Auctions packed out
Property stock listed for sale remains exceptionally low, and Sydney recorded a surging preliminary auction clearance rate of above 80 per cent this week (albeit on fairly low volumes for this time of year).
Anecdotally there were some very busy open homes in Melbourne this weekend, though the preliminary auction clearance rate slipped to 69 per cent in the Victorian capital.
Has confidence down there been knocked a little by rising interest rates and proposed land tax changes?
Possibly.
One thing that is becoming increasingly evident is that the rental market in Melbourne is a steaming hot mess, with would-be tenants reportedly having dozens upon dozens of unsuccessful applications knocked back.
In the UK - over the past five years or so - policy has pursued the removal of tax deductibility of mortgage interest for landlords with now-record population growth, and - surprise! - the rental market is a disaster in the making.
Melbourne is apparently following down the same path, seemingly continually tightening the screws on private landlords, most recently by increasing the scope and rate of land taxes on rental properties...and this is in an already chronically tight rental market.
It's a daft move, with the Greens geniuses still calling for rent caps on top.
The grand plan was apparently to get big institutions to build the rental housing, but good luck with seeing their provision of affordable rentals when the cash rate has already been hiked by 4 per cent...
Supply versus demand race
The Federal Government is wising up to the growing discontent, and is set to announce over the next fortnight that it will make $2 billion of funding available to build social housing.
Each state will receive $50 million - enough to deliver about 100 social housing units or so - with the remaining funding to be divided across the states on a per capita basis to upgrade public housing or construct some new units.
The thing is, the population is currently growing by an estimated 1,838 per day, so there's no way on earth new housing supply can keep up with that in the current environment.
A good start would be restoring normal lending assessments, but that's not going to happen any time soon.
Record immigration is at least solving the skills shortage.
Gareth Aird of CBA shows that slack in the labour force is now increasing, and is set to increase significantly over the months ahead.
This is one of the ways in which Australia's inflationary pressures will be resolved, while consumer spending is quickly being curtailed by higher interest rates.
This week it has been reported that the fate of leading Australian retailer David Jones is "hanging in the balance" (OK, well that was the Daily Mail's interpretation anyway), while Solomon Lew's Premier Investments has reportedly notched a shellacking, with a shocking -20 per cent year-on-year drop in retail turnover.
This is now leading to consumer price discounting, with Retail Food Group (Donut King, Gloria Jeans, etc.) the latest retail group to report moribund trading conditions, alongside Zip, Kidstuff, and others, as reported in the AFR.
And thus in real time inflationary pressures will soon be a thing of the past...but not until the energy/insurance bill shock has washed through.
