[Podcast] The Big Picture | Economic & property trends you must understand – July. With Pete Wargent

We’re well into the second half of 2021 now so it’s a good time to reflect back on the year so far and then look forwards to what’s ahead.

Property values across our capital cities have experienced double-digit growth already this year.

And despite the Covid concerns we’re experiencing, there’s plenty more growth to come.

Clearly, buyers are still out in force – owner-occupiers, investors, and first home buyers – at a time when available supply is struggling to keep up, keeping pushes prices higher.

While much of the commentary is about the micro factors – what’s happening on the ground in our property markets – I like to regularly get together with property commentator Pete Wargent in these Big Picture podcasts to look at the macroeconomic factors affecting our economy and the property markets to help give you some more clarity about what the future holds so you can make better investment and business decisions.

Since we spoke last month Australia’s economic recovery has continued to unfold, more jobs have been created and our property markets keep surging.

Australia’s Property markets

All our capital cities have already experienced double-digit growth this year other than Perth.

Homebuyers and property investors who took a long-term view have already enjoyed significant capital growth.

  • The higher-end, more expensive end of the market is outperforming the cheaper end.
  • Investors are back in the market.
  • The pace of growth will slow but property values are likely to increase another 10% this calendar year.
  • Rental growth is slowly starting to pick up as vacancy rates fall.

Australia’s households just keep getting richer

  • Australian household wealth grew more in the last year than it did during the preceding three years combined.
  • Much of our wealth is due to ownership of property
  • A new report from Credit Suisse estimates as many as 1.8 million Australians are millionaires today based on net household wealth (defined as the value of financial and real assets minus debts).
    • And over 3 million Australian adults could soon be millionaires, according to the report.
    • A lot has to do with property and super

The RBA and interest rates

Governor Philip Lowe’s announcement telling us that the economy is doing much better than previously forecast resulted in speculation that an interest rate increase may come sooner than expected

Latest housing finance figures

  • The value of new home lending has almost doubled since May last year.
  • New home lending increased by 4.9% from the month prior and a whopping 95.4% or $15.90 billion from May 2020.
  • While the value of owner-occupier lending only saw moderate month-on-month gains, investor lending has gone way up
  • Investor lending has now hit the highest level since June 2015 with $9.13 billion of new loans in May, more than double the value in May last year when COVID was in its early stages.
  • However, the investor surge comes at the cost of first home buyers, with the number of owner-occupier first home buyer loans dropping.
  • While first home buyer numbers are down, the value of first home buyer lending is up, reflecting Australia’s rising property prices.

Jobs

  • The jobless rate has fallen to its pre-pandemic level of 5.1 percent after the creation of 115,000 jobs in May.
  • The underutilization rate is the lowest since February 2013.
  • With international borders shutting out foreign labor and fuelling skills shortages in some industries, job ads at a 12-year high, and jobs vacancies soaring, the local labor market could reach full employment sooner than expected.

Population

  • Australia’s population increased by 136,300 people in 2020. This was the slowest population growth since ABS records began in 1982.
  • There were 294,400 babies born in Australia last year, the fewest births in 13 years.
  • And there were 161,400 deaths in the past year down by 3.4% over the previous year.
  • Over the next 40 years, Australia’s population is expected to age and become smaller than expected.

Resources:

Michael Yardney

Metropole’s Strategic Property Plan – to help both beginning and experienced investors

Get your bundle of eBooks and reports here: www.PodcastBonus.com.au

Join Michael’s Property Update private Facebook group by clicking here

Pete Wargent  Next Level Wealth

Pete Wargent’s new book Low Rates High Returns

Some of our favourite quotes from the show: Australia Property

“The markets turned in October last year, and they’ve gone gangbusters ever since.” – Michael Yardney

“We’ve never had as many first home buyers, so housing is affordable. Maybe not right in the centre of Sydney or Melbourne, but there are still opportunities.” – Michael Yardney

“I can see an employment rate with possibly even a 4 in front of it, moving forward.” – Michael Yardney

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About

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au


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