Unconventional Economist

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Mortgage shock to crash property prices “back down to Earth”

The latest data from the Australian Prudential Regulatory Authority (APRA) showed that around one quarter of mortgages originated in the December quarter of 2021 were at a debt-to-income (DTI) ratio above six times, up from around 15% pre-pandemic: In dollar terms, $137 billion worth of mortgages were issued at a DTI ratio above six times

5

Links 10 May 2022

Global Macro / Markets / Investing: Nearly 25 million tonnes of grain stuck in Ukraine, says UN food agency – Reuters A third Apple store is looking to unionize – The Verge Apple employees revolt against mandatory back-to-work policy – Computer World Honda And Acura Sales Take A Serious Dive – Car Buzz 3 things

23

New Zealand house prices are crashing

The Reserve Bank of New Zealand (RBNZ) last week released its half-yearly Financial Stability Report (FSR), which noted that house prices nationally had already fallen more than 4% since November 2021 after having risen a whopping 48% over the prior two years: The RBNZ also noted that New Zealand house prices “remain above sustainable levels

1

Business confidence soared ahead of rate rise

The Roy Morgan business confidence survey for April has been released with confidence soaring 5.9% after the federal budget cut petrol excise in half, but before the RBA’s decision to hike interest rates 0.25%: There were improvements across the index, and an increasing majority of businesses, 54%, expect ‘good times’ for the Australian economy over

5

Gaslighting Grattan pumps and whinges about immigration

For year’s the Grattan Institute has vigorously supported the ‘Big Australia’ mass immigration policy, claiming it delivers huge benefits for the economy and society. At the same time, Grattan continuously blames a ‘lack of supply’ – caused by said mass immigration – for driving Australia’s housing affordability woes and entrenching intergenerational inequality. The latest example

3

SEEK job ads continue to boom

SEEK has released its jobs dashboard for April, which revealed that job ads rose another 2.9% over the month to be up a whopping 22.5% year-on-year and 59.7% higher than April 2019: Applications per job ad were also down 7.6% month-on-month to be 47.0% lower year-on-year. The next graphic shows the month-on-month changes across each

5

Sydney house prices follow auction market lower

CoreLogic has released its preliminary auction results for the weekend, which recorded the lowest national clearance rate for 2022. Of the 1,611 results collected so far (out of 2,039 auctions), 64.7% were successful. This overtook last weekend’s 67.2% preliminary clearance rate as the year’s worst result, which was downgraded to 62.9% at final figures. In

78

Grantham: “Day of reckoning” coming for global housing markets

Investment legend Jeremy Grantham has labelled the pandemic global property boom the “fifth great bubble of the modern era” and has warned of an impending global property bust as central banks ‘normalise’ interest rates: Grantham is convinced that we’re in the midst of a fifth great bubble of the modern era, following the Wall Street

6

Links 9 May 2022

Global Macro / Markets / Investing: Amazon’s captive staff meetings on unions illegal, labor board official finds – Reuters Investors Rush Into Defensive ETFs as Market Turbulence Grows – WSJ Soaring Demand for Palm Oil Puts Rainforests at Risk Again – WSJ How are Bitcoin Miners using options to make money? – Wall Street Pro

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Weekend Reading: 7-8 May 2022

Global Macro / Markets / Investing: Shell profits nearly triple as oil prices surge – BBC Dow plunges 1,100 points as Wall Street sell-off accelerates – MSN Lucid is raising prices on its luxury Air EV by as much as 13% – Tech Crunch Stock Market Volatility and the Role of Alternative Investments – Investaltoira

8

Don’t introduce a levy to fund aged care

Modelling by the University of New South Wales indicates that the annual cost of providing aged-care services is likely to rise significantly in coming decades. The report’s co-author Ellora Shirodkar says the future cost of aged-care services could potentially range from 4% of GDP to 25%. Shirodkar warns that universal entitlement to aged care is

7

Australian economy worse after decades of mass immigration

Former Treasury Secretary, Dr Ken Henry, has lambasted Australia’s plummeting economic performance over the past two decades, which saw the nation’s productivity collapse: Dr Henry said Australia’s economic performance over the last two decades was “a great ­disappointment” because not enough action had been taken to address challenges policymakers knew were coming”. “We’ve been aware

3

Shock horror! Investor property tax rorts benefit the rich

The Parliamentary Budget Office (PBO) has presented research on negative gearing and the capital gains tax (CGT) discount, which would have been useful in 2018-19. According to the PBO, both tax lurks overwhelming benefit higher income earners – something MB has argued for years: 57 per cent of negative gearing deductions go to the top

6

CoreLogic weekly house price update: Rebound

In the week ended 5 May 2022, CoreLogic’s 5-city dwelling values index rose by 0.18% – the strongest rate of growth since mid-January: All major markets experienced value increases: Quarterly price growth remains negative in Sydney and Melbourne, but strongly positive across the other major capitals: Finally, dwelling values across the five major capitals have

3

Links 6 May 2022

Global Macro / Markets / Investing: Fed raises interest rates by 0.50%, largest move since 2000 – Yahoo Fed raises rates by half a percentage point — the biggest hike in two decades — to fight inflation – CNBC Distressed debt levels double in US corporate bond market. – FT Apple hires a 31-year Ford