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Wednesday, 13 May 2020

Time to buy now, say Aussies

Wages subdued

Wages growth was already slowing by the end of Q1 2020, slipping to a miserable +2.13 per cent in trend terms. 

For what it's worth public sector wages growth (+2.39 per cent) continued to outstrip wages growth in the private sector (+2.15 per cent).  

The slowdown was mainly driven by Victoria, where wages growth has slowed from +2.9 per cent to +2.5 per cent since June 2019.

Wages growth ranged from +2.5 per cent in Victoria down to +1.8 per cent in Western Australia.

This represents a dismal run which has continued for far too long, suggesting that the Treasurer should be unleashing Australia's greatest ever public works program instead of waffling about money trees (through the unfortunate coughs).

'Do buy now!' say Aussies

There were two brighter data points today, however. 

Firstly consumer confidence jumped by +16.4 per cent, and the details of Westpac's report are well worth reading. 

This was the biggest monthly jump on record as Aussies realised that the COVID-19 curve at home has been comprehensively flattened, and suggests that conditions in H2 2020 could soon be anything but recessionary.

The index is 'spectacularly above' recession levels, according to Bill Evans of Westpac, and 50 per cent above the levels seen in the early 90s recession, in turn suggesting a short sharp crisis. 

The time to buy a dwelling index surged by +32 per cent in a single month, as Aussies noted that the buy versus rent equation has suddenly become skewed towards buying, with mortgage rates likely to be stuck at record lows for years to come. 

Source: Westpac

The survey has had a solid correlation with housing market outcomes, and now shows that optimists are suddenly comfortably outweighing pessimists again, after sentiment was in the gutter only a month earlier. 

Students stick around

A second data point of interest relates to international student visas. 

While 121,000 student visa holders remain outside Australia - largely the Chinese cohort - some 485,000 visa holders have stayed on, and this can add to aggregate demand (as well as demand in the rental pool). 

Comparatively few international students have 'gone home' over the past 5 weeks, although New South Wales will be feeling the loss of a fair chunk of its headcount.

Source: AusTrade

Ergo, it's not all doom and gloom out there!