Pete Wargent blogspot

PERSONAL/BUSINESS COACH | PROPERTY BUYER | ANALYST

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Sunday, 5 December 2021

Lots and lots of auctions

Auctions

Big volumes of property listings and auctions going to calendar year-end.

Clearance rates sliding lower as buyers have much more choice now.

Domain with the preliminary infographic:


Source: Domain

Saturday, 4 December 2021

US unemployment plunges to 4.2pc (look out!)

Labor market tightens

US nonfarm payrolls printed at only +210,000 in November, well below market expectations of +550,000, with previous months revised up by a further +82,000. 

But there was a big drop in the unemployment rate, from 4.6 per cent to just 4.2 per cent, while the key measure of the underemployment rate fell sharply from 8.3 per cent to 7.8 per cent.


The Federal Reserve is now speaking more about accelerating its taper.

Indeed, with inflation at 6 per cent, and now unemployment at just 4.2 per cent, it's quite a marvel that the central bank is still creating $105 billion per month with asset purchases at all. 

There are still concerns around virus variants and what-not, but the general narrative has taken a turn in a more hawkish direction.

It’s seemingly impossible to predict almost anything at the moment, but presumably over-valued stock markets may get  a bit of a nudge on this news. 

97-year old Charlie Munger commented in an interview that the current environment for stocks and cryptos is the most extreme he has ever experienced - even crazier than during the dotcom bubble.

But what would he know? :-) 

Thursday, 2 December 2021

7 News on the Xmas window for homebuyers

Summer selling season

In their lead article, 7 News took a look at the potential window of opportunity for property buyers here (or click on the image below):

Housing finance peaked in H1 2021

Commitments retracing

Housing finance eased another -2.5 per cent to $29.5 billion in October, excluding refinancing.

The decline was driven by homebuyers (-4.1 per cent), but investment loans increased 1.1 per cent.


The impact of the lockdowns on home loans in Sydney and Melbourne is clear in the graph. 


First homebuyer numbers are normalising, but were still quite high in historic terms, with home ownership rates increasing through the pandemic. 


The average loan size for homebuyers was $86,000 or 18 per cent higher than a year earlier.


Softer numbers, in line with more balanced market conditions, but homebuyer commitments will quite likely pick up again in due course as borders and the major economies reopen.

The unusual Xmas window

Border closures

There's never been a year quite like it. 

There are more listings coming online now, but as yet, few international arrivals.

Interesting graph on a historic year for net overseas migration here (or click on the image below):

3 reasons the economy should bounce hard next year

Another srhinking

Lots going on in Australia's national accounts!

The economy, as measured by GDP, shrunk by -1.9 per cent in Q3, but remained +3.9 per cent up from a year earlier. 


Plenty of the year-on-year charts and graphs have looked rather wild lately, due to the hugely distorting impact of lockdowns.

Looked at quarterly, the -1.9 per cent wasn't too damaging, easily beating market expectations of a -2.7 per cent decline, though other income measures were hit harder, and hours worked fell by more than 5 per cent. 


Nominal GDP took a decent knock this quarter, though it was still up by 11 per cent from a year earlier. 


Strong rebound in the post

Obviously a fairly miserable set of headline numbers, then.

Generally, though, what we've seen elsewhere in the world is that when economies reopen, they reopen strongly.

There are at least three reasons why Australia should see the economy come firing back as Sydney and Melbourne get back up to speed.

Firstly, Australia is an exporter of commodities, and the key commodity prices have been running hot. 


Secondly, Australia has had in place some of the most substantial stimulus measures going (perhaps in part due to the preceding mining boom shoring up government coffers). 

The household saving ratio surged back up to just shy of 20 per cent in the third quarter as disaster payments kicked into gear - and more households were unable to socialise and spend - and the accumulated effect has been that households are now sitting on hundreds of billions of dollars in excess cash and deposits. 


That's a huge war chest of cash ready to be spent over the coming months.

And thirdly, although fixed mortgage rates are off their lows and creeping higher, the cash rate is likely to remain stuck at the zero lower bound for some time to come, freeing households to spend big next year.

Indeed, mortgage stress is now at record lows. 


Lots happening, indeed - more detail from the data king James Foster here!

Brisbane leads price growth

Brisbane/Adelaide price rises

Brisbane recorded 2.9 per cent dwelling price growth in November, while Adelaide also saw a 2.5 per cent increase.

Over the past year all capital cities have experienced strong growth, with prices up 21 per cent for the capital cities (and 25 per cent for the combined regional markets). 


Source: CoreLogic

Although prices increased in the month across seven of the capital cities the trend figures suggest more balanced market conditions in Sydney, Melbourne, and Perth, as more listings come online.


Stock levels do remain very tight for this time of year, but are now clearly increasing.


CoreLogic also reported strong ongoing growth in rents, at 0.7 per cent for the month.


Source: CoreLogic

The full monthly report from CoreLogic can be found here.

Tuesday, 30 November 2021

Housing credit impulse cools

Housing calming down

Decent news for the Aussie economy, with credit growth bouncing back up to 5.7 per cent. 

Business credit growth recorded another solid month to be up 5.3 per cent over the year. 


Housing credit growth picked up a bit further to 6.7 per cent, the highest level since July 2017. 


Although owner-occupier credit growth was very strong at 9 per cent - the highest since 2016 - investor credit growth was still quite muted at only 2.6 per cent over the year to October.


Although housing credit growth is still rising, it's no longer accelerating in the same manner, so we should expect the rapid housing price growth to taper over the coming months. 


With mortgage rates creeping higher, activity in the housing market is likely to be less dramatic next year. 

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Australia's seasonally adjusted current account surplus printed at a record high $24 billion in Q3, driven by rollicking iron ore and coal exports to China, while other global trade has been severely hampered. 

The cumulative surplus for the calendar year is set to be mind-bogglingly high, the like of which we've not seen before. 


The national accounts partials suggest that the economy probably shrunk by a few per cent in Q3, but we can expect the rebound to be strong over the year ahead given the accumulated war chest of household savings.