Employment, housing statistics and the SMSF sector

Today  we cover employment, housing statistics and the SMSF sector.

 1. Companies are hiring again!

It’s easy to report that plenty of jobs are disappearing by the day, but few bother to find out where the new jobs are.  That takes more work than just regurgitating the ABS monthly labour force statistics.

For example the resources boom is thriving and is, well, truly booming.

True home building and domestic retail is offsetting it with weakness.

Yet manufacturing is surviving despite the high dollar and is even expanding, despite all the eulogies that are spat out of tablets and aired on the nightly news.  This sector has actually expanded for three consecutive months.

No doubt manufacturers are still doing it tough, but adjustments are underway.

Companies are also hiring again, with new job advertisements growing for four months straight.  The main question is whether the scale of hiring will be enough to increase employment or whether the intake of new workers is just churn.

The world economy is undergoing major change and downunder we need to adjust.

This should be our economic policy – helping business deal with a harsher economic environment by government essentially getting out-of-the-way rather than trying to shield us with handouts and overzealous rules/regulations.

By doing such will lead to higher productivity – the missing ingredient to Australia’s long-term prosperity.

This is the key message to all the moaners and groaners in retailing, in the media, unions and economists at large.  Consumers are sick and tired of hearing stories of woe and warnings about worse to come.

Australia’s economy is in transition – the task ahead is to get on with the adjustment, not whinge about it.

2. Housing stats

House prices rose by 0.8% in February and whilst that might not sound like much, it is the biggest monthly increase in 18 months.

Prices rose in six of our eight capitals and in almost every major regional city, highlighting the underlying strength of Australian residential property.

The future looks bright too, with auction clearance results now hovering around the low 60% mark.  Remember clearance rates over 50% means that prices should continue to grow.

In addition the amount of resale stock on the market continues to fall.  Stock levels have fallen since the beginning of the year.

Underlying demand for new property is also set to improve with a big lift in permanent settlement in Australia.  The number of people settling downunder hit the highest levels in 3½ years in January.

Close to 14,000 people are now arriving each month, compared to the lows of 9,500 per month in late 2010.  Over the past year 146,500 people moved permanently to Australia.

To quote Craig James of CommSec “Population is power, lifting economic growth and momentum.”

More people means greater demand for homes, cars, household appliances and heaps of other stuff.

3. SMSF + residential = allowed and well

Earlier this week a national property website posted that “Self-Managed Superannuation Funds (SMSF) can only invest in commercial property following the ATO’s decision to ban residential property investments.”

Well didn’t I spill my Wheaties!  So did many others.

But relax it isn’t true.

The ATO – as they ruled in 2009 – won’t allow residential property to be transferred into your SMSF.

To quote the ATO “The only real estate you can transfer into your SMSF is business real property.  You cannot transfer a residential investment into your SMSF.  You also cannot transfer a property that has both business and non-business uses.”  See here for the ATO ruling.

To repeat, you can buy residential property with your SMSF.

About $400 billion is already invested in the Australian SMSF sector.  Currently residential property accounts for just $15 billion of SMSF assets.  By 2015, the total SMSF sector is expected to grow to $1.5 trillion – compared to the equities market’s $1.2 trillion.  And SMSF are expected to balloon to $3.3 trillion by 2026.

Wow! Please remember…. pass this missive onto 3 others.


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Michael Matusik


Michael is director of independent property advisory Matusik Property Insights. He is independent, perceptive and to the point; has helped over 550 new residential developments come to fruition and writes his insightful Matusik Missive

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