Unconventional Economist

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Are “tiny homes” a solution for housing affordability?

Another week, another spin piece about the benefits of “tiny homes” and why they offer a solution to Australia’s housing affordability crisis: According to the Internation Residential Code (ICC), a tiny house is defined as a dwelling under 400 square feet (or 37 square meters). A standard home, by comparison, is roughly 2,500 square feet

7

Imagine what the AFP would find with proper money laundering laws?

The Australian Federal Police (AFP) has uncovered a cache of Australian property laundered by Chinese funds after receiving a request from the Chinese Government: A mansion in Melbourne’s east, newly constructed units and more than 3,000 acres of Tasmanian farmland are among $17.3 million in property seized by authorities as part of an investigation into

15

Australia’s high-rise apartment crash goes from bad to worse

Yesterday, the Australian Bureau of Statistics (ABS) released its dwelling approvals data for September, which revealed that dwelling approvals nationally have crashed by 35% in trend terms from the March 2015 peak, driven by a mammoth 54% decline in unit and apartment approvals: Today, I want to focus on the high-rise apartment segment, which is

31

Australian universities double down on international students

The six year boom in international students has seen enrolment numbers nationally almost double to 712,000 as at June 2019: This boom has been driven by three primary source nations – China, India and Nepal – who together account for just over half of Australia’s international students: As documented recently by Associate Professor Salvatore Babones

12

Links 1 November 2019

Global Macro / Markets / Investing: 40% of multinational profits are shifted to tax havens each year – Sound Cloud Coal is Dying Faster than Anybody Expected: Chalk it up not to politics but plain old economics – Bloomberg When the Fed cuts interest rate three times and pauses, it works out great for stocks,

21

David Leyonhjelm’s recipe for low-wage serfdom

Senator David Leyonhjelm has penned an article lambasting the moral panic over ‘wage theft’ and prescribing a policy of full labour market deregulation: The [wage theft] issue originates in Australia’s absurdly complex industrial relation system, with its mess of awards and agreements barely changed from the middle of the 20th century… What this “crisis” reveals

17

Federal court rules backpacker tax unlawful

The Federal Court has struck down the Coalition’s controversial ‘backpacker tax’, introduced in 2016, ruling that it is unlawful to charge non-residents higher taxes than Australian residents: The federal court in Brisbane ruled it was not lawful that a non-citizen should have to pay more tax on earnings than an Australian doing the same job.

1

Final auction clearance rate holds above 70

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 3.1% decline in the final national auction clearance rate to 72.2% – well above the same weekend last year (47.0%) and almost the same as last week’s 72.1%: As you

13

Australians haunted by recession

While Australia has not experienced an official recession – defined as two consecutive quarters of negative economic growth – for 28 years. This has not stopped Australians from searching the term “recession”. As shown in the next chart from Fidelity, Google searches for “recession” is running at the highest level since the Global Financial Crisis

23

Investor mortgage growth crashes into negative

The Reserve Bank of Australia (RBA) has released its private sector credit aggregates data for the month of September 2019: A chart showing the long-run breakdown in the components is provided below: Personal credit growth (-0.7% MoM; -1.4% QoQ; -4.4% YoY) has plunged, whereas business credit growth (0.4% MoM; 0.9% QoQ; 3.3% YoY) and housing

12

Top 10% hold half of Australia’s wealth

The Roy Morgan Wealth Report 2019 has been released, which shows that owner-occupied housing accounts for half of Australia’s personal assets. The Report also shows that the wealthiest 10% of Australians hold nearly half of the nation’s wealth: Key Findings: Australians’ per capita gross wealth increased in real terms between 2007 (i.e. pre-GFC) and June

13

ABS: Australian rents fall to 2010 levels

The June quarter consumer price index (CPI) data, released yesterday by the Australian Bureau of Statistics (ABS), revealed that Australian rental growth remains stuck in the gutter, posting the equal lowest annual growth in the series’ 45-year history. According to the ABS, rents nationally rose just 0.1% in the September quarter and grew by just

13

New home construction costs record first ever fall

Yesterday’s consumer price index release from the ABS posted the first ever fall in the “New dwelling purchase by owner-occupiers” sub-component, which measures the cost of building a home (excluding the land): According to the ABS, this sub-index fell by 0.17% in the September quarter and by 0.08% year-on-year. This was the first annual decline

15

International student crisis goes on trial at Murdoch

Independent writer, Paul Wallis, has penned an interesting analysis of Murdoch University’s case against Dr Gerd Schroeder-Turk, who is being sued for causing a drop in international student enrolments after he told ABC’s Four corners that entry and teaching standards at the university had collapsed: You’d think it’d be common sense for international students coming

13

Links 31 October 2019

Global Macro / Markets / Investing: When recession comes, expect central banks to rewrite the rules – The Guardian Is US shale circling the drain? – RT Tesla filing shows U.S. sales tumbled 39% in third quarter – Reuters EIA: Oil Markets Could Face Oversupply in 2020 – Stock Market News The global economy is

17

Ardern’s election promise shattered as NZ immigration booms

In the lead-up to the September 2017 general election, the New Zealand Labour Party launched a plan to reduce immigration by around a third in a bid to relieve chronic housing and infrastructure pressures (especially around Auckland): …in recent years our population has been growing rapidly as record numbers of migrants arrive here. This has

26

Retirees ‘upsizing’ to game Australia’s pension system

The Australian’s Adam Creighton claims that some wealthy seniors are deliberately ‘upsizing’ to more expensive homes in order to receive bigger Aged Pension payments: Older Australians are buying more expensive homes in retirement to hang on to the Age Pension, according to experts who say pension eligibility rules are causing nationwide over-investment in housing. Part

4

John Hewson lashes Coalition’s FHB subsidy

Former Liberal leader, John Hewson, has joined the conga-line of analysts lashing the Morrison Government’s first home buyer (FHB) deposit guarantee: A key federal government policy on housing affordability is little more than “an election sop”, while piecemeal policy and a lack of forward-thinking are crippling both state and federal responses to the issue, former

3

Underlying inflation softens as economy grinds lower

The Australian Bureau of Statistics (ABS) has released the Consumer Price Index (CPI) data for the September quarter 0f 2019, which registered rising annual headline inflation but falling underlying inflation. According to the ABS, headline CPI recorded 0.5% growth in the September quarter, softening from the June quarter’s 0.6%: On an annual basis, headline CPI

8

Inner-Melbourne apartment completions collapse

Melbourne’s high-rise apartment boom is well and truly over, with apartment completions hitting a six-year low across inner Melbourne: Advisory firm Urban Property Australia forecast fewer than 4000 apartments to be added to the key inner-city precinct in 2019, which comprises the CBD, Docklands, Southbank and 11 other suburbs including North Melbourne, Carlton, Parkville, Port

8

Coalition’s regional visa scheme in “full panic mode”

We noted earlier this week how the Morrison Government’s much vaunted regional visa scheme had turned into a farce, with the Government manipulating the data and deeming Perth and Gold Coast “regional” despite being bonafide metropolitan areas: Perth is Australia’s fourth largest city with a population of 2.1 million people. And while the Gold Coast

14

Coalition gifts mortgage brokers more dodgy incentives

The mortgage broking industry successfully fought off the Hayne Royal Commission’s recommendation that trailing commissions be abolished and that banks stop paying upfront commissions to brokers. It is also trying to leverage its influence within the Coalition to overturn common-sense rules requiring the industry to act in the best interests of its clients, as applies

5

Paul Keating’s superannuation incoherence deepens

Paul Keating continues to spin lies about Australia’s superannuation guarantee (compulsory superannuation), claiming the following on Alan Jones yesterday (audio above): Paul Keating: “Superannuation dramatically reduced the call by the Aged Pension on the federal budget. It was forecast to the 4.6% of GDP in 2030. This year, it’s 2.7% of GDP heading to 2.4%.

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Links 30 October 2019

Global Macro / Markets / Investing: S&P 500 jumps to record high on strong earnings, trade-deal progress – CNBC The stock market is at a record high and it’s unbelievable – Yahoo Rent control—is the cure worse than the disease? – Up John Uber announces deeper push into financial services with Uber Money – CNBC