And fifthly, for the time being at least, New South Wales has exempted first homebuyers from having to pay stamp duty up to the $1.5 million price point.
Pete Wargent blogspot
Tuesday, 21 March 2023
5 reasons Sydney unit prices will rise 25pc
And fifthly, for the time being at least, New South Wales has exempted first homebuyers from having to pay stamp duty up to the $1.5 million price point.
Home values steady
Monday, 20 March 2023
Wages growth cools for a 2nd month
Sunday, 19 March 2023
Supply issues steadily being resolved
Supply shocks solved
Charlie Bilello always provides sensational insights from the US on Twitter, and is well worth a follow.
From this weekend alone...freight costs are now - almost unbelievably - lower than they were at the start of the pandemic, having plummeted by an astonishing -87 per cent.
On the rampant demand side, things have been gradually cooling a bit too.
The average price of a used Tesla has fallen by US$21,000 since July last year, as charted by Charlie:
Gas prices are now tracking -20 per cent lower than a year ago.
In Australia we aren't quite there yet, but given the significant drop in oil prices of late it shouldn't be too long before unleaded prices are down by a similar amount from a year earlier (diesel prices have remained strangely high, on the other hand).
As for US interest rates? Well, they are now expected to fall now over the next two years, as markets price in rising concerns about major stress within the banking system.
Saturday, 18 March 2023
Too much, too fast
Breaking bad
In many respects, we’ve lived through an unprecedented few years.
The enormous fiscal stimulus deployed around the world - combined with the brutal supply shocks - led to a burst of inflation as the world reopened.
Perhaps that was the inevitable cost of the shutdowns.
Too much, too fast
With the benefit of hindsight, many are saying that central banks should have started lifting interest rates sooner.
Maybe that’s so…with hindsight.
But it’s also questionable whether that would’ve made any meaningful difference to, say, timber shortages, or spiraling freight costs.
The monetary policy response to the spike in inflation has been rapid and brutal.
But now things are demonstrably breaking, with banks coming under severe pressure all over the place.
Wild swings
The volatility in bond markets over recent days has been almost beyond belief, which is not typically a sign of good news.
The US 2-year Treasury yield finished another wild trade at around 3.84 per cent overnight - it was above 5 per cent only a matter of days ago.
Australia’s yield curve is also now pointing to lower interest rates over the next few years.
More volatility is to be expected ahead, but the narrative around the need for lifting interest rates has been broken.
Friday, 17 March 2023
Fixed rates to fall
Fixed rates to fall
A snippet from yesterday's population release.
Net overseas migration hit a record high of +106,200 for the September 2022 quarter, the largest 3-month increase in modern history.
There's so much competition between lenders for new business that it's imperative borrowers shop around for the best possible deal.
Thursday, 16 March 2023
Population growth approaching record pace
Jobs bounce as expected
Wednesday, 15 March 2023
Long-term arrivals scaling new highs
Bond rally rocket
Inflation gradually easing
The US rate of inflation over the year slowed from 6.4 per cent to 6 per cent in February, and is now well on the way back down from the peak of 9.1 per cent in June 2022.
Source: ASX
The driver for this has been the collapse of several banks in the US.
In Europe, Credit Suisse failed to file its Annual Report on time - every accountant's nightmare - and has uncovered a material weakness in its reporting.
It would be a tremendous understatement to say that this is not great timing, and the cost to insure against default has skyrocketed alarmingly towards 1,000 basis points.
Needless to say the bank's share price has crashed to a new all-time low, down another -25 per cent today, and well over -75 per cent over the past year alone.
The European banks index is tanking this evening, while BNP Paribas was also halted after its share price crashed 10 per cent lower.
The market jitters continue.
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Australia's 3-year yield is trading way down at 2.8 per cent.
WTI Oil is below $70 for the first time since 2021 - which will at least be good news for inflation as demand drops away.
Tuesday, 14 March 2023
Rental relief in the regions
City rentals tighten
SQM Research reported today an increase in rental vacancy rates in Darwin, Canberra, Hobart, as well as many regional locations, as the long tail of the dwelling construction pipeline delivered some welcome relief to tenants.
There were significant increases in rental vacancy rates in many parts of regional Australia: Gold Coast, Mornington Peninsula, and the Blue Mountains, for example.
On the other hand there were sharp declines to very tight levels in CBD vacancy rates for Sydney, Melbourne, and Brisbane, as international students rushed back to Australia.
Overall, there is likely to be ongoing pressure in the rental markets of the larger capital cities as students return and as employers increasingly require employees to be back in the office.
Indeed there was no respite for renters in the largest capitals, with asking rents for units rising nearly 9 per cent in Sydney and Melbourne over the past quarter, while Brisbane wasn't far behind.
Source: SQM Research
Consumer sentiment surveys today reported sentiment mired at 30-year lows, while rising unemployment expectations underscored the growing need for a pause in interest rates.
Indeed OIS pricing of 96.55 for July implies a strong likelihood (essentially a 2 in 3 chance) of a 25 basis points cut interest rates in Australia by July.
In the US Federal Funds rate futures are also looking for interest rate cuts in the second half of 2023, in a remarkable about-face over the past week.
Back in Australia, the time to buy a major household item survey reading was the lowest since 1974, portending an imminent downturn for retailers in the discretionary segments.
Unsurprisingly business confidence was shredded in the NAB Business Survey, dropping from a reading of +6 to a reading of -4 in a single month.
SQM Research's media release on vacancy rates can be found here.
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The ASX 200 is trading back down at 6,950, but still is only a few per cent down from a year ago.