Despite the cost of living, it remains popular!

2-Sense podcast

Batesy and I are back on the podcast, discussing the big 3 property news stories of the week.

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

You can also watch the video version here:

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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 economy powers on!

Payrolls boom!

I guess it seldom pays to underestimate the strength of the US economy, and once again so it proves!

Nonfarm payrolls smashed estimates in adding a remarkable +353,000 in January.

It's been pointed out previously that the figures can often be revised down later, but this month revisions to earlier periods actually added another +126,000.

Boom!

The unemployment rate held steady, at just 3.7 per cent.

The growth in average hourly earnings was also notably stronger than expected at 4½ per cent over the year to January. 

Boom back better

It's quite remarkable, when you think about it!

Years were spent wondering whether interest rates could ever be lifted away from zero without crippling markets and the economy.

Yet here were are with the Federal Funds rate at up to 5½ per cent while employment booms along and stock markets have been casually making record highs. 

Clearly there won't be interest rate cuts from the Federal Reserve before May at the earliest, or for as long as this strength in the economy continues, while the US 2-year Treasury yield jumped from 4.2 per cent to 4.4 per cent on this release alone.

Granted, there could still be a significant lag effect at play, and over recent days the US regional banking crisis has roared back into the headlines, just when we thought the worst of the issues might have passed.

NYCB was the latest bank to chalk up a sudden 40 per cent drop as it revealed a surprise quarterly loss, with a pile of future loan losses to come. 

In Australia, the monetary policy channels operate a little differently, since most borrowers are on variable mortgage rates (or at least short-term fixed rates). 

Central bank moves in Australia have more impact, more quickly...both on the way up and on the way down. 

On this basis, it looks increasingly possible that interest rates will be heading lower in Australia before the US, but there will be plenty of resistance to moving too soon, and employment numbers will be watched closely for any signs of significant deterioration. 

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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.

Lending for new homes at record lows

Lending eases

Lending for housing pulled back 4 per cent in December on a seasonally adjusted basis, although this wasn't entirely unexpected after a big surge in October and November combined (up around 8 per cent). 

It was the first decline reported in 5 months. 

James Foster ran through the detailed numbers here. 

Overall lending was up solidly in Q4, and property sentiment is generally shifting to a brighter shade in early February as evidence by more enquiries to buy property via buyer's agents, and an increase in online searches for investment property.

You only need to look at the fundamentals to see why.

The Housing Industry Association highlighted here the challenges facing housing supply, with lending for new homes now tracking at record lows. 

Source: HIA

Meanwhile, the rental crisis is far from over. 

Median asking rents in Sydney have now increased from $600/week at their pandemic lows to $1,050 per week, apparently re-accelerating again over the past three months. 

Over the past year median asking rents in the New South Wales capital are up +16 per cent for houses, and +15 per cent for units. 

Source: SQM Research

Aussie stock markets have also been busy pushing out to a record high close at 7,699 for the ASX 200, as bank stocks have rebounded.

There's been something of a tension for bank stocks between the brightening outlook for residential lending (and the significant potential for the release of bad debt provisioning), versus some exposure on commercial office assets with very high vacancy rates.

Overall, happy days for household wealth, though: there's seemingly a very good chance that housing wealth, stock markets, and superannuation will all sit at record levels in 2024, in spite of the cashflow pressures facing so many households. 

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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.

Building approvals snaking around the cycle lows

Building approvals drop again

House approvals slowed modestly in December, mainly driven by Sydney.

And unit approvals dropped by nearly 10 per cent, which essentially comprised 1,000 fewer units approved in Melbourne. 

Some large projects have since been greenlit around Melbourne's CBD in January, however. 

Unit approvals were again surprisingly low across Greater Brisbane, where there's a serious undersupply of housing.

Overall, the trend for building approvals doesn't look clever, heading lower again, as it is.

However, this is possibly around the cycle low point now. 

Certainly let's hope so, because the 162,000 approvals over the past year was the lowest figure since March 2013 (plus don't forget that the Housing Industry Association assesses that 1 in 4 'new' homes is actually a knockdown-rebuild).  

Overall, these were again very weak numbers, and along way behind what's going to be needed.

Zooming out, as Ben Phillips of the ANU points out, this is probably the bottom of the cyclical trend.

Source: Ben Phillips, ANU

By 2027, we'll most probably be looking towards the next apartment supply overhang.  

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Housing prices continued to rise in January, according to CoreLogic's latest index. 

Source: CoreLogic

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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 freefalls to 0.6pc!

Very good news for inflation!

Inflation fell faster than expected in the December quarter, down to just +0.6 per cent.

There was still some inflation out there, mainly from tobacco excise, painfully surging insurance prices, and new dwelling costs (again), but overall this was an outstanding result considering where we've come from.

After a number of years of Aussies getting used to very low inflation, the pandemic lockdowns and supply chain disruptions created a nasty spike of inflation over the past year or two...but this is now moderating.  

The core measures of inflation over the year fell back fairly dramatically from 5.2 per cent to 4.3 per cent (and annualising the recent numbers suggests the job is essentially almost 'done'). 

From an annual inflation perspective heading down about as fast as they went up, and we may well now discover that central banks have over-tightened somewhat. 

Rental price inflation slowed this quarter, though this was driven by the Commonwealth Rent Assistance according to the Australian Bureau of Statistics. The rental crisis remains far from fixed, however. 

Overall, Australia has belatedly caught the global disinflationary pulse, and there's more to come here as lower energy costs flow through. 

Overall, this was pretty much sensational news for Australia's central bank.

There are plenty of signs that activity in the economy is stalling, and the way things are going overseas we could even see interest rate cuts here before the US. 

Looking further out, markets are expecting modestly lower interest rate over the next couple of years. 

I expect a very busy year ahead for realtors and buyer's agents as first homebuyers and upgraders scrap to get their hands on a dearth of stock.  

The worst case for property is basically dead for the next few years, but nevertheless there are parts of the country where higher mortgage rates are still seriously hurting borrowers. 

As ever, James Foster ran through the detailed inflation numbers here. 

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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.

Investor credit growth is throttled

Investor chokehold

Investor credit growth continued to be strangled into the end of 2023, as rental vacancies fall to all-time lows. 

Annual credit growth to investors has been running at under 3 per cent for the past six months, during a period of record population growth. 

Business credit growth appears to have stabilised at a more modest level at around 0.5 per cent per month of late.

Owner-occupier have been a bit more active, pushing housing credit growth into growth territory.

Looking ahead, investors may become more active in 2024 and 2025 as interest rates fall. 

Housing prices have run far ahead of the credit impulse due to extremely tight levels of stock on the market. 

Overall, the lending environment for investors is very tight, with the regulator needlessly applying a 3 percentage points lending assessment buffer, when implied yields suggest that interest rates will be falling over the next two years. 

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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.

Property market outlook for 2024

Property in 2024

I joined the champion team at Open Agent to discuss the property market outlook for 2024 here (or click on the image below):

Retail sales tank

There's been plenty of guff written about the 'strength' in retail sales over recent months.

The reality is now gradually becoming apparent.

The November Black Friday surge in turnover was revised down in the latest figures.

Turnover then also fell -2.7 per cent in December in seasonally adjusted terms, taking monthly retail turnover all the way back down to 2022 levels at $35.2 billion (despite the record population growth since that time).  

Reported the ABS:

Source: ABS

Of course, the real kicker is that these figures are measured in current prices, and the quarterly figures will show that retail volumes have been dropping for well over a year.

Now it's all about retail discounting to get customers through the door meaning lower prices ahead.

The UK is already experiencing this, with growth in the shop price inflation dropping to the lowest level in two years, up only 2.9 per cent over the past year. 

James Foster ran through the latest detailed figures for Australia here.

The Aussie household saving ratio has already fallen from 24 per cent at the highs to 1 per cent, and since monetary policy works with a lag, we'll soon be seeing the intense impact of higher mortgage rates on the economy. 

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The inflation figures for the December quarter are due out on Wednesday morning, and are expected to record quarterly increase of around +0.8 per cent.

This would take annual inflation down to a 2-year low of around +4.3 per cent.

---

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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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.

Renovations back at near-record levels

Alterations & additions

Major renovations work ballooned from early 2020 from $200 million to $600 million per month on the back of the government's massive HomeBuilder stimulus package.

I guess, if nothing else, this shows just how powerful targeted fiscal stimulus can be!

And Australia has a lot of fiscal headroom should it ever be needed again.

Things seemed to be easing in 2023 as mortgage rates increased, and as many of the pandemic period renovation projects finished, yet by November we were back to near-record monthly highs for the financing of renovations.

What gives?

Firstly, it's worth noting at least a third of the increase in the value of renovations has been due to rising costs, rather than only volumes.

And secondly, certainly the chronic shortage of housing in south-east Queensland has led to the construction of more granny flats. 

Thirdly, low levels of housing stock for sale combined with high transaction costs/stamp duty rates have led many aspirational homeowners to stay put and renovate, rather than trade up.

And fourth, perhaps some of the more creative mortgage brokers are even using 'renovations' as an excuse to cash out for refinancing. 

Noise, or new uptrend?

But is this latest data merely noise or a blip, or is it the resumption of another genuine boom in renovations work?

Smoothing out the recent data suggests that Sydney and New South Wales homeowners have driven the recent rebound, with renovation financing running at around double their pre-pandemic levels. 

But the largest percentage uplifts in the value of renovations lending since the pre-pandemic days have been seen in Queensland and Western Australia, more than tripling respectively.

It's boom-time in the resources states, driven in part by very rapid population growth.

A word of warning for would-be renovators: you should probably plan for budget overruns, heavy pricing for materials and trades, and potentially council approval delays to boot. 

Also, consider using a buyer's agent if you're looking to buy in the current exceptionally tight market conditions.

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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 one of Australia's biggest business podcasts.

And our enormously 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 well over 3.5 million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 13,500 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. 

    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.