Mortgage arrears eased a little in Q4

Mortgage arrears hold the line

Prime mortgage arrears (RMBS) declined slightly in Q4 last year from 0.89 per cent to 0.87 per cent, according to S&P Global Ratings. 

This allays fears that the interest rate hiking cycle would lead to a spate of arrears, although many loans did go into hardship arrangements over the past couple of years. 

Source: S&P Global Ratings

Despite higher mortgage rates, low unemployment, rising rents, and low vacancy rates meant that investors showed fewer signs of mortgage stress than owner-occupiers. 

The improvement has been driven by the tremendous decline in arrears in booming Western Australia.

Queensland has also recovered from the preceding severe weather events - unfortunately there will be some more issues in northern New South Wales and Queensland for some unlucky homeowners following this week's Cyclone/storm.

The highest arrears were seen in Victoria, albeit only at 1.08 per cent, with some suburbs deep into Melbourne's mortgage belt reporting higher arrears rates. 

Overall, though, S&P expects arrears to stabilise at historically low levels thanks to gradual rate cuts.

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'Trump-cession' narrative catches a bid

Buckle up for detox

The new administration in the US is going about cutting public expenditure hard, and stock markets certainly don't appear to be too pleased about it.

Trump's plan is to cut the enormous run of fiscal deficits in the US to stem the gargantuan increase in the US national debt, while raising tariffs to assist the cause. 

In reality, the economy has become heavily addicted to public sector spending, and to allow a rebalance to the private sector a painful period of 'detox' adjustment may be inevitable. 

It looks as though Trump is going at this approach headlong, resulting in some volatility in asset prices in early 2025, though the compensation will likely be some interest rate cuts from the Fed later in the year.

In Australia we're following a different approach, to date, with high government expenditure helping to keep the unemployment rate low so far.

Context matters

Despite much gnashing of teeth, it's worth noting that the US S&P 500 index is only back down to where it was in September, and is still trading almost 10 per cent higher than where it was a year ago.

And zooming out, the market has more than doubled from where it was 5 years earlier.

The tech-heavy NASDAQ 100 was also down -3.8 per cent overnight, but again the index is only -12 per cent off its highs, essentially only taking it back to where it was in September last year. 

So, yes, we can expect some wild headlines.

But let's also not forget that the US S&P 500 stock market index has delivered outstanding 16 per cent per annum returns since 2009, for a cumulative gain of over 1,000 per cent, for one of the most sustained boom periods in markets history.

Domestic news

It's a quieter week ahead in Australia, as the wild weather has now passed, and residents of south-east Queensland and northern New South Wales have a chance to clear up and assess any damage from the recent storm. 

From chatting to friends across the region, it seems that the Gold Coast bore much of the the worst of the extreme high winds and water/power outages, Brisbane got a massive amount of rainfall in a day - resulting in flooding and overflowing creeks in all the usual places - and Sunshine Coast escaped, relatively speaking, quite unscathed. 

Lismore in NSW has again been one of the hardest hit communities, with many households having been unable to insure their home since the last inundation of flooding, an issue which may need addressing by the government. 

In other news, Westpac's latest consumer sentiment survey showed that almost everything got a boost in March 2025 following the February interest rate cut, including family finances, time to buy a major household item, economic conditions over the next year and 5 years, house price expectations (which are now fairly bullish), and time to buy a dwelling (especially in Victoria, notably).

Consumer sentiment hit its highest level in 3 years, with the Federal election likely to be called imminently.

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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. 

4. 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: Is Australia entering a housing market super-cycle?

2-Sense

This week on the podcast, Chris and I discussed the looming wild weather for northern NSW and south-east Queensland, the housing market entering its 'super-cycle', and the Coalition's pledge to send public servants back to the office 5 days per week.

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

You can also watch on YouTube here:

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

    2. 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.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3¾ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,900 followers. 

By the way, I'm an 8-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. 

4. 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 labor market softens gently, storms passing

Passing storms

The US economy added +151,000 jobs in January, a bit lower than expected, but solid enough.

The unemployment rate held fairly steady, at 4.1 per cent.

Measures of underemployment are rising, however, with the underemployment rate rising from 7½ per cent 8 per cent over the month. 

Source: Bloomberg

Auto delinquencies are at 30-year highs, and there are other some tentative signs of an economy fraying a little at the edges. 

Bond yields have eased quite significantly over recent months. 

And the crude oil price touched a 3-year low this week, taking away some of the inflationary risks. 

Back home in Australia, Cyclone Alfred has been downgraded to a storm.

We barely got a ripple up here, all things considered - except for major beach scarping - but potentially there will be some significant outages and damage impacting further south at the Gold Coast. 

Hopefully situation back all back to normal fairly soon.

Building approvals at 25-month high

Unit approvals pick up

Building approvals picked up to a seasonally adjusted 16,579 in January, driven by a bump in high-rise and higher-density approvals in Greater Sydney and Greater Melbourne.

House approvals were fairly flat for the month at a seasonally adjusted 9,000, but were 8 per cent higher than a year earlier, mainly thanks to Perth, Adelaide, Melbourne, and Brisbane. 

This was a better result, for sure, but before cracking the champagne it's worth noting that only 107,000 dwellings have been approved across the financial year to date, about 23 per cent below the 140,000 or so needed to meet the stated targets of the Housing Accord. 

One of the limitations of the ABS 'trend' series is that it can miss turning points, and although the trend for building approvals moved lower across recent months, it seems highly likely to me that the 2025 calendar year will be stronger for approvals than 2024 was.

Annual dwelling approvals have picked up from a cycle nadir of 164,000 to 175,000 over the past seven months of data, underscoring the point. 

Overall, this was a better result, suggesting that developers anticipate a more favourable environment ahead for getting new projects sold at the right price, to be built and then delivered to the market.

James Foster ran through the key figures in more detail here.

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P.S. Whenever you’re ready…here are 4 ways I can help you:

    1. Download our property buying guide

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

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

    2. 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.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3¾ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,800 followers. 

By the way, I'm an 8-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. 

4. 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.

Aussie National Accounts...Chartfest!

Private demand emerges

Real GDP growth came in at a slightly underwhelming 0.6 per cent for the December quarter, with a little boost from net exports and some more growth in government spending. 

The Aussie economy grew by a pretty sluggish 1.3 per cent over the year, and productivity took a disappointing downturn in today's figures.

Public investment rose 1.8 per cent in the December quarter, and this quarter private demand finally did contribute to growth, rising by 0.4 per cent.

Public spending now represents a record share of GDP, according to Westpac's analysis. 

You only have to look at the change in employment by occupation over the past 5 years to see where much of the economic growth has been coming from (healthcare, social assistance, and the rapidly burgeoning NDIS government disability scheme):

Having previously declined for seven consecutive quarters, GDP per capita gratefully eked out a seasonally adjusted increase of 0.1 per cent. 

Although this figure may be revised down later, it does at first blush appear to be the end of the per capita recession, albeit GDP per capita remains 1½ per cent below its highs. 

Nominal GDP (i.e. in current prices) increased by 1.6 per cent to a new record high, with export prices getting a boost in the December quarter. 

After an unusual few years to say the least, it seems that other income measures in the economy have broadly been flat over the past 18 months. 

Australia's terms of trade got a little fillip in the December quarter, with the lower Aussie dollar helping to lift export prices for iron ore, LNG, and rural goods.

However, the crude oil price is now since down by more than 15 per cent from their highs at under $68, and coal prices have since crashed to multi-year lows, so the trend for the terms of trade is more than likely going to remain down. 

Finally, a look at households.

The household saving ratio picked up to the highest level since the September 2022 quarter at 3.8 per cent as incomes increased through the calendar year. 

There should be a bit of a tailwind for households from falling interest rates in 2025, with 2024 having seen a steepling level of mortgage interest paid to lenders.

The wrap

Overall, it was heartening to see the seemingly endless declines in GDP per capita arrested in the final quarter of 2024, even if it was only a tiny gain provisionally recorded. 

Households are set to get some respite on their mortgage repayments in 2025 as more competitive mortgage rates are gradually offered by lenders, but only a steady pick-up in consumption spending is anticipated by most economists.

Dwelling investment was weak again in the December quarter, but should pick up from this calendar year as interest rates are lowered and as developers scramble to tackle the housing shortage.

There has been much debate about whether high levels of government spending and population growth have been justified, given that housing rents and cost of living pressures have been acute.

But, at least unemployment has remained low, and the economy has kept growing...

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P.S. Whenever you’re ready…here are 4 ways I can help you:

    1. Download our property buying guide

Download our free property buying guide here. 

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

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

    2. 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.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3¾ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,800 followers. 

By the way, I'm an 8-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. 

4. 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.

Housing prices rebound in February

Sentiment rebounds

Housing prices increased in 7 of the capital cities and across regional markets in February.

Melbourne has turned a corner now, and led the way with a +0.4 per cent increase.

Melbourne prices were down -1.1 over the quarter to be -6.4 per cent lower than at their peak.

Overall, though, sentiment has picked up as buyers sense that lower interest rates are on the way.

Source: CoreLogic

CoreLogic reported that rents rose +0.6 per cent in February, which as the fastest increase since May 2024, but well below the monthly high of +1.2 per cent seen in February 2021. 

Prices are likely to increase in 2025 as interest rates are lower.

You can read CoreLogic's full report here.

In other news, the Melbourne Institute inflation gauge recorded its first decline in six months, declining -0.2 per cent. 

Over the year inflation was +2.2 per cent, down from +2.2 per cent in the preceding month, representing further progress towards containing inflation. 

---

P.S. Whenever you’re ready…here are 4 ways I can help you:

    1. Download our property buying guide

Download our free property buying guide here. 

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

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

    2. 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.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3¾ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,800 followers. 

By the way, I'm an 8-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. 

4. 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: Are big inheritances destroying the 'fair go'?

2-Sense podcast

I joined Batesy to discuss the big property news stories this week.

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

You can also watch the video version on YouTube here:

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P.S. Whenever you’re ready…here are 4 ways I can help you:

    1. Download our property buying guide

Download our free property buying guide here. 

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

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

    2. 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.

    3. Subscribe for my free daily blog

Subscribe for my free daily blog with some 3¾ million hits here. 

You can also catch up with me daily on Twitter here, where I'm active daily and have over 14,800 followers. 

By the way, I'm an 8-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. 

4. 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.