sector and healthcare roles. 

After the Federal Reserve cut US interest rates by ½ percentage point yesterday, this was a carefully watched release.

The labour market is still gradually weakening - albeit only slowly - and SEEK reported that applications per job advertisement were the second highest on record last month.

Nevertheless, these figures remained very solid, and CBA pushed out its forecast for a first interest rate cut from November to December 2024, and even that looks a little too dovish. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Inflation rates with a 2-handle (Fed cuts by 50bps)

Central banks on top

Just got our business PI renewal through this week, with the quoted premium coming back with a lazy 100 per cent increase.

Some of that was due to a higher turnover, but by no means all of it!

Yes, there's been plenty of services price inflation in Australia over recent times, even if much of it is in the rear-view mirror now. 

Over recent days, though, we've seen headline inflation rates for August reported for the Eurozone at 2.2 per cent, for the UK at 2.2 per cent, and for Canada at just 2 per cent. 

The UK figure statistics retained enough stickiness in services prices inflation to have the Bank of England likely keeping interest rates on hold this month, but the Bank of Canada could be delivering larger rate cuts on this evidence.

With the headline inflation at 2½ per cent in the US, Federal Reserve cut the funds rate today by a percentage point, with a couple more cuts priced in before the end of the year.

There's a giant mountain of debt maturing in the US imminently, and although the economy has held up pretty well there's a huge incentive to get interest rates down as soon as possible. 

Plus, the rising unemployment rate is also now a worry, and the Fed's dot plot now points to 8 interest rate cuts from the peak through 2025, which is more aligned with market expectations.

Aus late to the party

As you can see in the above chart, Australia's journey with battling inflation back down has some way further to run.

That said, next week, partly thanks to government subsidies, the monthly inflation gauge is expected to be negative, taking the annual inflation reading down to 2.7 per cent, with further declines to come as fuel prices fall at the pump.

The Reserve Bank should reasonably be expected to draw attention to core inflation figures, while looking through the impact of energy bill relief. 

Market pricing has Australia's cash rate target falling to around 3 per cent over the next 18 months, from 4.35 per cent today. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

ausbiz: Property around the traps

Vacancies fall slightly

SQM Research released its latest vacancy rates figures for the month of August 2024.

There were declines in vacancy rates over the month in Sydney, Adelaide, and Perth, while Canberra continues to have the highest capital city rental vacancy rate at 2.2 per cent.

Source: SQM Research

While Perth, Adelaide, and Darwin continue to have very tight rental markets, over the past few months there have been some signs of an easing in the rental pressures as average household sizes have adjusted higher.

Smoothing the past 6 months of data suggests a gentle uptrend for most capital cities, except perhaps for seasonally more volatile Darwin. 

You can click to enlarge the image:

Nationally, asking rents rose by +0.4 per cent over the month, and +6.5 per cent over the year, with some variations around the country.

Louis Christopher of SQM Research reported that there remains a severe shortage of rental properties, but with the market having adjusted the days of 10 to 20 per cent rental price inflation are now likely to be behind us.

You can read the full media release from SQM Research here.

ausbiz TV

In other news, I discussed all around the property news around the traps in 6 mins with Nadine Blayney on ausbiz TV.

Tune in here (or click on the image below):

New homes sales dip in August (Sydney's supply struggles)

Sydney's supply struggles

New home sales were stronger again in Queensland in August, up +3.8 per cent, following a strong +15.6 per cent increase in July.

Over the past 3 months, new home sales in Queensland have been +53.5 per cent higher than for the corresponding period in the prior year.

Interstate migration, investors, and retirees are all driving very strong demand in the coastal markets.

New home sales in Western Australia and South Australia were down in August, on the other hand, albeit from high levels.

Source: HIA

The Housing Industry Association speculated that investor activity for new homes in WA may be slowing down after a boom period.

And housing supply in New South Wales is struggling. Noted the HIA:

“New home sales in NSW remain weak as the cost of delivering a new ‘house and land’ package in Greater Sydney remains elevated by regulatory changes and land prices.

 
“It has been more than ten months since the last rate increase. The continued undersupply of homes and robust labour market conditions are assisting a return of consumers to the new home market."

Macro trends

Alongside interest rates and immigration, there are two other big macro trends set to drive property market dynamics over the coming decade. 

One is the unprecedented transfer of trillions of dollars of wealth from Baby Boomers to younger generations, which will be ongoing for the next 15 years.

The other is the battleground surrounding working from home.

In the UK, the government argues that allowing workers the right to work from home, could boost productivity, which seems like a long bow to draw (but that's Europe for you!).

On the other hand, Amazon announced that office workers will be mandated back into the office 5 days per week from January 2.

Amazon's stock price has been meandering around for the past 4 years, and it seems that the time has come for a few skulls to be cracked by management.

Amazon employs more than 1½ million workers worldwide, and noted in a release that the past 15 months of being back in the office 3 days per week had only strengthened convictions around the benefits of personal interaction.

Closer to home, Tabcorp has seen its share price crater 57 per cent over the past year, and has also demanded that workers return to the office 5 days per week.

This will impact around 1,500 employees in Sydney, Melbourne, and Brisbane. 

In Australia, there has been a gradual return to the office, but it's been comparatively slow, and with the unemployment rate still holding firm at 4.2 per cent, employees have retained an upper hand in bargaining power for a long while Down Under.

To date, office valuations in Australia have declined by -22 per cent from their highs, a bigger decline than was seen during to the global financial crisis. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

2-Sense: Lending starts to pick up the pace

2-Sense podcast

The Australian Property Podcast is picking up some momentum, with over audio 50,000 downloads alone per month this year.

This week Batesy and I discuss the acceleration in housing lending - albeit not for construction - the housing supply conundrum, and the drop of more than 20 per cent in office valuations.

Tune in here (or click on the image below):

You can also watch the YouTube version here:

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Protecting your wealth as deficits blow out

Debt and deficits

As the highly partisan debate about US economy rages on - has President Biden (if indeed Biden is in charge of anything) achieved a brilliant soft-landing, or destroyed living standards with several years of rampant inflation? - the federal Budget deficit in the meanwhile quietly flames out towards $2.1 trillion.

US interest payments on the national debt alone passed $1 trillion this month.

As the brilliant analyst Charlie Bilello highlighted with his graphic below, all of this is going on when the economy has been powering along with some extremely low rates of unemployment.

How far is the deficit going to blow out next time there's a recession or a deep downturn?

It makes one think...

US reserve currency

To be fair, I've not really been one of those "death of the US dollar!" types.

I remember watching some documentary or other when flying long haul as a backpacker concerning the looming demise of the US dollar...but come to think of it that doco must've been about a quarter of a century ago now!

However, a US national debt topping $35 trillion probably does mean that the decades ahead will be locked into low interest rates, ongoing inflation, and probably a good deal of money printing for good measure.

Perhaps not too surprisingly, given this context, money markets are pricing for a Federal Funds rate falling to 3 per cent by the back end of next year.

Interest rate cycle turns

The global narrative around interest rates is now shifting in a dovish direction.

Australia's 3-year bond yield - having topped out at around 4.35 per cent in October 2023 - fell back to 3.44 per cent today.

This week the European Central Bank cut interest rates for a second time in this cycle, despite the core rate of inflation remaining significantly above target.

One of the speaking reps noted that there could be a "series" of interest rate cuts to follow, depending on how things play out with the return to the target inflation rate.

You could see the real-time reaction in markets, with the price of gold spiking to a new record high.

Source: Bloomberg

Inflation-busting investments

How to protect yourself from more decades of the same?

Owning gold and other commodities is one popular inflation hedge, and a stocks/bonds portfolio is another proven method over the long term.

Farmland, commercial property with inflation-linked leases, residential property, and a manageable level of mortgage debt which will be inflated away over time are some others. 

Australia is certainly somewhat better placed than many other countries from a government debt perspective, although there's a decent amount of indebtedness at the state level and the country also tends to run very high levels of net immigration.

In all eventualities, the purchasing power of the currency looks likely to get smoked. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

Interest-only handbrake release?

IO loans stymied

The prudential regulator APRA released the latest quarterly data on ADI lending statistics and exposures. 

The mortgage arrears rate - as measured by impaired loans plus loans 30-plus days past due - increased, albeit  modestly, to 1.69 per cent (note this data is solely related to ADI lenders). 

Western Australia and Queensland's cyclical but burgeoning economies have generally helped loan arrears to stay low.

There's comparatively little higher risk lending these days, and practically no lo-doc lending to speak of. 

Although there's far less high debt-to-income lending now, there has been a bit of an increase in low-deposit lending over the past three quarters of data to 7 per cent of new housing loans, mainly due to first homebuyers taking advantage of the Commonwealth deposit guarantee.

The flow of new interest-only lending held steady at 20 per cent of loans...about half of what we were once used to seeing.

The overall stock of outstanding interest-only (IO) loans fell to a new all-time low of 11 per cent of outstanding housing loan balances by value.

There has been a stunning shift here resulting from prudential/regulatory intervention which severely stymied the flows of IO lending, and then saw an interest-rate differential for this loan product type.

It may well be that the bottom is in now, and the flow of interest-only picks up gradually from here.

At least, hopefully. 

Every quarter the new low in IO loans is seemingly widely celebrated, but this does also add holding costs to investments, and in recent years we have witnessed steepling rents, and a chronic shortage of housing stock overall.

The 3 percentage points lending assessment buffer hasn't much helped with this trend either, and hopefully this will also be dropped after the first weak inflation print. 

---

Actually, while we're here...there's been a lot of hype about mortgage arrears, some of which has been justified, but S&P Global Ratings reported a surprise decline in Australian Prime SPIN mortgage arrears in July to just 0.94 per cent.

Perhaps not so surprisingly, non-conforming SPIN arrears increased to 4.19 per cent.

The recent improvement in prime arrears has been very much related to the resources-driven boom, especially in Western Australia, and to a lesser degree, Queensland. 

Landlords have felt the pain of rising holding costs, and some have sold up; but for those remaining in the market rents have increased and rental vacancy rates have been at record lows.

As such overall RMBS arrears were notably higher for owner-occupiers (1.52 per cent) than for investment loans (1.18 per cent). 

Overall, things have held up pretty well and most stretched homeowners have hung on, with respite set to come in the form of lower mortgage rates in 2025 and beyond. 

---

P.S. Whenever you’re ready…here are 5 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan - book in here

You also download a free copy of my e-book The Only 6 Ways to Become Wealthy here.

    2. Download our property buying guide

Download our free property buying guide here. 

You can also check out a few of our recent property investment purchases here. 

Get in contact with us today if strategic property investment is your thing. 

    3. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is rapidly becoming one of Australia's biggest business podcasts, now with well over 50,000 audio downloads per month, and growing fast.

And our popular Low Rates High Returns Show also remains available on Spotify.

    4. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3.7 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,500 followers. 

By the way, I'm a 7-times published author on finance and investing, so you can check out some of my books here.

My new book, co-authored with Cate Bakos is available to buy here or on Amazon here - follow our book release on Facebook here and at our Buy Right podcast series here. 

5. Work with me privately

For a limited time you can book in a free diagnosis call with me here, so book in a call today.

US inflation falls to 2.5pc

US inflation at 3-year low

US inflation came in at +0.2 as expected in August.

Source: BLS

Over the year, headline inflation was +2.5 per cent, way down from the peak of +9.1 per cent. 

The 'all items less food and energy' reading fell to +3.2 per cent (the 6-month annualised core inflation figures were a much healthier +2.7 per cent). 

The 3-month annualised figure was +2.1 per cent, suggesting that in real time price pressures are probably being broken.

Source: BLS

This wasn't a bad result...essentially in line with expectations.

There are arguably some worrying signs in the economy, but with services inflation still looking potentially a bit sticky, the Fed will probably go with a 25 basis point cut in September, and await further information. 

I think.