Lower rates reducing mortgage stress

Mortgage stress declining

Roy Morgan reported from its survey of over 50,000 households per annum that those at risk of mortgage stress fell by some 78,000 from a year ago to 16.8 per cent, to sit well below the decade average.

Source: Roy Morgan

Those 'extremely at risk' also fell to the lowest level in well over a decade, which is good to see. 

The high risk cohort overwhelmingly comprises lower income households, and is far less represented by households earning $100,000 per annum or more. 

Record LNG exports in May

LNG ramp up

It looks as though the pace of iron ore and coal exports has slowed through to June.

Gladstone was getting back up and running again in May 2017, with 1.64 million tonnes exported.

Karratha fired back up after maintenance in April, while several new trains saw another massive expansion at Gorgon.

Exports were thus at a record high of more than 5 million tonnes in May.

And there's plenty more to come too, with Wheatstone (WA) getting in on the party from August onwards.

There's been a huge rebound in gas prices from a year ago, though prices seem likely to come under downwards pressure again towards the end of June.

Treasury had forecast that LNG exports would triple between 2015 and 2021, including well over 60 million tonnes of exports in FY2018.

At the current pace, and with Wheatstone still to come, this looks set to be achieved comfortably.

Australia median house price update

Heh...

On a more serious note, here's me in today's Sydney Morning Herald, discussing the today's population clock milestone and what it means for Australia. 

Australian population clock strikes 24.5 million

Population growth picks up

It was only in February last year that we saw the Australian resident population clock pass 24 million.

Today, the population clock quietly ticks past 24,500,000. 

The population clock presently assumes an increase of one person every one minute and 22 seconds.

Acceleration

The quarterly rate of population growth in Australia has picked up strongly again since bottoming out in early 2015.

In fact absolute population growth has been very strong since the mining boom, and has comfortably exceeded expectations before the Sydney Olympics.  

Versus the 1999 ABS forecasts the population today is 2.95 million higher than was projected at that time. 

That's not to decry the forecasts, which must be always be wrong to some extent.

Rather this is to show the potential scale of the impact from the mining boom on the creaking infrastructure deficit.

In particular the growth in population of the capital cities has far outstripped anything that could have been expected two decades ago, and projections expect this trend towards urban densification to intensify. 

Sydney grinds towards full employment

Jobs growth picks up

If this blog has adopted a marginally more upbeat tone in recent weeks, then it's mainly due to improved labour force indicators. 

Total employment expanded by +234,740 over the year to May 2017, rising by +2 per cent - a pace of employment growth miles ahead of the rate of population growth - to a fresh high of 12.21 million. 

Having apparently threatened to stall, employment growth in 2017 is off and running again in Greater Sydney, where the total number of employed persons is up by +1.91 per cent over the past year, comfortably fast enough to keep the unemployment rate declining. 

Smoothing out the volatility on a 3mMA basis, we can see that the annual rate of employment growth in Sydney has been picking up again since January 2017. 

As a result the Greater Sydney unemployment rate was again reported at just 4.4 per cent in May.

The annual average unemployment rate in Sydney has been declining consistently since February 2014, suggesting that the harbour city is approaching so-termed 'full employment'.

Elsewhere, Hobart is tightening nicely, but Brisbane's labour market is evidently struggling to absorb new migrants as apartment construction gets set to fade. 

At the industry level healthcare and social assistance has seen a net increase in employment of more than +509,000 over the past decade, the ageing population accounting for strong stock price performance in that sub-index. 

The most contentious point is what happens from here to total construction employment, which remains heroically elevated at a fraction under 1.1 million. 

Maroons thrive

State of Origin - series level

A symbolic shift in momentum is last night's thriller of a big game?

New South Wales looked set to dominate the match throughout, but Queensland ended up snatching the spoils right at the death. 

For half a decade now Brisbane has lived firmly in Sydney's shadow on the economic front as the coal and LNG downturn has bitten hard. 

And there's no doubt that Sydney has been powering ahead with its infrastructure plans while Queensland has been languishing.

Yet the cyclical migration north is well underway now. 

If only Queensland's political leaders could show as much spirit as its footie team! 

Job vacancies rise to a 5-year high

Jobs rebound

There has been much criticism of the Reserve Bank's apparently lackadaisical approach to monetary policy and the subdued economy in recent times - mainly from people like me, to be fair.

But the RBA must be feeling at least a little vindicated after a spate of improved news about the economy, particularly on the employment front. 

The unemployment rate was reported at a 51-month low this month.

And so it continues today. 

It was reported today that manufacturing employment has expanded by 40,000 over the past year, the strongest growth in a decade.

And the jobs outlook has brightened lately too.

The Department of Employment's job vacancies index was released today, with total seasonally adjusted vacancies rising to 172,403.

That's the highest result monthly since nearly five years ago June 2012.

Since the nadir in September 2013, the index has bounced back by 24.5 per cent.

Increases have been seen across all states and territories lately, but South Australia has been the surprise standout performer.

Low rates just starting to bite a little. Better!

Melbourne vacancies crash to a 7-year low

Infrastructure boost for Sydney

Most indicators suggest that Melbourne has moved into first place as the city creating the most jobs and growth.

That said, the New South Wales Treasurer handed down a 2017-18 Budget yesterday revealing that the state's finances are in rude health.

Each month I've been tracking the unprecedented stamp duty take resulting from Sydney's property boom, a gift which has kept on giving.

It was reported yesterday that the state beat projections in 2016-17 to hit another surplus of $4.5 billion, with NSW now in a negative net debt position, boasting a net worth totalling more than a quarter of a trillion dollars, and with enough left over to set up a $15 billion Future Fund.

To complete the virtuous circle the state now plans to unleash a towering $72.7 billion spend on infrastructure, incorporating an impressive range of projects, a further record $7.7 billion for health infrastructure, and $4.2 billion to build 26 new schools and to fund upgrades.

This is a positive move for Sydney, and the harbour city will need to get these projects moving to fill the hole left by any coming downturn in the rate of apartment building.

Melbourne vacancies keep falling

We seem to have reached an inflection point in this property cycle.

Lower interest rates spurred record numbers of property investors into the market since 2012.

But now regulators and banks are winding back interest-only loans and have introduced tougher serviceability measures and higher mortgage rates for investment products.

And this is at a time when demand for rentals has never been higher, with employees changing roles and locations more frequently than in times past, and a record boom in international visitors and students.

While the rate of dwelling construction has been impressive, I recently mused here whether the number of available rental properties will keep up with demand this year and next. 

Vacancy rates declined across much of Australia in May, with the national vacancy rate dropping from 2.4 per cent to 2.2 per cent. 

Vacancies remained super-tight in Hobart (0.6 per cent) and Canberra (1 per cent), while in Sydney the vacancy rate declined to just 1.8 per cent. 

Vacancy rates ticked down in Brisbane, Perth, and Darwin in May, though from elevated levels in the case of Perth and Darwin, where median asking rents continue to slide. 

In Melbourne the vacancy rate is almost in freefall, halving from more than 3 per cent at the end of 2014 to a 7-year low of just 1.5 per cent. 

Inflation impact?

SQM's asking rents index shows rents already rising for apartments in Sydney (up 3.5 per cent over the year to June 20), and quite sharply for apartments in Melbourne (up 5.9 per cent).

The vacancy rates figures suggest that rental prices may soon level off in the resources capitals, while there is mounting evidence of a tightening rental market in the two most populous capital cities. 

If rents do start to rise again then this has implications for monetary policy since rents form an important part of the consumer price index (combined with rising energy prices, a strengthening rental market could be enough to scope out further rate cuts).

On the other side of the ledger, oil prices have declined to their lowest level in 9 months. 

Overall, the figures suggested that the rental markets in the weakest cities are approaching their cyclical nadir, while most other markets ex-Brisbane are either tight or tightening. 

Most notably, the feared oversupply in Melbourne has not materialised - if anything the number of available rentals is failing to keep pace with demand.