Office woes
Been a bit quiet on the blog this week as I've been presenting at a few regional events, in Port Macquarie, Newcastle...and on this Friday in the afternoon I'll be presenting at Circular Quay in Sydney with Chris Bates from Blusk (please email me if you want a ticket).
The Reserve Bank of Australia released its September Bulletin, which had some interesting insights as usual.
Notably, in the commercial property space, Melbourne's office attendance as at February 2023 was still below half of the levels seen pre-pandemic.
Presumably this will have improved over the past 7 months, but still it's an alarming drop.
Sydney's recovery is faring somewhat better, with occupancy up to around two-thirds of the pre-pandemic level by February this year.
Source: Reserve Bank of Australia
Office vacancy rates in Australia are tracking at around 15 per cent, which is the highest figure reported since the early 1990s recession, although commercial bank exposures in Australia are reportedly relatively low in global terms this time around.
Office rents have naturally fallen from their pre-pandemic highs, although they have now stabilised and may even be rising a little, while Aussie office asset values have dropped by close to 10 per cent (though not as much as in other countries, such as the 20 per cent declines seen in Europe).
Wages growth peaks
In another interesting section was a consideration of the slowdown in wages growth.
Official ABS measures of wages growth have reported surprisingly tepid increases in wages, all things considered.
RBA liaison considers a range of more timely measures of wages growth, ranging from business surveys to enterprise agreements, and other private sector measures.
The numbers vary, but overall the most timely measures seem to suggest that wages growth is peaking and rolling over.
Source: RBA
This makes sense given record immigration and the slowing economy.
State budgets this week revealed many grand plans for building more housing, but the underlying issues remain.
While population growth is now running at a record high of around 650,000 per annum, new housing starts have slumped to decade lows, falling by 23 per cent according to the latest Housing Industry Association survey of Australia's largest 100 homebuilders.
The Victorian state government is introducing yet another slug to landlords, this time in the shape of a 7.5 per cent levy on short-stay rental income.
Meanwhile lending settings remain exceptionally tight, making life extremely difficult for first homebuyers and prospective landlords (in fact, more landlords are selling, exacerbating the rental crisis).
