Are high house prices killing off our entrepreneurs?

2-Sense podcast

This week Batesy and I discussed all the latest property market news here (or click on the image below):

You can also watch at Youtube here:

Fed Funds futures price 121bps of cuts in 2024

Higher rates have bitten

Canada's unemployment rate continued to rise last month, ticking up to a 22-month high at 5.8 per cent, according to Statistique Canada. 

The Canadian economy is still adding jobs, but this hasn't been nearly enough to keep pace with the population explosion.

This is an issue that Australia, too, will likely grapple with in 2024. 

In Europe, inflation has suddenly vanished, with the inflation rate crashing far lower than expectations down to just 2.4 per cent across the Eurozone, following a -0.5 per cent reading for the past month. 

The next move in interest rates will therefore almost certainly be down for the ECB, to below 4 per cent.

In the US, Federal Funds futures are pricing close to 125 basis points of cuts in 2024 (with an 80 per cent chance of a cut as soon as March). 

That's approximately 100 basis points more than was the case a month ago, with a sub-4 per cent policy rate priced in before the end of 2024. 

It almost makes you wonder what markets know about the potential (or otherwise) for a soft landing that we don't...

Of course, there's an equivalent risk that such a rapid loosening in financial conditions prevents inflation ever getting back down to 2 per cent. 

No matter what, it's going to be an eventful year ahead! 

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The Aussie dollar has surged about 3½ cents higher against the US dollar over the past 5 weeks, to 67.7 per cents, which should help in the fight to bring inflation down faster. 

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Sydney rents have really surged back rapidly over the past couple of years, according to Domain's latest quarterly rental report:

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

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Temp visa holders eclipse records

Record visa issuance

The number of temporary visa holders in Australia hit a record high in October of 2,664,523. 

Excluding visitors, the total was a record 2.32 million. 

Student visas hit a record high of 672,782, while working holiday visas have roared back to 159,638.

It's been well documented that this is causing some ructions in the rental market, but it's also solving the labour shortages in hospitality, retail, and other sectors which were chronically short-staffed when the borders were closed. 

Many temporary visa holders will now be eligible for permanent residency in Australia, under newly-announced rules, effective November 25. 

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here

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

2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is one of Australia's biggest business podcasts.

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

3. Subscribe for my free daily blog

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4. Work with me privately

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

Credit growth picks up, but only for housing

Housing credit firms

Housing credit growth firmed in October, increasing by +0.37 per cent, which was the largest monthly increase in 11 months. 

The increase was largely driven by owner-occupiers.

On the other hand, higher mortgage rates are leading more investors to sell, and net credit growth to investors was very weak again in October - as it has been all year - at only +0.2 per cent. 

No end in sight for the rental crisis here...

Capital city prices are up +8½ per cent over the past year, and have outpaced the credit impulse indicator due to record high immigration, developer insolvencies and project cancellations, and very low stock levels. 

Overall credit growth for the month was soft at +0.3 per cent, matching the recent pace of growth, and pointing to a slowdown in the economy in 2024. 

In other news, the US PCE Price index fell to 3 per cent, far below the peak at 7 per cent of mid-2022, and the lowest since March 2021.

The Federal Reserve's preferred measure of core PCE slowed to 3½ per cent, also the lowest since early 2021, and almost 2 per cent below the Federal Funds rate. 

Monetary policy settings are the most restrictive since...2007.

Markets are accordingly pricing for 5 interest rate cuts in 2024 for the US. 

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here

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

2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is one of Australia's biggest business podcasts.

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

3. Subscribe for my free daily blog

Subscribe for my free daily blog with 3½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,000 followers. 

4. Work with me privately

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

Building approvals are extremely low...except here

Approvals slump continues

CBA economist Stephen Wu predicts that inflation by December could begin with a '3-handle', with some economists suggesting the most recent interest rate hike may have been too hasty.

Indeed, with the base effect he's probably spot on, and it looks as though inflation is actually declining faster than the Reserve Bank's latest forecasts.

Certainly the building industry is despising current conditions, with insolvencies at decade highs.

In that context, it wasn't a surprise to see annual dwelling approvals slumping to the lowest level in 124 months in October, at 166,000. 

Louis Christopher estimates that with cancellation rates presently running so high dwelling completions might be only 150,000 or so next year, even before accounting for demolitions. 

There have been some large projects approved in south-east Queensland such as the twin towers in Robina and a large development in Brisbane's Fortitude Valley, but project approvals in Sydney and Melbourne remain very low. 

House approvals should begin to recover with demand next year, but are currently trending lower with a HomeBuilder hangover, though approvals in booming Perth are already rising again. 

Overall, building approvals have increased a little of late, but are way to low at around 14,000, with few medium- and higher-density projects likely to stack up or pass feasibility in the current environment. 

Overall, the mix of higher interest rates, trades, and materials costs mean that developer profits just aren't easy to come by at today's prices. 

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here

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

2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is one of Australia's biggest business podcasts.

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

3. Subscribe for my free daily blog

Subscribe for my free daily blog with 3½ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,000 followers. 

4. Work with me privately

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

Stuart Wemyss from ProSolution

ProSolution advisory

My weekly coaching calls are usually for clients only, but there was some great general information this week from Stuart Wemyss, so I thought I'd share it here:

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here

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

2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is one of Australia's biggest business podcasts.

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

3. Subscribe for my free daily blog

Subscribe for my free daily blog with well over 3.4 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,000 followers. 

4. Work with me privately

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

Inflation cools to 4.9pc

Inflation cools

The monthly inflation gauge showed an implied fall in prices for October, taking the annual rate of inflation down from 5.6 per cent to 4.9 per cent.

This was lower than market expectations for 5.2 per cent (and, of course, well down from the highs of 8.4 per cent in December 2022). 

Source: ABS

James Foster ran through all of the key information here. 

As ever, there are some good reasons for caution. 

Rents will generally continue to rise over the next 2 to 3 years, for example.

On the other hand, we should get a very timely drop in fuel prices over the next few months, and red hot new dwelling cost inflation should also now ease from here. 

The recent global bond rally continues, with dovish words from the Fed, and Australia joining Germany and Spain in reporting softer inflation figures.

Australia's key benchmark 3-year bond yield began the month at 4½ per cent, and will end it at under 4 per cent. 

The somewhat weaker than expected inflation figures also broadly ensure that interest rates will be on hold until February. 

Looking ahead, we should see some decent goods price deflation in Australia, with some residual price pressures for the cost of services, and holiday travel.

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here

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

2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is one of Australia's biggest business podcasts.

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

3. Subscribe for my free daily blog

Subscribe for my free daily blog with well over 3.4 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,000 followers. 

4. Work with me privately

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

Retail turnover declines in October

Retail disappoints

Retail turnover missed expectations, declining modestly by -0.2 per cent in October, to be just +1.2 per cent higher than a year earlier. 

Total monthly turnover remained a little below the 2022 peak, at $35.77 billion, despite some marked increases in prices and population growth over the course of 2023. 

'Black Friday' sales should see a spike in activity in November, which hasn't always been easy to account for with seasonal adjustments (as you can see from the 2022 spike and then subsequent trough). 

There have actually been a few such factors creating noise, such as the i-Phone 15 release and a surprisingly warm spell, so following the trendline is probably smart here. 

The king of Aussie market analysts James Foster ran through all the key details here.

Looking ahead, consumer durables prices are set to go into outright decline in Australia, following the sharp drop in Chinese export prices for consumer durables. 

Justin Fabo chimed in with this awesome graph to demonstrate the relationship:

Monthly consumer price inflation figures will be very closely watched when they are released tomorrow morning.

The annual figure should follow fuel and electricity prices lower, although it's less clear what will be recorded for goods prices. 

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P.S. Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

Register for my next free online training - Boom or Bust? How to change your investment plan for 2023 - book in here

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

2. Subscribe to our Top 10 Podcasts for Investors

Listen in to our podcasts

The Australian Property Podcast is one of Australia's biggest business podcasts.

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

3. Subscribe for my free daily blog

Subscribe for my free daily blog with well over 3.4 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,000 followers. 

4. Work with me privately

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