Rental vacancies decline to 2.1pc

Vacancies down

The national residential vacancy rate fell from 2.2 per cent to 2.1 per cent in September, according to SQM Research, with declines recorded across most capital cities.

Sydney saw an improvement from 3.4 per cent to 3.2 per cent, in line with the findings of the REINSW vacancy rate survey. 

Vacancy rates also fell again in Brisbane to 2.3 per cent, well down from 2.9 per cent a year earlier. 

There were improvements across most rental markets, with the tightest capital city markets now Hobart (0.6 per cent), Adelaide (0.9 per cent), and Canberra (1.0 per cent). 

The ACT is now reportedly set to introduce legislation to cap rental price increases - although property rates and land taxes can continue to be hiked unabated - as the farcical meddling and ongoing distortions continue. 

Arrears improve again

Arrears ease

30-plus day mortgage arrears fell again from 1.49 per cent to 1.41 per cent in August 2019, according to S&P Global's Prime SPIN index for Australia. 

While arrears often decline in August, the magnitude of the improvement suggests that interest rate and tax cuts have flowed through to lower arrears, according to S&P.

While there remain some residual 90-plus day arrears, especially in the resources jurisdictions, 30-plus day arrears are once again approaching record lows at just 0.34 per cent. 

 Arrears improved significantly across every state and territory in the month of August.

Meanwhile, non-conforming and non-bank originated loans saw arrears approaching record lows.

Thus while mortgage repayments often remain the same, there's some solid evidence here to show that rate and tax cuts have eased the mortgage burden of households successfully. 

Good news, and runs contrary to much of the alarmist reporting out there.

Short-term arrivals hit new record

Headcount

A plateau in permanent and long-term arrivals into Australia has been outweighed by fewer departees.

As such the permanent and long-term inbound intake is still running at very strong levels at just shy of 300,000 per annum over the year to August 2019. 

Interestingly, the lower Aussie dollar and other factors saw seasonally adjusted short-term arrivals burn up to the highest level ever in August, at 820,000 for the month. 

The multi-decade boom in Chinese visitors gained some fresh legs in August at a seasonally adjusted 129,800 (up from 121,500 a year earlier).

Remember, though, China is but one of the cogs in the Asian Century wheel, albeit the most powerful one. 

Moreover, YouGov found in a recent poll that Australia is likely set to be one of the prime beneficiaries of flight from Hong Kong. 

Indeed, if you include Taiwan and Hong Kong in the monthly short-term arrivals chart, you'll find that short-term arrivals from the region have never been higher than they've been this year. 

February and July tend to be the big-ticket months for education arrivals due to term times. 

As it turned out July was not such a blockbuster this year - in fact, arrivals were down year-on-year in July - but a significant portion seemed to spill over into August instead. 

Either way, the numbers remain very strong. 

As such, Melbourne has been by far and away the biggest economic beneficiary of short-term arrivals over the past year, with annual visitors into Victoria up by +7.3 per cent to just short of 2½ million. 

The other standout performers in this regard were Tasmania (up +6 per cent to 92,500), and, somewhat surprisingly, Canberra!

Queensland tourism, after an obligatory bump from the Commonwealth Games, has disappointed.

Podcast: The R word!

Podcast: Aussie recession?

This week on the Michael Yardney podcast we discuss the likelihood or otherwise of an Australian recession in 2020. 

At this stage the chances are deemed to be relatively low as rate cuts, personal tax cuts, and the lower Aussie dollar work to rebalance growth in the economy,

But recessions do tend to recur, so it's always worth considering some scenarios.

We concluded the podcast with our outlook for Australian property over the next 5-6 years.

(Spoiler: the outlook is markedly different between established capital city property and new investor stock, such as house and land packages on the city fringe, and those new apartment towers aimed at landlords). 

Tune in to listen this week here (or click the image below):

Don't forget to subscribe for the weekly podcast for free here.

HK capital flight

Hong Kong flight

Incoming...

And it will be capital as well as people.

Source: YouGov

Brisbane jackhammers

Jackhammers

It's all happening in Brisbane CBD...there's not too much downing of tools or time for smoko around here at the moment!

The 30-second video below should give you the gist:

So while residential construction is now slowing towards multi-year lows, there's plenty happening in the commercial and infrastructure space. 

One of the major broadsheets reported this week on its front page that traffic controllers on the Queen's Wharf project are set to earn more than $194,000 per annum, including 10 hours per week of paid overtime.

Meanwhile, including overtime carpenters are expected to earn around $240,000 per year for a 46-hour week. 

All of which will feed itself back into Brisbane's economy over the next few years.

We looked at some of the major projects and what they might mean for Brisbane at our buyer's agency website here. 

Underemployment refuses to come down

Employment holding up

Roy Morgan reported that employment growth was still surprisingly strong over the year to September 2019 (+470,000), and mainly driven by full-time jobs. 

This could be another indicator of an upside surprise for this week's ABS employment print (alongside the impact of sample rotation)? 

However, Roy Morgan too has found that the size of the labour force is expanding very rapidly.

While unemployment as measured by Roy Morgan has improved to 8.7 per cent, there are still more than 2 million Aussies seeking work or more work, and this dynamic has now persisted for four consecutive years (inflation has been under target throughout that period too). 

Lowest Sydney vacancies in a year (but...)

Vacancies rate down

The first sign of Sydney's rental market turning the corner, with the REINSW reporting the lowest vacancy rate since October 2018 for the month of September.

The decreased vacancy rate for Sydney to the lowest level in 12 months was driven by decreases in the middle ring (-0.9 per cent), the outer ring (-0.8 per cent), and then the inner ring (-0.3 per cent). 

Demand for rentals tends to be higher in the warmer months, and the REINSW sees the improvement as being sustained for the rest of the year.

A look at the smoothed 6mMA vacancy rates by region below, however, shows that there is still quite a glut of rental stock to be worked through. 

Moreover, there's still another blast of unit completions to come in parts of Sydney before this construction cycle tails off in earnest.

Elsewhere, the vacancy rate in the Hunter Valley tumbled to the lowest level in years at just 1 per cent, while Newcastle wasn't far behind at only 1.2 per cent. 

Across the Illawarra region the vacancy rate declined in September, but with Wollongong still somewhat elevated at 2.7 per cent.