Housing credit impulse turning...

Impulse turning

Credit growth came in at 0.4 per cent for August, and 5.1 per cent over the year.

Housing credit growth was steady at 0.3 per cent, again, as it has been of late.

Over the year, housing credit growth was 4.3 per cent (well below the 7.6 per cent seen this time last year). 

Over the year total credit growth in the economy continued to decelerate, now down to 5.1 per cent, having been as high as 8.6 per cent a year ago.

Investor credit in the housing market has been anemic for the past year, once again recording net growth of only 0.2 per cent in August. 

At a time of record high population growth, this means more chronic pressure on rental markets. 

Eventually lending standards will need to be relaxed to get investment and construction happening again, but this probably won't happen until 2024 when inflation is definitively under control. 

The housing credit impulse is gradually turning positive, but in fact housing prices have recovered much more quickly that might've reasonably been expected, due to record high population growth and very low stock listings. 

Overall, this was pretty much as expected, with higher interest rates doing their thing. 

Job vacancies plunge to earth

Job vacancies falling

Job vacancies dropped another 9 per cent over the 3 months to August, to be 18 per cent below their highs at 390,000.

Job vacancies were up over the quarter in Queensland, but are now dropping away sharply in New South Wales and Victoria. 

The number of unemployed persons per job vacancy bottomed out at 1 in August 2022, but has now increased to 1.4...so things are normalising quite quickly now. 

In fact as the labour force expands quickly the unemployment rate is already heading to 4½ per cent, and possibly higher in due course. 

Retail turnover also continued in a very weak trend, ensuring that the Reserve Bank will keep interest rates on hold to allow the tightening still in the system to work its way through for a bit longer. 

Monthly inflation...still heading the right way (fuel aside)

Fuel drives inflation rebound

As expected by markets, the monthly inflation indicator came in at 5.2 per cent for the year to August.

This was an increase from the very sharp drop to 4.9 per cent last month, but below the 5.4 per cent recorded in June. 

The increase was mainly driven by rising fuel prices, driven more so by global forces, and rents, which are being pushed higher by record immigration and tight lending conditions. 

Excluding volatile items - fuel, fruit and veg, and holiday travel - the indicator rose 5.5 per cent in August, down from 5.9 per cent in July. 

Since this was in line with market expectations, the Aussie dollar and bond markets were largely unchanged.

Things are gradually moving in the right direction, but still a drop in fuel prices would be most welcome!

Immigration set to slow

Population growth to calm down

We're in the eye of the storm for record population growth at the moment.

But much of the surge has been driven by the rebound in temporary visa holders, and things will calm down again soon enough.

I discussed this with Danielle Ecuyer on ausbiz TV here (or click on the image below):

Monthly CPI to creep back up

Inflation to rebound in August

Been travelling around a bit over the past fortnight - hence the lower blog post output - speaking at events in Port Macquarie, Newcastle, and Sydney.

Next stop is Victoria for the next week (it's also Grand Final weekend), but there's still time to join the Rask Roadshow Sydney event, which is now close to selling out.

Get your tickets here. 

It's been a rather slow news week, but tomorrow the ABS releases the August figures for monthly inflation.

This is likely to show a rebound from last month's sharp drop, driven by fuel, insurance, and some other services costs. 

In other news, home values continue to recover and rise solidly according to CoreLogic's index:

Source: CoreLogic

CoreLogic wrote this week about the NHFIC forecast of a dwelling deficit of 175,000 by 2027, particularly in the unit market, driven by above average population growth and below average dwelling completions.

As interest rates begin to fall, the vacuum in unit supply is expected to fuel a stronger price boom in the more affordable unit market over the next 3 years. 

You can the article here.

KPMG also released its latest forecasts, predicting solid dwelling price growth for all capital cities ahead through 2024 and 2025. 

Population growth is increasingly becoming a political issue, but is likely to naturally slow over the period ahead.

The massive rebound in population growth has largely been driven by the return of international students and a record 2.55 million people in Australia on temporary visas.

Looking ahead, I expect to see population growth easing back to under 400,000 per annum, or a more sustainable 1½ per cent per annum. 

---

The ASX 200 opens at 7,040 this morning, a little below the level seen in February 2020.

It's been a wild ride to hell and back since then!

2-Sense: Rents to slow, even as population booms

2-Sense

This week on the podcast, Batesy and I discussed population growth hitting 2,000 per day.

Nevertheless, rents are expected to slow.

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

You can also watch the video version at YouTube here:

Navigating Australia’s Land Cycle: A Conversation with Pete Wargent

Land cycle

I joined Catherine Cashmore at Fat Tail Research for a longform discussion to chat about the latest property market dynamics, the land cycle, and more. 

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

You can also watch at YouTube here:

Home prices higher over the year (PropTrack)

Home prices move higher

Capital city home prices increased by 0.35 per cent in August according to PropTrack, to be 3.4 per cent higher than a year earlier. 

Despite many doom and gloom forecasts, the market has been surprisingly resilient in the face of a large and rapid increase in interest rates. 

Prices are slightly lower than a year earlier in Hobart (-4 per cent), Darwin (-1 per cent), and some parts of regional Australia. 

Overall, thought, it's been a case of onwards and upwards for the capital city markets, with the next move in interest rates likely to be down, in the face of a massive dwelling shortage.