RBA…Chart Pack day- Pete Wargent

Charts, charts…

I know that charts aren’t everyone’s cup of tea, so I’ll limit myself to just six of ’em today. You can view the rest of the Reserve Bank’s enlightening charts here.

Let’s start with housing loan approvals. Very strong indeed, with the value of loan approvals heading to to the moon and to beyond record levels. The result will be a strong Australian housing market in 2014.

In the coming week, having had some experience of dealing with first homebuyers in Sydney, I will present the evidence that I have gathered to show why the subdued figures for first homebuyers in New South Wales are incomplete.

I believe that anyone who seriously believes that data showing that nearly a quarter of homebuyers in Western Australian are first-timers – yet only 3.4% in NSW – is not listening to what the data is telling them.

Genuine critical analysis would surely conclude that in the absence of grant assistance first homebuyers in NSW are not being recorded, and now I have some genuine first-hand experiences to back up the assertion.

Stay tuned for that in the next week. In any case, personally I expect the figures for first homebuyers in a number of other states to show increasingly robust readings through 2014, so watch this space…

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Stronger housing finance is being reflected in dwelling prices now increasing in all of the major capital cities, with the possible exception of Canberra, which looks a little undecided.

Adelaide needs to get a shift on or the city risks missing out on this growth cycle in its entirety. Regional Australian dwelling prices have gone absolutely nowhere in aggregate.

Sydney is heading to the stars, as anticipated for several years on this very blog. Fortunately for me, I put my money where my out-sized gob was many years ago.

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As the RBA Chart Pack only runs to 30 January and is six days behind, the share markets chart looks reasonably healthy. Not so, sadly. We are in the midst of a rather hefty correction (or cataclysm, depending upon who you believe!).

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And finally, 3 charts to sum up the challenges facing the Aussie economy in the years ahead. Firstly, mining capital expenditure has risen relentlessly – and even still now refuses to peak – but it surely must begin to fall in due course.

How much of the capex contribution to the economy will be offset by a boom in exports? BIS Shrapnel forecasts Australian mining production to increase by a whopping 41% over the next 5 years. I’m not so sure about that, and in any case, will falling commodity prices and a resurgent dollar smash a hole in export returns?

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And, perhaps the most important chart of the lot: unemployment. Australia is relatively-speaking reasonably well placed as we move through into 2014, with the headline rate of unemployment at 5.8%.

Will the unemployment rate continue to tick up as the mining construction boom unwinds, or will ultra-low interest rates see other sectors such as dwelling construction step up to plug the employment gap? The next Labour Force data will be released in 8 days time on February 13. Can’t wait!

‘Til next time…

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Pete Wargent

About

Pete Wargent is a Chartered Accountant, Chartered Secretary and has a Financial Planning Diploma. He’s achieved financial freedom at the age of 33 - as detailed in his book ‘Get a Financial Grip – A Simple Plan for Financial Freedom’. Pete now manages his investment portfolio, travels and works as a consultant in the finance industry from time to time. Visit his blog


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