Leith van Onselen


Melbourne and Sydney for sale listings surge

SQM Research has released its Stock on Market report for February, which revealed that property listings rose by 0.2% over the month but were still down 13.8% year-on-year: However, as shown above, listings in Sydney and Melbourne bounced, jumping by 9.9% and 10.0% respectively in February. According to SQM Managing Director, Louis Christopher: “The month


Gerry Harvey warns of deepening retail recession

Executive chairman of Harvey Norman, Gerry Harvey, has warned that Australia’s retail recession will deepen with more store closures on the way: Speaking after the release of Harvey Norman’s latest results, Harvey told news.com.au there are more retail collapses on the way, and they will likely include smaller businesses. “The main ones have probably gone


Australian incomes take a terms-of-trade dump

Monday’s December quarter Business Indicators release from the ABS, which feeds into today’s national accounts, showed that the gap between wages & salaries has narrowed against business profits. As shown in the next chart, real business gross operating profits fell in the December quarter, down 1.2% in trend terms: Therefore, while there remains a wide


Universities brace for $8b international student bust

Last month, the chief executive of the International Education Association of Australia, Phil Honeywood, warned that Australia’s education sector and broader economy faced an $8 billion hit from the loss of Chinese international students: Phil Honeywood said the entry ban on non-citizens who had been in mainland China was a worst-case scenario for universities, English-language


Links 4 March 2020

Global Macro / Markets / Investing: Coronavirus shook the foundations of a global stock market powered by debt – ABC The Gig Economy Has Never Been Tested by a Pandemic – The Atlantic U.S. stock short-sellers notch $105 billion week in coronavirus sell-off – Reuters Four Reasons Why the Coronavirus Is Such a Terrifying Economic


Apartment approvals collapse

The Australian Bureau of Statistics (ABS) has released dwelling approvals data for the month of January. At the national level, the number of dwelling approvals collapsed by a seasonally adjusted 15.3% to 13,016. The overall slump in approvals was driven by units & apartments , which collapsed 35.5%. Over the year, dwelling approvals fell 11.3%,


Another $16b needed to fix NBN debacle

The hits keep on coming for Australia’s beleaguered $51 billion National Broadband Network (NBN), with a parliamentary inquiry told that the NBN has put an “artificial handbrake” on fast download speeds, raised the price of accessing the internet, and repeatedly failed to meet its own revenue targets: The latest NBN complaints came at the first


Australia’s terms-of-trade collapses

Within today’s dump of balance of payments data that feeds into tomorrow’s December quarter national accounts release was the important news that Australia’s terms-of-trade slumped 5.3% in seasonally adjusted terms and by 1.9% in trends terms: Over the year, the terms-of-trade fell by 0.6% in seasonally adjusted terms but rose by 1.6% in trend terms.


Don’t expect banks to pass on RBA rate cuts

The Reserve Bank of Australia and the federal government have made it clear that they expect banks to pass on official interest rate cuts in full to borrowers. However, data from RateCity regarding the response of the banks to recent rate cuts suggests that borrowers should be prepared to be disappointed, with the banks likely


Australia’s poor productivity is no puzzle

Alan Kohler is the latest commentator that has attempted to solve the puzzle as to why Australia’s productivity has slumped: The Productivity Commission’s annual “Insights” publication, which stated that both labour and multifactor productivity fell for the first time since the mining boom, by 0.2 per cent and 0.4 per cent respectively. It means the


Melbourne property prices soar to record high

It’s official. After rebounding by 12.7% over eight months, Melbourne’s dwelling values have hit record heights, surpassing their former November 2017 peak: The below chart shows the month-by-month changes more closely: Sydney, too, has experienced a strong rebound, with dwelling values up 13.2% over nine months. Indeed, according to CoreLogic, the median house price in


Compulsory superannuation is failing low income Australians

The Grattan Institute has released its submission to the federal government’s Retirement Incomes Review, which explicitly argues that Australia’s system of compulsory superannuation is failing lower-income workers. Grattan also argues that instead of lifting the superannuation guarantee, which would cost the Budget an additional $2 billion a year, the government should instead bolster the Age


Unions: Throw open borders to cheap, sick Chinese workers

With the coronavirus spreading like wildfire, and Australian wages hovering near record lows, the union movement has demanded the federal government open Australia’s borders to temporary Chinese migrant workers: Unions are calling on the federal government to lift the “discriminatory” Chinese travel ban, with some businesses struggling to cope without temporary workers who remain trapped


Why is New Zealand sick of Jacinda Ardern?

In the lead-up to the September 2017 New Zealand general election, Labour promised to reduce immigration by around a third by cutting the numbers of work and student visas: …in recent years our population has been growing rapidly as record numbers of migrants arrive here. This has happened without the Government planning for the impact immigration is


Australian households’ long, painful wage recession

The December quarter Business Indicators report was released by the ABS, which includes aggregate wages & salaries data, namely “gross earnings before taxation and other deductions” and “includes provisions for employee entitlements”. In order to get a better sense of how Australian workers are faring, I have deflated this aggregate nominal wages & salaries data


Can Indian international students fill the hole left by China?

International student enrolment data for calendar year 2019 has been released by the Department of Education, which reveals that India has become Australia’s key growth market for education exports. Total student enrolments from India surged another 34% in 2019 to 144,000, and have ballooned by 195% since 2013: India was Australia’s second largest source market


Links 3 March 2020

Global Macro / Markets / Investing: Great Gatsby Curve: Relationship between inequality and mobility – Business Insider Coronavirus Is Different. Almost No Company Is Safe. – WSJ Trump could have stabilized markets more had he not muzzled the grown-up in the room, Dr Fauci – Bipartisan Press Krugman celebrates the market losing a Trillion dollars


Flammable cladding class actions escalate

Apartment owners involved in two combustible cladding class actions have been given permission by the Federal Court to expand their claims under Australian Consumer Law. Vitrabond supplier Fairview Architectural is the subject of one of the class actions, while Alucobond manufacturer 3A Composites and supplier Halifax Vogel Group are the subject of the other class


Senate rejects Coalition’s “risky” visa privatisation

A Senate committee has rejected the Morrison Government’s planned outsourcing of Australia’s visa processing, warning that it threatens the integrity of the immigration system: The Senate committee, chaired by Labor’s Kim Carr, found the “privatisation” of Australia’s visa application and assessment system would reduce service quality and price gouge visa applicants. But the Federal Government


CoreLogic: Housing recovery to slow as virus bites

Following on from this morning’s report covering the five major capitals, CoreLogic has released its full dwelling value results for February, which also captures the smaller markets and regional areas: As shown above, the smaller capitals and regions also had a mostly positive month in February, with Hobart (+0.8%), Canberra (+0.8%), and the combined regions


CS: Should stock pickers choose cyclicals or defensives?

Via Damien Boey at Credit Suisse: Last week, we updated our views on volatility. Our initial thesis was that volatility would spike, consistent with the equity risk premium rising faster than the risk free rate, supporting defensives over cyclicals. We also suggested that levered passive funds would de-risk and de-lever in a higher volatility environment,


ANZ job ads rise for second straight month

February’s ANZ job ads have been released which reported the second consecutive rise, up 0.7% in February and almost 5% over the past two months: However, job ads were down 10.2% year-on-year. According to ANZ, the result was a surprise to the positive side. However: the past two months of gains weren’t enough to regain


Business indicators mixed in Q4

Via the ABS comes mixed GDP partials: Inventories beat analysts expectations of -0.1% and will add to GDP after falling by 0.2% seasonally adjusted in Q3. However, profits fell hard and missed analysts expectations of a 1.3% decline. At this stage, Wednesday’s Q4 GDP print is still looking soft given the sharp falls in construction


Australia’s superannuation system is driving inequality

Chief economist of The Australia Institute, Richard Denniss, is the latest commentator to expose the gross inequity of Australia’s compulsory superannuation system: This year, the government will spend more than $41 billion on tax concessions for superannuation with the stated purpose of helping people save for their retirement. But the way the rules are designed


Ken Henry: Australian households are struggling

The former secretary of the Australian Treasury, Ken Henry, believes Australian households are struggling, wedged between rising housing costs, insecure work arrangements, and low wage growth: I’m no longer so comfortable with the increasing ‘casualisation’ of the labour market . Over the past 40 years Australian house prices have approximately quadrupled in real terms (i.e.,


Australian property values surge another 1.2% in February

CoreLogic’s dwelling price results have for February were released over the weekend, which revealed another 1.2% increase in values over the month at the 5-city level, driven by more strong rises across Sydney (1.7%) and Melbourne (1.2%): It was the eighth consecutive monthly acceleration in home values at the 5-city level: Over the February quarter,


“Super Saturday” delivers auctions boom

The first “Super Saturday” of the year delivered another booming auction market, with both Sydney and Melbourne delivering high preliminary clearance rates off very strong volumes. At the national level, the preliminary rate was 77.1%, down marginally from 77.7% last weekend, but way above the 50.4% recorded in the same weekend last year: Sydney’s preliminary


Universities’ international student binge pushes locals out

In the 2019 calendar year, international student arrivals hit a record high 620,000 according to the Australian Bureau of Statistics, up from 380,000 in 2014: Total international student enrolments across Australia’s various educational institutions also hit a record high 957,000, according to the Department of Education: The biggest driver of this growth were Australia’s universities