Asking rents rocketing
SQM reported that vacancy rates fell back from December's Christmas mini-spike, returning to a record low of just 1 per cent in January.
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Source: SQM Research
If we plot the trend for the past six months, we can see that the declines are now largely being driven by Sydney and Melbourne, as immigration returns to the major capital cities.
Sydney's asking rents increased by 30 per cent from a year earlier, while Brisbane and Melbourne each saw asking rents up 25 per cent.
There were also punchy increases in rental prices in Adelaide and Perth.
Source: SQM Research
Rental vacancies have continued to decline in February, and as such will notch record lows in next month's figures.
Rent only comprises around 6 per cent of the CPI basket in Australia, but still the extremely tight lending settings for landlords are going to be a net negative for bringing inflation down in 2023.
The outlook for the next few months is for market conditions for renters to deteriorate further, with permanent migrants now beginning to arrive, and with international student visas being processed in record numbers...and at a record speed to boot.
A further 50,000 Chinese students have effectively been ordered to return to Australia immediately, adding to rental market pressures, especially in the context of their being only 31,500 rental vacancies nationwide in January.
This should all help to take pressure of labour costs in 2023; the NAB survey showed that pressures were still running high in the recreational and personal services sector, including hospitality.
Unemployment to rise
Roy Morgan's latest consumer confidence reading showed the confidence reading plunging to 78.1, the lowest level since the early days of lockdown in April 2020.
The news wasn't much better for unemployment, with Roy Morgan's broader definition of unemployment seeing the January 2023 unemployment rate rising to 10.7 per cent, the highest level since the JobKeeper stimulus package ended all the way back in March 2021.
Source: Roy Morgan
Westpac's consumer sentiment survey also showed unemployment expectations as now rising, with consumer sentiment back at around the lowest levels we'll see outside of a full blown recession, plummeting to a reading of just 78.5.
Unemployment expectations are now significantly higher than a year earlier at a reading of 119.4 (up from 102.8 in February 2022).
The beatings will continue until morale improves...
