By Leith van Onselen Following yesterday’s crash in mortgage credit growth, which plumbed the lowest level on record, a reader sent an email asking me to explain what this means for house prices. The short answer is “not much” when viewed in isolation. The longer answer is “a lot” if the slowing mortgage growth translates
By Leith van Onselen Serial mass immigration spruiker, Jessica Irvine, has called for Inner-Sydney to be densified to reduce travel times: Sydney’s economy will get an almost $20 billion boost if government invested in affordable housing in the inner city, slashing commute times and increasing job opportunities for the city’s workers, researchers say… Under the
By Leith van Onselen This week’s Housing Pulse report from Westpac included the below stunning chart showing that national housing turnover fell to the lowest level since 1987 in the final three months of 2018, whereas total listings have also ballooned: Yesterday, CoreLogic released a new report showing that the surge in listings is causing
Global Macro / Markets / Investing: Never Before Has the Fate of Hedge Funds Turned on So Few Stocks – Bloomberg Corporate Bond Markets in a Time of Unconventional Monetary Policy – OECD There’s been a mysterious surge in $100 bills in circulation, possibly linked to global corruption – CNBC Did the Yield Curve Flip?
Outside Australia, stocks have dropped across the region as the US/NK summit ends on a whimper, cut short with no agreement. Risk markets have bid up the USD and pushed stocks down as the latest Chinese manufacturing PMI comes in lower than expected for a third month in a row. The Shanghai Composite is off
More evidence today of the weakening Aussie consumer, with Harvey Norman’s Australian operations recording a 5.2% fall following reduced demand for furniture, bedding and appliances amid the rout in house prices. From The AFR: Earnings from Australian franchised operations fell 5.2 per cent to $158.5 million as weaker demand for furniture, bedding and appliances amid falling
By Damien Boey at Credit Suisse APRA data reveals a moderate 0.1% increase in gross loan balances in January. Seasonality usually dampens January growth numbers by roughly 0.1% – and adjusting for this, it is likely that system credit rose by 0.2% in the RBA’s January numbers. Consensus is looking for 0.3% growth, and so
By Leith van Onselen Last weekend, CoreLogic released its preliminary auction clearance rates, which revealed the following results: Today, CoreLogic has released its final auction results, which reported a 4.7% decline in the final national auction clearance rate to 49.4% – below last week’s 51.2%: As you can see, Sydney’s auction clearance rate fell by 8.4%
By Leith van Onselen The Australian Bureau of Statistics (ABS) today released data on capital expenditures (capex) for the December quarter, which registered a 2.0% seasonally adjusted rise in capex volumes over the quarter and a 1.9% increase over the year (see below table). The 2.0% quarterly rise beat market expectations of a 1% lift.
by Chris Becker With the capital expenditure print surprising to the upside, upsetting the apple cart of 4Q GDP forecasts following the disastrous construction data yesterday, the Australian dollar initially took a leap higher: After reversing overnight due to a much stronger USD, this spike has had more luck in the crosses, with the Kiwi
The ABS is out with December quarter private capex and the news is pretty good: TOTAL CAPITAL EXPENDITURE Estimate 5 for total capital expenditure for 2018-19 is $118,361m. This is 3.6% higher than Estimate 5 for 2017-18. The main contributor to the increase is Other Selected Industries (8.9%). Estimate 5 is 4.0% higher than Estimate
By Leith van Onselen The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of January 2019: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (-0.6% MoM; -1.4% QoQ; -2.8% YoY) is still in the gutter, whereas business credit growth (0.3%
By Leith van Onselen In late 2017, the Turnbull Government implemented university funding reforms that made it harder for students to access the Higher Education Loan Program (HELP) for courses that have poor employment prospects, thereby effectively ending the demand-driven university system established by the Gillard Labor Government. Now, Labor is seeking to re-establish the
This week’s LIVE webinar (12:30pm AEST, Thursday 28 Feb) – we look at the proposed changes to refundable imputation credits. Join MB Fund’s Head of Investments Damien Klassen, and Tim Fuller as we bring you up to speed some of the impacts these changes will bring: – Who the changes will affect most – How these changes
By Leith van Onselen Over the past year or so, I have ridiculed the new found push by Coalition politicians towards decentralisation, noting that this is a pipe dream based on the settlement pattern of new migrants, which have overwhelmingly chosen to flood the major cities. My view was initially based on data from the
By Leith van Onselen CoreLogic’s dwelling price results have been released for February, which reveals another 0.9% decrease in values recorded over the month at the 5-city level: It was the 17th consecutive monthly decline in home values, with values down a cumulative 9.0% over that period at the 5-city level: Quarterly values also dived
By Leith van Onselen Business Council of Australia (BCA) CEO Jennifer Westacott has urged both sides of federal politics to cease their attacks on the business sector and focus on policies to stimulate the economy and wages. From The AFR: “Enough is enough,” she told The Australian Financial Review of the “business bashing” in which
Some more good work from DFA’s Martin North who, alongside property insider Edwin Almeida, has demolished the view that the auction market is rebounding. As I keep pointing out, auction clearances typically rebound in February/March, reflecting a seasonal bounce: Moreover, auction volumes have crashed. Even CoreLogic warned last week that the current rebound is pure
by Chris Becker Iron ore prices continue to slide with both spot and futures markets putting in a sixth straight loss. Port inventories rose to just over 145 million tonnes last week, the highest since September 2018, but steel demand should kick in soon. Texture from Reuters: The spring period beginning in March, after China’s
By Chris Becker Risk markets remained in a holding pattern again overnight as a slew of macro events and news weighed on any risk taking, sending USD higher. The US advanced goods trade deficit blew out while durable goods orders came in a little weaker than expected, but all eyes were on Washington for Michael
By Leith van Onselen The noose is slowly fastening around Australia’s mortgage industry. The Hayne royal commission found that mortgage lenders had not adequately assessed borrowers’ capacity before extending credit, instead relying on the Household Expenditure Measure (HEM) – a relative poverty measure that estimates expenditure at the lower end of the income scale. This
By Leith van Onselen Director of BIS Oxford Economics, Frank Gelber, has forecast a relatively mild 10% reduction in Australian building activity over three years. From The Australian: With the residential downturn under way, it’s just as well that non-dwelling building will be strong… But the strength of non-dwelling building won’t be enough to make up
By Nathan Lynch, Asia-Pacific Bureau Chief, Financial Crime and Risk at Thomson Reuters Australia’s Greens are exploring a range of political strategies to force the parliament’s hand on Tranche 2 of the anti-money laundering (AML) regime, following claims that shadowy “vested interests” have blocked the reforms. The country’s third-largest political party has undertaken preliminary work on
By Leith van Onselen Western Sydney is the epicentre of the city’s working class. It is a prime dumping ground for the federal government’s mass immigration ‘Big Australia’ program. And it has become a virtual “special economic zone” where wages can be shredded with impunity by the wealthy owners of capital living in the East.
By Leith van Onselen Several years ago, as The Great Australian Housing Bubble raged, Liberal MP John Alexander was one of the only people on his side of politics speaking the truth on housing. In March 2016, Alexander famously declared the Australian housing market a “Ponzi scheme”. Alexander followed this up in May 2016, claiming
Michael Sainsbury has done a great job exposing Prime Minister Scott Morrison at Michaelwest.com.au. Below are my favourite extracts: WHEN SCOTT Morrison either accidently – or more likely with great skullduggery – emerged as the successor to Malcolm Turnbull in August 2018, the congratulations naturally enough flooded in. But for most Australians, it was unclear
Global Macro / Markets / Investing: This Stock Market Rally Has Everything, Except Investors – NY Times The incredible shrinking CEO – FT Modern Monetary Theory Isn’t Helping – Jacobinmag Jerome Powell Says the Concept of MMT Is ‘Just Wrong’ – Bloomberg Walmart Joins Amazon in Chase for Ad Dollars – WSJ Millennials Are Facing
Stock markets are generally buoyant across Asia today with a few macro releases, including Australian construction data, disappointing to the downside, but having almost no effect on risk taking. The Shanghai Composite is up nearly 1% going into the close, taking back most of the previous losses to remain above 2900 points at 2964. The Hong Kong
UBS has downgraded its Q4 GDP outlook following yesterday’s “disastrous” 3.1% decline in construction activity. UBS now expect a GDP print of just 0.3% with risks tilted to the downside. UBS has also reiterated its call that the RBA will be forced to cut rates in November 2019: Overall, Q4 construction surprised materially to the
By Leith van Onselen The ABC’s Phil Lasker has written an interesting article on the “perfect storm” hitting Australia’s army of property investors: Investors are big players in Australia’s property market, representing about 42 per cent of total mortgage demand. A significant shift in investor sentiment could lead to a serious downturn in the property
