How to manage your cash flow for property perfection

Cashflow management

No surprises from the Reserve Bank of Australia today, with interest rates on hold.

In today's episode of the Australian Property Podcast, we discuss cashflow management.

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

You can also tune in at Apple podcasts, Spotify, and other podcasting hubs. 

You can also check out the video version on the YouTube channel here:

Stock dries up

Unit rents mooning

Property for sale has sunk even further below the half-decade average, according to CoreLogic:

The growth in unit rents has slowed somewhat in Canberra, Hobart, and Darwin, as supply has increased.

However, rents are mooning for units in Sydney, Brisbane, and Melbourne. 

Source: CoreLogic

Looks like it's set to be a big few years for units in the big cities. 

Inflation gauge drops away...

Inflation is beyond peak

The Melbourne Institute released its inflation gauge, and it dropped from 6.3 per cent to 5.7 per cent.

Source: Shane Oliver, AMP

The trimmed mean reading also fell to 5.2 per cent, further confirming that inflation peaked last year.

ANZ-Indeed reported that job ads peaked in September 2022 and have fallen -7.2 per cent since.

As such, the Reserve Bank of Australia will almost certainly be pausing interest rate hikes tomorrow, according to market pricing. 

Lending for new homes lowest since November 2008

Lending for building crashes

Building approvals were once again atrocious at around 12,600 in February, the recent weakness being driven by a drop in unit approvals in Sydney and Melbourne.

Pre-sales are far too weak to get new projects out of the ground, and apartment prices will need to rise significantly from here before that changes. 

House approvals were also still weaving lower over the year in all the main capital cities: Sydney, Brisbane, Perth, Melbourne, and Adelaide. 

The trend for building approvals thus continued to decline to the lowest level in 128 months. 

The elephant in the room is that with developers going insolvent all over the place many of these approvals will never got off the start line either. 

It's little wonder markets are starting to price in rate cuts over the year(s) ahead, and lending/housing policies are much too tight at the moment to arrest the downward trend for approvals.

Lending for new home construction has crashed to the lowest level since the global financial crisis in November 2008, reported Tim Reardon of the HIA:

Source: HIA

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There is at least some growing pressure to remove the constraints on lending assessment buffers, as discussed by Leith van Onselen at Macrobusiness here. 

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Stock for sale remains at very low levels, and as such dwelling prices have been ticking higher for 2-3 months now in many parts of the market. 

CoreLogic reported price increases for Sydney in March, as well as blistering increases in unit rents. 

Big Australia to Huge Australia

Population acceleration

There was yet another thumping (by-)election result yesterday - this time a historic win in Aston - and once again swinging hard to Labor, which will be causing some serious angst in Liberal circles, and possibly even in time a leadership spill.

Zooming out and looking at the bigger picture, the Labor Party has now assumed a position of total dominance right across Federal and State politics, with very little prospect of a close election contest between now and 2028 at the earliest.

In recent years, more and more we are hearing policy conversations discussing the journey towards a huge Australian population of 100 million, and the new ALP government has wasted no time at all in dialing up immigration to record highs. 

Total population growth is now running at around 600,000, roughly double what we'd been used to in the post-resources boom years. 

For whatever reason, the unions don't seem too fazed by this, and more broadly PM Albanese and Jim Chalmers seemingly don't believe that high immigration has a deleterious effect on wages growth or productivity, as discussed in The Spectator here. 

Whether or not an Aussie population soaring to 100 million is actually a good thing is a bit of a moot point at the moment, since Labor will set population policy without any serious contest for at least the next 6 years...and possibly 9 or 12. 

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There were more strong auction results in Sydney yesterday, and now we head into the Easter break and the cooler Autumn months, so tight stock levels will likely decline even further over the months ahead. 

PropTrack again noted rising housing prices for February - largely unreported - with unit prices in Sydney leading the way, increasing by +0.7 per cent over the month, and Brisbane units also again in positive territory.

Overall, PropTrack sees prices only -3 per cent lower than a year ago, but still +30 per cent higher than pre-pandemic lockdown levels. 

Will there be another major banking crisis?

Australian Property Podcast

I joined Chris Bates on the 2-Sense segment of the Australian Property Podcast to discuss the Big 3 news stories of the week.

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

You can also tune in at Apple Podcasts, Spotify, and elsewhere. 

Please feel free to subscribe, leave us a friendly review, and spready the joy. 

US inflation continues to ease

Inflation expectations down

US PCE inflation eased further down to 5 per cent in the latest figures, down from the highs of 7 per cent in June 2022.

Charts from the charting king, Charlie Bilello:

It's never going to be a straight line down, but it was good to see core inflation rising by only +0.3 per cent over the month, which was lower than expected, and January was revised down. 

This brought core inflation down to +4.6 per cent over the year.

3-year ahead consumer inflation expectations fell to the lowest level in nearly 3 years, since June 2020.

Bond yields fell, and markets are loving this little surprise. 

PCE housing inflation is still remarkably high at over +8 per cent, but surely this is a lagging indicator which will drop in due course. 

Australian Property Podcast

Australian Property Podcast

Brief intro...

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