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Realty locusts take wing from PurpleBricks

From the AFR: “Broke” real estate agents are quitting British disrupter Purplebricks in droves as the fixed-fee agency’s low-margin, high-turnover business struggles to achieve enough sales amid a slowing Australian housing market. Research by The Australian Financial Review found at least 27 agents had quit Purplebricks Australia since March with overall agent numbers now down to

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Morgan Stanley: Mortgage sizes face big cuts on macroprudential 3.0

Via Morgan Stanley on macroprudential 3.0: An estimated 18 per cent of mortgage customers have a debt-to-income (DTI) ratio that is above six times, an analysis of 1836 mortgagors shows, which is unacceptable when seen through the lens of new lending rules. A correction of the “very high” debt-to-income segment of the mortgage market could

74

Ching! RBA oligarchs toast immigration class war

Via the AFR: Despite enjoying longer lives, older Australians will have more younger taxpayers to fund their housing and welfare thanks to skilled immigration compared to most other advanced economies, according to findings presented to Reserve Bank of Australia board members this month. In a challenge to growing anti-immigration sentiment, policy members debated the fact

40

This is not your grandfather’s “class war election”

Via The Australian: Bill Shorten has taken a major ­political gamble ahead of the crucial Super Saturday by-elections by refusing to back the government’s $144 billion in personal income tax cuts and vowing to repeal the bulk of the package if the ­Coalition manages to legislate it. The Opposition Leader yesterday accelerated his class-war campaign

42

Tales of interest-only reset shock

Via the ABC: As property prices in Australia have climbed over the past few years, thousands of Australians desperate to get a foothold on the property ladder have used interest-only loans. But the interest-only period on these loans doesn’t last forever. Over the next three years, interest-only loans worth a combined total of about $360

88

Telstra shreds 8000 jobs

Via the AFR: Telstra will split out its infrastructure assets into a new wholly-owned business for the potential to demerge the new division or bring in strategic investors. The plan is one aspect of a range of sweeping changes, labelled Telstra2022, which chief executive Andy Penn will present later on Wednesday, including the sale of

48

Penny Wong welcomes her new Chinese overlords

Here is Penny Wong’s speech yesterday on Australia-China relations: The Australia China Business Council has existed for almost as long as Australia has had diplomatic relations with China. Our oldest non-government institutional link with China, you play a key role in the bilateral relationship between our two countries. This role is perhaps even more important

43

ANZ bears-up: Australian house price to fall 10%

Via ANZ: We now expect to see peak-to-trough price declines of around 10 per cent in Sydney and Melbourne, with smaller declines elsewhere. This cycle is being driven by tighter credit, rather than higher interest rates. Higher interest rates in 2019 are expected to be an additional headwind, though rate hikes will only occur if the housing market has broadly stabilised. We note that

23

China and Labor pash at conference

Via New Daily: China does not infiltrate other countries or seek to interfere in their internal politics, China’s ambassador to Australia says. Cheng Jingye has told the Australia China Business Council that relations between the two countries can improve after rising tensions over alleged political interference. “We have many shared interests. We both stand for

83

Labor formally embraces China kowtowing

Good grief, via the AFR: Labor is urging the Turnbull government to tone down its anti-China rhetoric, warning that it is flirting with a “dangerous exercise” by politicising the bilateral relationship between Canberra and Beijing. Opposition foreign affairs spokeswoman Penny Wong will tell the Australia China Business Council’s showcase annual networking day in Federal Parliament

36

Coalition child: Fine unis to enforce my version of free speech

Honestly, how does this pass as serious debate: Liberal senator James Paterson has called for universities to face fines for failing to uphold free speech, claiming that financial penalties would go some way to preventing the “administrative cowardice” behind the Australian National University’s decision to scrap plans for a course in Western civilisation. As debate

35

Property deals collapse as banks strip buyers “naked”

More credit crunch porn at the AFR today: Mortgage brokers and buyers agents’ claim million-dollar property sales are collapsing as increasingly risk-averse lenders reassess their exposure and pull out, causing deals to collapse. Sales between $3 million and $5 million and settlements for off-the-plan apartments – where preliminary lender offers were made two-to-four years ago

27

Good news: Chinese millennials turn off Australia

Via the AFR: For Australian entrepreneur Andrea Myles, Prime Minister Malcolm Turnbull dropped what she refers to as his “Mandarin bomb” at exactly the wrong time. It was December last year, around the time Myles was recruiting participants for the third “China Australia Millennial Project”, which puts young Australian and Chinese entrepreneurs in a room

52

Sir Robert Menzies on whether we should sell the ABC

Via Domainfax: Opposition Leader Bill Shorten has warned that the Liberal Party would be “emboldened” by an election victory to sell the ABC, seizing on a Liberal policy vote on the weekend as a key issue at the federal byelections on July 28. The move came after cabinet ministers poured cold water on the idea

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Ghettoisation of Australian cities IS THE PLAN

Ghettoisation of Australian cities is the plan. It’s quantitative peopling and it’s going swimmingly right across the Sydney’s and Melbourne’s west at astonishing speed. Via The Australian: Demographic shifts driven by Australia’s immigration program threaten to lock Sydney’s western suburbs and parts of Melbourne into a bleak future, as low-income ethnic clusters struggle to cope

45

Why Huawei is banned

Some more top notch Aussie politicians at work today at the AFR: Controversial Chinese telco Huawei is hitting back aggressively over spy agencies’ efforts to veto it on national security grounds from involvement in the construction of the 5G wireless network, lobbying federal parliamentarians directly that its exclusion would push up costs for consumers, result

4

China slows sharply as steel boom goes nuclear

China released its May data dump today and growth is slowing sharply. All measures missed expectations with industrial production at 6.8%, fixed asset investment at all time lows of 6.1% and retail sales likewise weak at 8.5%: But under the bonnet, the crucial real estate/steel complex is absolutely booming. Floor area sales rebounded to be

75

Mortgage deposits triple as credit crunch hits

Via the AFR: A typical deposit on a $1 million residential property has nearly tripled from about $50,000 to $150,000 as borrowers commit to tougher standards demanded by regulators, increasing pressure on the Bank of Mum and Dad or unsecured loans to make up shortfalls, lending analysis shows. Deposits required for nearly eight-out-of-10 loans have

35

Coalition mulls basic English test for permanent migrants

By Leith van Onselen The Australian reports that the Turnbull Government is considering a basic English test for all new permanent migrants amid concerns that by 2021, more than one million ­people in Australia could have ­little or no English skills: The move to consider mandating English language tests beyond citizenship applicants and apply a basic

36

Is Australia headed for a financial crisis?

Yesterday I attended a Capital Economics event with Paul Dales that addressed this question. The presentation first noted the huge over-valuation of property with Sydney and Melbourne 30% above sustainable trend, as well as the huge household debt imbalance we all know. It also noted the high likelihood of further price falls: In exploring the

36

Citi panics first, hikes mortgage rates

Via the AFR: The Australian division of the global financial powerhouse Citibank has hit the brakes on residential property lending amid growing fears about a housing slowdown and its impact on the broader economy. But the policy change follows repeated warnings by the bank about looming slowdown in the residential and commercial markets and its

26

Chris Pyne’s salary rises to $175bn

Recall from defense expert Brian Toohey two years ago: …everything is wrong about the Turnbull government’s decision to build 12 extremely large submarines in Adelaide. …The government’s refusal to go with an off-the-shelf design will cost more billions, because the first of new submarines won’t be operational until after 2030 and the last until almost 2060. This means the decrepit

9

S&P kicks Australia out of “very low risk” sovereign club

It’s not yet the sovereign downgrade, but it’s the pre-downgrade downgrade, from S&P: • In the past two years, information has emerged on the Australian banking system that highlights lapses in governance and risk management. As a result, we are revising our previous view on the competitive dynamics and institutional framework of the Australian banking

69

G7 screws the US pooch

While the world’s press is busy lapping up the anti-Trump hysteria post-G7, let’s stop and ask what did they expect? Via The Guardian: Donald’s Trump’s chief economic adviser said the US pulled out of a G7 communique because the Canadian prime minister, Justin Trudeau, “stabbed us in the back” and accused the leader of one America’s