SQM forecasts ongoing strong Sydney house price growth

ScreenHunter_12 Sep. 23 12.54 By Leith van Onselen SQM Research has today released its latest housing "boom and bust" report for 2014-15, which predicts ongoing strong growth in Sydney, whereby prices are predicted to grow by between 8% and 12% over the 2014-15 financial year, and by 5% to 9% across the capital cities, with all of the major capitals forecast to record positive growth (see below table). According to Louis Christopher: “The market is somewhat overvalued but not by as much as what some have very publicly stated. I don’t believe at this stage the market is in a bubble. Some cities are heading into...
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Bank internal capital models under APRA spotlight

ScreenHunter_06 Jun. 26 22.42 By Martin North, cross-posted from the Digital Finance Analytics Blog In an important speech given today by Wayne Byres, Chairman of APRA, “Perspectives on the Global Regulatory Agenda”, there are some important pointers which indicate to me that we should expect some changes to the capital regulatory framework quite soon. We highlighted the capital questions recently. Whilst talking about the global agenda, he did confirm the Financial System Inquiry (FSI) view that local and global cannot be separated. Whilst Basel III was focusing on systemically important banks, the current agenda is...
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8 years without a FIRB foreign property prosecution

ScreenHunter_3949 Sep. 02 08.10 By Leith van Onselen Following on from Houses & Holes' quick post yesterday, ABC's The Business last night aired a segment (above) featuring Liberal MP, Kelly O'Dwyer, slamming the inept failure of FIRB to police or prosecute foreign investors that flaunt Australia's property investment rules, specifically: Rules precluding non-residents from purchasing pre-existing dwellings; and The requirement that a foreign temporary resident sells their home within three months of departing Australia. O'Dwyer is particularly scathing of the fact that FIRB has failed to prosecute anyone in eight...
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Melbourne facing “sub-prime” apartment risk

ScreenHunter_07 Feb. 10 11.46 By Leith van Onselen The AFR is out today citing BIS Shrapnel analysis claiming that Melbourne is facing a sub-prime crisis in the apartment market as a growing over-supply clashes with falling rents: “I worry that if we keep building apartments in the same location, of the same type, for too much longer, we are going to see a case of sub-prime building,” BIS Shrapnel associate director Kim Hawtrey told delegates at its September Melbourne forecasting conference... “Sub-prime building means we are over-building in areas or in demographic cohorts that lack the numbers to occupy those...
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SQM: Perth leads rental market stall

ScreenHunter_07 Jul. 17 21.09 By Leith van Onselen SQM Research has released its rental market report for August, which revealed a slight rise in the number of vacancies but a stable rental vacancy rate of 2.3% (see below table). The rental vacancy rate was 0.2% higher than August 2013, with all jurisdiction registering either an increase or no change over the year. According to SQM: This result reflects comments that SQM Research has made in recent months, that the rental market remains sluggish, with tenants enjoying the shift in the balance of power as vacancies continue to gradually increase... Louis...
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Immigration policy sells-out local accountants

ScreenHunter_4248 Sep. 17 07.26 By Leith van Onselen The AFR has published an article today on the jump in overseas students studying accounting, which has driven local students from the field: A 40 per cent jump in new overseas postgraduate accounting students in 2013 was the sole driving force in the critical tertiary accounting education market, as local students continued to shun the field. International students now ­dominate accounting courses, making up a record 79 per cent of the 17,600 enrolled postgraduate students in 2013, according to data from the federal Department of Education. At the undergraduate...
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Links 17 September 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Replaying the 30s in Slow Motion - New York Times Fixing Climate Change May Add No Costs, Report Says - New York Times Buy-backs helping to buoy market -  Wall Street Journal The big flaw in share buybacks - The Economist Be careful with historical market returns - Pragmatic Capitalism Is this the beginning of the end of the hedge fund gravy train? - Abnormal Returns Investing against the odds and facts - Bucks Blog How to cultivate trading intuition - TraderFeed Small caps continue to lag - Crossing Wall Street Searching for deep value...
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Competition policy tsars slam online piracy crackdown

imgres By Leith van Onselen Two senior competition policy tsars - former ACCC head, Alan Fels, and former chair of the 1999 Australian Intellectual Property and Competition Review Committee, Henry Ergas, have lodged a joint submission to the Government warning that Australians would likely pay more to legally download music and movies, with the bulk of the revenue flowing offshore, if the Government's proposed measures to prevent online piracy are implemented, while also warning that the costs of the measures "greatly exceed their benefits": The report finds that the implications of the Government’s...
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WA mining and resources jobs crash

ScreenHunter_03 Jul. 23 09.31 By Leith van Onselen DFP Recruitment has released its mining and resources jobs index, which registered a 5.4% fall in August - the fourth consecutive monthly fall - with the index also down 9.9% over the quarter and by 34% over the year. Western Australia has also led the decline: The rate of decline seen over the past 12 months is concerning for all engaged within the industry. The iron ore price has recently hit 5 year lows exposing a number of the higher cost producers and we are continuing to see deeper cost cutting measures introduced. The repeal of the mining tax has been well...
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Super fee gouge rolls on

ScreenHunter_2952 Jun. 24 12.41 By Leith van Onselen There are arguably few better businesses to be in than Australian superannuation. Thanks to compulsory contributions, set at 9.5% of employee wages currently, along with a largely fixed cost structure, the superannuation industry continues to rake it in, earning fat fees on everyone's retirement nest egg. Last night, ABC's The Business aired an interesting segment revealing that Australians paid super funds $20 billion in fees last year, up 8% and equating to around $2,000 per member. It wasn't all bad news, however, with average management fees declining, courtesy...
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Youth underemployment rockets to all time highs

ScreenHunter_3946 Sep. 01 12.43 By Leith van Onselen Following last week's labour force figures for August, I posted an article showing that unemployment for Australians aged between 15 and 24 had risen to 13.8% in trend terms - the highest youth unemployment rate since November 2001 (see next chart). I also showed that total employment growth for those aged 15-24 years of age has been more or less negative since the Global Financial Crisis (GFC), whilst the rest of the labour force has experienced positive growth (see next chart). With full-time jobs having been hit particularly hard, partly offset by an...
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ANZ-RM consumer confidence falls below average

ScreenHunter_20 Apr. 10 19.28 By Leith van Onselen The ANZ-Roy Morgan Research (RMR) consumer confidence index fell in the week ended 14 September, down 2.0 points (1.7%) to 111.3, taking it too the lowest level in five weeks and below its long-run average reading of 113.2 (see next chart). This week's fall was driven by “declines in ‘time to buy a major household item’ (-5.1%) and ‘financial situation compared to a year ago’ (-3.7%)”. The below chart plots the most recent Westpac-Melbourne Institute Consumer Sentiment index against the ANZ-RM Consumer Confidence index: As you can see, the mood...
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“Mad Adam” on the income boom!

imgres "Mad" Adam Carr has once again entered bizarro world today with another post lashing "doomsayers"for being concerned about Australia's falling national income growth and soggy outlook: What could drive such an emotionally charged dystopian view of the economy? The main culprit is the mistaken view that national income is falling, driven by the slump in the terms of trade. It lies at the heart of this doomsday cult that seems to be running Australia and it stands behind the constant call to slash wages and cut the exchange rate. Presumably because the only way to lift national income is by cutting...
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Why raising education levels pays big dividends

ScreenHunter_26 Oct. 16 10.41 By Leith van Onselen The OECD has released its latest Education at a Glance Report, which contains some very interesting benchmarking data on education-related matters. Below are some of the key charts from the report, which basically show that education is a great investment from both a private and public perspective. First, consider the proportion of the working age population that attained tertiary education in 2012 versus 2000. As you can see, Australia ranks well on this measure, easily beating the OECD average and achieving a big lift in educational attainment over the 12-year...
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Links 16 September 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: The Return of the Currency Wars - Wall Street Journals OECD slashes growth forecasts for leading economies - The Guardian Can real estate stocks cope with rising rates? - Alliance Bernstein Market bears are capitulating - Wall Street Journal Has the market already incorporated all the positive economic surprises? - Humble Student How often do stocks and bonds fall together? - A Wealth of Common Sense In defense of a quantitative approach to financial markets - Math Trading North America: Where American companies are winning - Howard...
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Joe Hockey faces a Wayne Swan moment

ScreenHunter_4209 Sep. 15 14.37 By Leith van Onselen The ABC's Ian Verrender has published an interesting article today on the challenges facing the Budget as iron ore prices and Australia's terms-of-trade slump: Joe Hockey is facing his very own Wayne Swan moment. It is the point in time when it suddenly dawns on a treasurer that all those revenue projections in that budget way back in May are disappearing into a deep and very dark hole. ...on the commodity front, prices are unravelling at a brisk pace, particularly for iron ore, the nation's biggest export earner. That spells bad news for our nominal income and the...
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Piracy wars heat up

ScreenHunter_4208 Sep. 15 13.48 By Leith van Onselen AFR Sunday included an interesting segment yesterday (above) on the diverging opinions on internet piracy, with content providers and incumbents coming to blows with internet service provider (ISP) iiNet over the best way to deal with the issue. The incumbents, like Village Roadshow and Foxtel, who want to maintain their current business models (and profits), are lobbying hard to make ISPs police internet users and enforce copyright, whilst also expecting them to wear the cost of stamping-out piracy. By contrast, iiNet has hit back, saying "there are big costs...
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New car sales continue to fall

ScreenHunter_01 Apr. 17 11.28 By Leith van Onselen The Australian Bureau of Statistics (ABS) today released new motor vehicle sales for the month of August 2014, which registered a 1.8% seasonally adjusted fall in the number of sales, and a 3.5% decrease over the year (see next table). Sales in July fell in all jurisdictions except the South Australia. As shown in the below, new car sales continue to trend down, with the trend series declining since November 2012. That said, sales of Sports Utility Vehicles (4WDs) continue to increase, although this has been more than offset by weakness in the other...
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BIS warns on Australian housing values

ScreenHunter_30 Oct. 10 06.15 By Leith van Onselen The Bank for International Settlements (BIS) - the central banks' central bank - released a new report over the weekend proclaiming that Australian housing is severely over valued: Graph 2 juxtaposes recent house price growth rates with the deviation of current valuation ratios from their longer-term average values for the countries in the database with sufficiently long series. 13 The horizontal axis in both panels measures the three-year growth rate of residential property prices for each country on the basis of the selected price series. The graph clearly shows the...
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Employee share reforms will foster innovation

ScreenHunter_4199 Sep. 15 09.24 By Leith van Onselen The Australian has reported today that the Abbott Government intends to reform the way that employee share schemes are taxed in a bid to foster start-ups and innovation. From The Australian: Employee share schemes will be a key part of [Coalition] policy by offering help to start-up companies that want to lure good staff with the offer of stock options. This is impossible for some under existing laws that require staff to pay tax on the shares when they receive them rather than when they sell them. The share schemes will only be available to small companies, limiting the...
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Melbourne’s tower fetish creates indigestion

ScreenHunter_07 Feb. 10 11.46 By Leith van Onselen The Age is running an article today about how Melbourne's inner-city livability is being eroded by rapid development, which is placing  extreme pressure on public amenities, like parks: Melbourne is facing a shortage of public parks and sporting grounds, as skyscraper developers swoop on the city's best blocks and price government out of the market... Concerns have also been raised about the supply of sporting grounds in the inner city and beyond. ...the council has estimated that by 2031 the municipality will be facing a shortfall of 12 ovals and 12 soccer pitches,...
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Coalition starts making right noises on super

ScreenHunter_4198 Sep. 15 07.19 By Leith van Onselen Slowly but surely, the Coalition is beginning to see the light on superannuation, and acknowledging that the current make-up of the system is unsustainable for Australia's long-term finances and ripe for fundamental reform. Today, Coalition MP, and former advisor to Peter Costello, Kelly O'Dwyer has penned a worthwhile piece in The AFR, arguing that raising compulsory superannuation (the "superannuation guarantee") to 12% would only compound the deep structural flaws already present in Australia's super system, making the whole retirement system even more expensive and...
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Auction clearances retrace

ScreenHunter_07 Mar. 20 20.55 The national auction clearance rate slid over the weekend on the back of declines in Sydney and Melbourne. According to RP Data, the national weighted average preliminary auction clearance rate was 70.8% over the weekend, which was down 3.6% from the 74.4% preliminary clearance rate reported last weekend. Sydney’s clearance rate fell by 4.1% to 78.3%, whereas Melbourne’s fell to 70.5% (last weekend 75.1%). Brisbane, which typically only has a small number of auctions, experienced no change in its clearance rate (still 49.4%. However, overall auction volumes (2,055) were up on last...
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RP Data weekend property market update

ScreenHunter_18 Mar. 18 17.58 Click to view RP Data’s latest weekly housing market update, which provides a useful snapshot of the housing market as at 14 September 2014. This week’s report includes: Latest weekly dwelling value results; Auction results & clearance rates; Latest median house & unit prices; Average time on market & vendor discounts; Mortgage market activity; and New listings...
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Links 14 September 2014

ScreenHunter_01 Apr. 02 06.19 Global Macro / Markets / Investing: Global megacities by 2030 - Bloomberg Exchange rate pass-through in developing and emerging markets - VOX What we didn’t learn from the economic crisis - VOX Volatility is less important than our reaction to it - A Wealth of Common Sense Is high frequency trading a good thing for the financial system? - London Review of Books Demand for financial advice isn't going away - Big Picture What type of financial advisor works for you? - Simon Lack North America: America has fallen out of love with the station wagon - Quartz Silicon Valley Has...
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