Unconventional Economist

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Why is Perth’s housing market lagging?

For all intents and purposes, Perth Property should be experiencing a mega boom. Mortgage demand in Perth is through the roof. New mortgage commitments were up a whopping 106% in trend terms in the year to April, with mortgage demand typically leading dwelling value growth: The latest market indicators from the Real Estate Institute of

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Links 22 June 2021

Global Macro / Markets / Investing: Emerging-Market Bulls Pin Currency Hopes on Hawks Outpacing Fed – Bloomberg Ex-Tesla President Sells Stock Worth $270M – The Techee Millennials Aren’t Having Kids Because It’s Too Expensive – Money Microsoft Names CEO Nadella As Board Chairman – The Techee Americas: An inflation storm is coming for the U.S.

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Gottiboff screams ‘apartment shortage’

Robert Gottliebsen must have gotten off the blower to his mate ‘high-rise’ Harry Triguboff, because today’s drivel in The Australian reeks of blatant special pleading: NSW and Victorian governments are adopting strategies that, by accident or design, are slashing the building of new high-rise apartment towers… When overseas students return to Australia there will be

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Last hurrah for NSW stamp duty boom

The New South Wales Government will deliver its 2021 Budget tomorrow. The Government had forecast in its half-yearly Budget review in February that stamp duty revenue for 2020-21 would total $8.372 billion. However, the government now expects such revenue to total $9.379 billion, due to Sydney’s soaring residential property market – delivering a financial windfall

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Politician’s/lobbyist’s revolving door must be closed

There are calls for former government ministers to be banned from lobbying for companies for at least three years. Former Law Council of Australia president Arthur Moses says a three-year ban would bring MPs into line with similar restrictions on senior business executives, whereas Centre for Public Integrity chairman Anthony Whealy says there should be

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Greens seek to kill responsible lending reforms

Yesterday, Treasurer Josh Frydenberg defended the Coalition’s proposed wind back of responsible lending laws, telling reporters they are essential to helping the economy recover from COVID: “Ensuring consumers and small businesses can get timely access to credit as the economy continues to recover from the COVID crisis”. “The reforms are intended to improve efficiency, reducing

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May retail sales come in soft

The Australian Bureau of Statistics (ABS) has released its preliminary retail sales data for May, which recorded only 0.1% growth – well below analyst’s expectations of a 0.4% rise: Retail sales were 7.4% higher year over year, with turnover still running way above the pre-COVID trend: According to the ABS: May saw offsetting movements at

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RBA: Pandemic stimulus unprecedented

The Reserve Bank of Australia (RBA) has released its June Bulletin, which includes an interesting report on the unprecedented stimulus undertaken by the world’s economies. The first chart below shows the ramp-up in debt across advanced and emerging economies, which was driven higher by pandemic stimulus: These direct measures, including those that are expected to

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Abul Rizvi: immigration system is being used to lower wages

In April last year, Abul Rizvi – former Deputy Secretary of the Department of Immigration and one of the architects of Australia’s faux ‘skilled’ migration program – penned a spurious article arguing that Australia’s economy would suffer badly from the reduction in temporary migrants: If 50% of long-term temporary entrants depart, Australia would experience negative

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Sydney pushes auction clearances higher

CoreLogic’s preliminary report on the weekend’s auctions reported a higher clearance rate driven by strong results from Sydney. The national preliminary clearance rate rose to 77.8% from 77.4% the prior weekend. This was off significantly higher auction volumes, up to 2,418 from the prior weekend’s 1,426 (which was negatively impacted by the Queen’s Birthday holiday).

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Links 21 June 2021

Global Macro / Markets / Investing: High greenhouse gas emitters should pay for carbon they produce, says IMF – The Guardian World’s Bubbliest Housing Markets Flash 2008 Style Warnings – Bloomberg Can decisions taken by the Basel Committee increase the gold and bitcoin prices? – Arzualvan REPO, REVERSE REPO, FED – Arzualvan The End of

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Weekend Reading: 19-20 June 2021

Global Macro / Markets / Investing: Red-Hot U.S. Economy Drives Global Inflation, Forcing Foreign Banks to Act – WSJ America’s high-yield debt is on ever-shakier foundations – The Economist Fed Pencils in Earlier Interest-Rate Increase – WSJ Is the pandemic accelerating automation? Don’t be so sure – The Economist Avoiding a requiem for the WTO

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WestConnex to gouge NSW taxpayers even more

MB has frequently questioned the efficacy of Sydney’s WestConnex toll road and tunnel project – the $16.8 billion 33 kilometre motorway under construction that is more expensive per kilometre than the Chanel Tunnel. This hideously expensive project will see existing free public roads like the state-owned M4 (that have already been paid off) being tolled

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Auction market signals weaker property price growth

CoreLogic released its final auction report for last weekend, with the final clearance rate rising to 73.6% from 70.6% the prior weekend, which was negatively impacted by Melbourne’s hard lockdown. As usual, Sydney drove the market recording a final clearance rate of 74.1% (down slightly from 75.6%), whereas Melbourne’s final clearance rate rebounded to 68.8%

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Phil Lowe: Macroprudential to come before rate hikes

In the Q&A to yesterday’s Keynote Address at the Australian Farm Institute Conference, RBA Governor Phil Lowe stated that the Council of Financial Regulators (i.e. RBA, Treasury, APRA and ASIC) are actively looking at macroprudential tools to curb the mortgage/property market (listen from around the 34 minute mark): “The Council of Financial Regulators meeting last

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Australia’s youth benefitting from negative immigration

Yesterday’s employment report from the Australian Bureau of Statistics (ABS) revealed that Australia’s youth – defined as those aged 16 to 24 – continue to benefit from the closure of Australia’s international border. While overall youth employment is yet to return to its pre-COVID level, with total jobs still down 17,400 from their pre-COVID peak

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RBA demands low immigration for higher wages

The most revered economist in Australia, RBA governor Phil Lowe, has become the defacto best union official in the country, arguing for higher wage inflation for quite some time. In yesterday’s Keynote Address at the Australian Farm Institute Conference, Lowe concluded that “the Board wants to see the recent recovery transition into strong and durable

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It’s official: Australia has lost 74k migrants during pandemic

It’s official. Australia has lost 73,900 migrants since the start of the coronavirus pandemic, according to Q4 population data released yesterday by the Australian Bureau of Statistics (ABS): As shown above, Australia has recorded three consecutive quarters of negative net overseas migration (NOM), specifically: -7,800 in Q2 2020 -41,200 in Q3 2020 -24,900 in Q4

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Links 18 June 2021

Global Macro / Markets / Investing: Fed Pencils in Earlier Interest-Rate Increase – WSJ Fed officials see GDP, inflation rising higher in 2021 – The Hill How ‘Chaos’ In The Shipping Industry Is Choking The Economy – NPR Asian Central Banks Build Dollar War Chests as Buffer for Volatility – Bloomberg The Fed Cannot Control

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RBNZ cleared to introduce debt-to-income mortgage curbs

Recent data from the Reserve Bank of New Zealand (RBNZ), collated by Interest.co.nz, showed that Kiwis leveraged big time into property ahead of the Ardern Government’s investor tax reforms (announced in late March). The proportion of new mortgages taken out with debt-to-income (DTI) ratios above five soared over the March quarter, with all borrower groups

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ABS employment in detail: mega boom!

The Australian Bureau of Statistics (ABS) today released its labour force report for May, which registered another 0.3% fall in the official unemployment rate to 5.1% off a whopping 0.9% increase in the number of jobs: Full-time jobs rose by 97,500 in May whereas part-time jobs rose by 17,700: The labour force participation rate rose

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Why mortgage stress has risen

Digital Finance Analytics (DFA) has released its mortgage stress figures for May, which shows that around 41% of households remained ‘mortgage stressed’, up significantly from the pre-pandemic level of 32.9%: Martin North explains the rise in mortgage stress as follows: Our approach to measuring stress is unique in that we examine household cash flow –

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Restauranteurs confess: immigration kills wages

Yesterday, CBA’s head of Australian economics, Gareth Aird, released data showing that the coronavirus pandemic has reduced the number of non-resident workers in Australia from 521,000 in Q1 20 to 235,000 in Q1 21: In turn, this has driven unemployment and labour underutilisation down, which will soon likely result in stronger wage growth: According to

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Jobs market booms post JobKeeper

The ABS has just released its labour force survey for May, which reports cratering unemployment (to 5.1%) and underemployment (7.4%) on a whopping 115,200 monthly increase in jobs and a 1.4% increase in hours worked. The result smashed analysts’ expectations of a 30,000 increase in jobs and a 5.5% unemployment rate. Below are the key