Pete Wargent blogspot


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Wednesday, 23 June 2021

Australia tops median household wealth

Global wealth

Credit Suisse released its Global Wealth Report for 2021.

With a median net wealth per adult of US$238k Aussie households were measured to be the wealthiest in the world in 2020, ranking ahead of Hong Kong, Singapore, Switzerland, Japan, and all the rest.

Source: Credit Suisse

Australia's mean wealth per adult was also exceptionally high at US$439k, ranking behind only Switzerland, the U.S., and Hong Kong.

Switzerland and Australia saw the biggest increase in wealth over the past year, while the composition of Aussie household wealth is essentially unchanged over the past two decades. 

Australia's housing stock is overwhelmingly and increasingly owned by private households, with only a small share of dwellings accounted for by public housing, in contrast to elsewhere. 

This also partly accounts for the relatively large stock of household debt in Australia. 

The number of Aussie millionaires increased from 1.4 million to 1.8 million in 2020 (and is expected to increase to 3.1 million by 2025), as asset prices rise.

Only Switzerland had a great density of millionaires than Australia (Monaco probably does too, if anyone knew how to measure those figures). 

Tuesday, 22 June 2021

Jobs report puts RBA on notice

Dovish stance

I discussed the latest jobs figures with Annette Bleacher at ausbiz TV here (or click on the image below):

Podcast mini-series: The Top 10 books on investing

Top 10 investment books

A new min-series on our Low Rates High Returns podcast: the top 10 books on investing.

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

You can listen to the whole podcast back-series on Apple here.

You can also tune in to the full podcast series at SoundcloudStitcher, or Spotify.

You can download our new e-book here.

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Saturday, 19 June 2021

Auctions revised down

Hammer time

Melbourne's final auction clearance rate was revised down to 61.7 per cent through the lockdown disruption.

The final result for Melbourne this week will also likely land somewhere in the 60s.

Another solid result for Sydney today, despite the very high number of listings:

Source: Domain

I discussed here yesterday how Victoria's population began to decline in from June 2020 onwards, as folks moved interstate to escape restrictions.

Louis Christopher of SQM Research made an interesting counterpoint, highlighting how high vacancy rates in inner-city Melbourne have begun to fall.

There could be a number of explanations for declining vacancy rates: the population may no longer be decreasing, units could be filling up in the CBD, Docklands, and city fringe due to lower advertised rents, or perhaps investors are selling up their rentals. 

Maybe it's simply a combination of factors. 

One to watch as the year progresses.

Friday, 18 June 2021

Locked down Victoria sees population decline

Negative growth for VIC

All of the Australian states have experienced an obvious decline in population growth due to tight international border controls...but Victoria's experience has been next level.

Annual population growth in Victoria has slowed from a peak of nearly 154,000 in 2017 to just 745 for the calendar year 2020. 

Indeed, in the second half of 2020 the state's population declined by approximately 35,000, and given there have been further lockdown restrictions in 2021 it's quite likely that this trend has persisted. 

It's not too hard to see what's happened when you look at net interstate migration.

Whereas folks were previously moving to Melbourne for work, now there has been a surge of Victorians relocating to south-east Queensland. 

Net interstate migration to Queensland exceeded 30,000 in 2020 for the first time in 15 years, and the numbers really exploded in the December quarter with conspicuous Victorian licence plates being spotted all up and down the Queensland coast, so there's quite likely more in the post.

Queensland had by far the fastest population growth rate in 2020 at 1.1 per cent, or +58,100 persons.

With Victoria experiencing 0.0 per cent population growth it becomes clear why the bulk of rental vacancies are in inner-city units in Melbourne (and to a secondary extent Sydney). 

Across much of Australia rental vacancy rates are running at record lows, partly because people have been leaving Victoria in droves to escape the on again/off again lockdown policies and restrictions on movement. 

Thursday, 17 June 2021

Employment surges again

Employment hits record

The labour force report trounced expectations, with employment rising by a massive 115,200 in May 2021 to a record high of 13,125,100.

Full-time employment overwhelmingly accounted for the May gains. 

There were some quirks in the data, including from sample rotation, and this did come off the back of a negative print in April. 

In fact this month's result got a huge kick from the sample rotation, which will effectively act as a drag on the growth in reported employment over the next 6 months. 

A more sanguine view shows that employment increases solidly by +153,800 over the past quarter, which might be a more realistic guide as to the pace of employment gains. 

The unemployment rate took a very significant drop, all the way down to 5.07 per cent, though there is still a way to go before full employment. 

The unemployment rate peaked at 7.45 per cent, but has recovered quickly. 

At the state level New South Wales has now seen total employment recover in full, bouncing by +308,000 from a year earlier, taking the state unemployment rate back down to 5 per cent.

Employment has also surged to a record high in Queensland, but with by far the fastest population growth in the country - at 1.1 per cent thanks to surging interstate migration from Victoria - there is still some slack in the Sunshine State, where the unemployment rate is 5.4 per cent. 

Hours worked were up 13 per cent from a year earlier, due to the base effect, which outpaced the 8 per cent growth in employed persons. 

Overall, another very promising result, although not quite as strong as it looked at first glance.

The Reserve Bank acknowledged the lumpy nature of the recovery and will commit to further bond buying, while again noting that the conditions for an increase to the cash rate are unlikely to be met until 2024 at the earliest (and in some scenarios, the conditions may still not be met during 2024). 

Tuesday, 15 June 2021

Rental vacancies tighten

Rental vacancies tighten

Rental vacancies across Australia continued to decline in May, down from 1.9 per cent to 1.8 per cent.

Rental vacancies have dropped very sharply from a year earlier, when the national rental vacancy rate was 2.5 per cent. 

Sydney's vacancy rate dropped from 3.1 per cent to 2.9 per cent in May, while Melbourne was still by far the most elevated at 3.7 per cent.

It remains to be seen what Melbourne's latest lockdown will do to unit vacancies.

Brisbane declined again to a 1.3 per cent vacancy rate, now well down from 2.5 per cent a year earlier.

All other cities saw very low vacancy rates of under 1 per cent in May, especially Darwin (0.4 per cent) and Hobart (0.5 per cent).

Vacancy rates in the Sydney and Brisbane CBDs have declined very sharply from last year's highs according to SQM Research.

Some vacancies appeared on the northern NSW coast, as a cohort of renters moved back to town. 

Many regional centres continue to tighten, from Mornington to Gold Coast.

Resi prices up 5.4pc in Q1

Resi prices up

The median dwelling price across the 8 capital cities rose strongly by 5.4 per cent in the March quarter.

House prices have, on average, outperformed attached dwellings since 2003, though all dwelling types reached new highs in March 2021. 

Sydney and Hobart prices rose 6.1 per cent in the March quarter, with significant gains recorded across all of the capital cities. 

The mean dwelling price in New South Wales increased by $115,300 over the past year to breach $1 million for the first time.

The mean dwelling price remains below previous highs in the Northern Territory and Western Australia, but all other states and territories recorded new highs, as expected.

Prices have continued to increased at a sprightly pace in the second quarter too.

You can find some more detailed analysis with James Foster here.