What a week of positive property and economic data | Property Insiders [VIDEO]

What an incredible week of positive economic and property data.

It started with the Australian Bureau of Statistics confirming how strong our property markets are and continued with the fourth-largest monthly decline in unemployment on record with a stunning fall in the unemployment rate from 5.5% to 5.1% in May. Houses Property Market

Perhaps more importantly, underemployment is now quite a bit lower than it was prior to the pandemic

The incredible jobs boom has the unemployment rate on track to have a four in front of it and that has led the media to keeps speculating that this will test the RBA’s guidance that interest rates won’t rise until 2024.

Of course, this is great news for our economy which is experiencing that V Shape recovery that everyone was hoping for but no one really expected.

But what does it mean for our property markets?

That’s one of the questions l ask Australia’s leading housing economist, Dr. Andrew Wilson, chief economist of My Housing Market, so please watch this week’s Property Insider video to get our thoughts on these matters.

Watch this week’s video as we discuss what happened in our auction markets over the weekend as they give a good “in time indicator” of what’s happening on the ground.

Auction clearance rates remained strong this weekend despite significantly increased auction numbers.

Sydney Auction Market

The Sydney weekend auction market has rebounded strongly following last weekend’s Queen’s Birthday holiday pause, recording another boom time clearance rate despite hosting over 1000 auctions.

Sydney recorded a clearance rate of 80.8% on Saturday which was higher than the previous weekend at 77.8%.

The clearance rate for houses was 81%, with units just below, at 80.1%.

With the exception of the distracted Queen’s Birthday and Easter weekends, Sydney has recorded a clearance rate above 80% for each Saturday this year so far.

Sydney recorded the median price of $1,610,000 for houses sold at auction on the weekend, which was higher than the $1,555,000 recorded over the previous Saturday.

The Northern Beaches was yet again in Sydney’s top-performing region.

Sydney Auction Clearance TrendsMelbourne Auction Market

The Melbourne auction market bounced back strongly at the weekend following the distractions of last weekend’s Queen’s Birthday holiday and the easing of Covid shutdown restrictions.

Melbourne reported a record June Saturday auction day reflecting underlying seller confidence in the current robust market conditions.

A remarkable 1,566 actions were reported which smashed the previous June record of 1,379 auctions set just two weekends ago.

Despite this, Melbourne recorded a solid auction clearance rate of 74.4%

Melbourne Auction Clearance TrendsLatest ABS housing data

The value of Australian homes is soaring as record home buying activity pushes prices higher in a once-in-a-generation housing market boom

The ABS released their latest stats for the March quarter of this year… yes I know that’s 3 months ago.

They report that the total value of Australian housing over the March quarter increased sharply by 5.7% compared to the previous quarter, to a new record high of $8.29 trillion.

Australian home values have now increased by 13.9% over the past year – the fastest annual rate of growth on record.

Watch this week’s Property Insiders video as Dr. Andrew Wilson gives his news on what’s ahead for the housing market will eventually slow them down.

Total Home Value

Whatever happened to the cliff we were going to have post-JobKeeper

It’s raining jobs.

Despite relentless predictions of higher unemployment rates to follow the end of JobKeeper in March, Australia’s jobless rate continues to defy the “experts”. Businesspeople Waiting For Job Interview

The jobless rate has fallen to its pre-pandemic level of 5.1 per cent after the creation of 115,000 jobs in May.

Even more impressively, the underutilisation rate, which combines unemployment and underemployment, is the lowest since February 2013.

That was the last time the economy experienced wage growth of at least 3 per cent – a key threshold the RBA is trying to achieve.

With international borders shutting out foreign labour and fuelling skills shortages in some industries, job ads at a 12-year high, and job vacancies soaring, the local labour market could reach full employment sooner than expected.

The big picture story is ambiguously positive.

More jobs are being advertised, more people are finding work, and this is not just important in terms of spending power of the newly employed, but also this boosts the confidence of those people already in jobs.

National Job Sa

 

No Prospect of Higher Interest Rates Any Time Soon

Reflecting the recent surge in US inflation, the monthly meeting of the US Federal Reserve has been widely spruiked as a possible indicator of an increase in official interest rates sooner than previous expectations.

Rba Interest Rates

Those speculating on a signal for rate rises to be brought forward would have been sorely disappointed with Federal Reserve Chairman Colin Powell who predicted that at this stage rates would not likely rise until 2023 – and that Fed forecasts should be taken with a “big grain of salt”.

Powell also stated that economic conditions were far from those required to raise rates and the “lift-off is well into the future”. Population Melbourne

Powell also indicated that there were no plans for the Fed to taper its bond-buying program again reflecting ongoing concern over the US economy.

The recent spike in US inflation was clearly an upward adjustment from the artificially low prices influenced by covid policies over the past year.

Similarly, Australia can expect to record higher inflation over coming quarters as the local economy also normalises.

Although US interest rate policy does not directly impact Australia rate settings, similarities in the current macroeconomic environment would reinforce the likelihood that – as predicted by the RBA – Australian interest rates would remain where they are until 2024 – at the earliest.

Watch this week’s video as Dr. Andrew Wilson gives his thoughts on this matter.

Latest Population figures.

Watch this week’s Property Insiders video as Dr. Andrew Wilson summarises the latest ABS population data and how strong interstate migration is underpinning the South East Queensland property markets.

Population

Annual Population2.jpg

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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


'What a week of positive property and economic data | Property Insiders [VIDEO]' have 20 comments

    Avatar for Michael Yardney

    June 2, 2021 Mike Schwarz

    Dr Andrew Wilson – Question on Interest Rates
    It is said that the banks have been receiving cheap funding from the reserve and this ends in June. They will then need to source funding on the global market which is markedly higher. This would suggest they will have no option but to raise interest rates.
    Had you factored this into your view on interest rates?

    Reply

      June 2, 2021 Michael Yardney

      Great question Mike. I know Dr Wilson has taken this into account from our private discussions. The banks will have to borrow overseas, but look what interest rates are overseas. Of course the value of the Australian dollar will be a factor.
      Remember, the RBA is keen to keep interest rates low to stimulate the economy, increase business activity and jobs growth and eventually get unemployment down. They are not not going to pull the rug out from under us

      Reply

    Avatar for Michael Yardney

    April 25, 2021 Mark

    Its interesting to watch the FOMO effect on purchasing real estate at higher prices than they are worth as real estates are elevating prices during the demand. I also recently read an account of a person at auction in Sydney saying I felt like I had won lotto just because he secured the winning bid !
    Now the prices are rising so quickly and people are borrowing way to much to purchase at historically low interest rates its not difficult to work out what happens next when interest rates rise again !
    See household debt in Australia
    https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world
    Another concern is the misdemeanor of good debt and bad debt lets face it all debt is bad but it portrays a certain air of its ok because its good debt .. but good debt can turn bad too ie negative equity
    We see the occurrence every decade or so the debt delinquency increases this last happened when interest rates were increased
    I have been in a position where I have not only seen this occur but almost been burnt too .. not a good feeling but you learn by your mistakes very quickly
    The oracle Buffet says be fearful when others are greedy and greedy when others are fearful
    I am standing back and waiting for this supposed pandemic mayhem to cease ….

    Reply

      April 25, 2021 Michael Yardney

      What you say is correct – some people are making poor decisions driven my FOMO – but that doesn’t mean it’s the wrong time to make a wise investment decision

      Reply

    Avatar for Michael Yardney

    April 2, 2021 Mary

    @Joseph
    Your comment about “Australia heading towards Japan” and being over 1T in debt

    Have you seen this link lately?

    https://www.usdebtclock.org/world-debt-clock.html

    Australia is doing AMAZINGLY WELL compared to the rest of the world.

    I suggest to try removing the lens of pessimism and looking at life in general with a more realistic and optimistic outlook

    People are angry when prices go down
    People are angry when prices go up

    Can’t seem to win either way eh?

    Reply

    Avatar for Michael Yardney

    March 3, 2021 Jennifer

    90% of jobs recovered? I I don t think so. The tourism and travel sectors have been decimated and the education sector is not far behind. It s a shame that 9-5ers forget that these sectors even exist. I personally have been getting by on menial casual jobs for over a year and it looks like that will continue for most of this year as borders remain closed. Some of us have had our lives turned upside down for the foreseeable future, so No, it is not back to normal. I m lucky as I had some money and a mortgage already but I can t even go to the bank to access a better rate through refinancing as I don t tick a single box right now. And I work for a very reputable company normally – stood down definitely through no fault of theirs or mine. Not all of us are back to normal!

    Reply

      March 3, 2021 Michael Yardney

      We quoted the Australian Bureau of Statistics latest figures. Of course for the many people like you who are still without a permanent job and the situation is terrible and we are not wanting to belittle that.

      Reply

    Avatar for Michael Yardney

    February 4, 2021 Raj Thakrar

    Hi Michael,
    It is too early to be generalist and say property prices will hike. There are number of factors in play here.
    1 Due to lock down some sales were on hold
    2 Government Incentive in play
    3 Relaxed lending rule
    4 Government incentive
    Cost of new build artificially inflated by builders and developers sending cost of new build to new level making house price higher. The buyers technically are not benefiting for these Government incentives they are going in to builder and developers pocket. Housing in Australia is still young growing market so bubble will burst scenario does to stack up. It is always demand and supply simple economics.

    Reply

    Avatar for Michael Yardney

    December 10, 2020 Philip Lee

    The property market didn’t collapse because the government is throwing everything at it to keep it afloat. Our property market is not a free market driven by market fundamentals. It is manipulated by the government cutting interest rates to zeo, stamp duty concessions plus first home buyer grants, and government guarantees for deposits all sucking in the financially unsophisticated into putting themselves into a life of mortgage stress. It’s just kicking the can down the road.

    Reply

      December 10, 2020 Michael Yardney

      Philip. You are correct, our property markets have never been a “free market”, they have been manipulated by the Reserve Bank and APRA. Remember a couple of years ago when investors were dominating the market pushing up prices, the RBA raised interest rates and APRA made it much harder for banks to lend to investors and this slowed down the markets.
      Currently intervention has supported our markets and that’s good. It’s the government’s job to protect its constituents – you and me and one way of doing that is providing stability to our housing market. They are too big to fail and no one will let them fail.

      Reply

    Avatar for Michael Yardney

    October 16, 2020 Joseph Battaglia

    Michael your optimistic views irrespective of the true underlying data is disconcerting.
    The government is covering up the reality of the situation, throwing money against the wall at all costs (hoping some will stick) and falsely propping up the economy whilst kicking the can down the road. The rhetoric from parties with bias/interest in the real estate market are also contributing to the propaganda that “things are ok and sentiment is up” – whilst reality is different.
    We are not leaders on the world stage, for our real property obsession, in fact we are almost ridiculed that we are a nation that increases their wealth through selling properties to each other increasing the price at each transaction.

    Its fiscally clear, we should allow the reset button to deflate this overvalued bubble and get back to reality. I mean seriously, some of these prices are ridiculous!

    Are we going the way of Japan?
    This QE is just irresponsible on all counts.
    Over $1T in debt for such a small economy… come on, who are we kidding.

    Reply

      October 16, 2020 Michael Yardney

      You are right Joseph, many of our industries are on life support from the government at the moment. And while the property market was being supported by loan deferrals, they seem to be cleaning themselves up nicely. What is the alternative? Do you really want to see businesses go broke and people go hungry? Our government and those around the world have learned how to handle economic downturns. And spending our way out of a downturn is a valid economic argument

      Reply

    Avatar for Michael Yardney

    October 2, 2020 Dave

    Dear Michael. Your articles are interesting
    and usually very well written . However this one is full of a lot of spelling and sentence construction mistakes that in parts make it hard
    to follow . Take a look at where it says sh-t (Let me know if you need a proof reader ) 😉

    Reply

      October 2, 2020 Michael Yardney

      Thanks for the heads up Dave – you are right lots of errors in this one. As I can talk faster than I can type I usually use voice to text, and it is pretty accurate. But clearly I missed a couple of bad bloopers this time.

      Reply

    Avatar for Michael Yardney

    July 24, 2020 Martin

    The RBA will print money. And has printed plenty of it already to fight covid-19. It just doesn’t give the money directly to the government. It prints new money and uses it to buy government bonds on the secondary market so that institutions can take a cut as they buy the newly issued bonds from the government So that the government can pay for jobkeeper and Then these institutions onsell them to the RBA for a markup.

    Reply

      July 25, 2020 Michael Yardney

      There has been a lot of discussion recently about Modern Monetary Theory, which suggests central banks should print more money and then give (lend) it to the government, to help pay for it debts.
      This week RBA governor Philip Lowe said that he won’t do that (print extra money) instead the banks should borrow on the open market at the prevailing low interest rates because they can afford it.
      Rather than print more money he gave the Morrison government the green light to increase debt levels and lock in a larger budget deficit to support the economy during its recovery from the virus crisis

      Reply

    Avatar for Michael Yardney

    June 26, 2020 Alex P.

    While Dr Wilson may say that more sellers entering the market is an expression of confidence, the flip side is that it may be the smart money taking the opportunity to exit while prices are still holding up. If you drill down in the data is there a way to differentiate whether these are investment properties or owner occupied properties being sold and how does that relate to historical data. Second point is that government intervention has done a good job of addressing short term liquidity over the crisis but there have been no measures on a similar scale to address solvency, and solvency is what really matters after the liquidity tap has been turned off.

    Reply

      June 26, 2020 Michael Yardney

      Alex, you are right on both counts.

      Our experience on the ground speaking to buyers, sellers and estate agents, is that there are very few distressed properties coming on the market at present.

      Similarly we do not believe the government is going to pull the rug out from under us in September after he’s gone to such an effort to support the economy and our markets

      Reply


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