5 things I learned this week that you should also know

A lot can happen in one week in our property markets, can’t it?

So here’s a look back at some of the things I read or learned this week, that I believe you should also know.

1. The high end of the property market outperforms

While there is a broad base property boom around Australia, the largest capital cities showed that at the “high” end of the market values markedly outpaced cheaper properties.

However, in smaller cities, capital growth was more uniform.

Overall dwelling values in Australia are 7.8% higher over the last year and currently sit around 7.6% above the previous October 2017 record high.

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2. How much are you saving each month?

According to Finder.com.au Aussies are saving nearly $900 a month on average

The average amount of reported monthly savings has increased significantly through the pandemic, despite a dip in early 2020.

While this figure hovered between $600-$700 per month before the pandemic, economic uncertainty and working from home encouraged many Australians to increase their savings.

The average amount reported shot up to $989 in June 2020, before falling back somewhat although still significantly above pre-pandemic levels, currently sitting at $889.

Most experts, however, we’re doubtful that this increased saving trend will continue.

When asked in Finder’s survey, 88% (14/16) said it would not.

Stephen Halmarick of Commonwealth Bank said that a large part of the savings came from government income, which will now disappear.

Tony Makin of Griffith University agreed, saying the savings boost was triggered by uncertainty.

Craig Emerson of Emerson Economics disagreed, saying Australians would remain cautious about the future path of the virus.

Most economists, however, we’re optimistic that this savings boom would help reduce the burden of household debt (12/14, 86%).

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3. Aussies wiped over $7 billion off their credit card debt

The Reserve Bank has released its March 2021 credit and charge card data, revealing Australians knocked $7.5 million off debt accruing interest on personal credit cards in March.

The debt decrease comes off the back of an $18.4 million increase the month prior.

Despite cardholders wiping $6.96 billion off personal credit card debt accruing interest over the last year, Australian credit card holders still have a personal credit card debt of $20.02 billion.

Despite the decline in debt, the value of purchases on personal credit cards totaled a staggering $21.90 billion, an increase of $1.09 billion from the month prior.

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4. Will the rapid fall in unemployment challenge RBA stance to interest rates?

The accompanying chart shows how ANZ Bank now expects our unemployment rate to fall to 4.8% by end-2021 and 4.4% by end-2022.

And lower again in 2023 seems likely.

This upgrade potentially challenges the RBA’s expectation a rate hike is “unlikely to be until 2024 at the earliest”.

While these ANZ forecasts may appear ambitious, they reflect the expectation of a decelerating pace of labour market improvement, particularly in 2022.

ANZ explains:

“Ultimately, it will be inflation that matters for the RBA, and the most important judgment in our view is the strength of the transition from underutilisation to wages, and then to inflation.

The RBA is presuming this transition will be very slow, as it was the last cycle, but the risk around this assessment appears rather one-sided.”

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5. No other modern nation on earth comes close to Australia’s generosity in absorbing migrants

Sure our international borders are closed at present, but they will reopen again.

The accompanying chart by demographer Bernard Salt, published in the Australian, reminds us that about 30% of Australians (7,500,000 people) were born overseas.

This proportion for the Sydney built-up urban area is 39%, making it one of the world’s most cosmopolitan communities.

This “born abroad” proportion for greater New York is 29%, for Paris 22%, for Berlin 13 %, for Tokyo 2%, while for Shanghai it is less than 1%.

Salt says that Europeans get all angsty when the proportion of migrants approaches 20 per cent.

Sydney is double that. Melbourne isn’t too far behind at 36 per cent.

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Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metrople Team

If you’re wondering what’s ahead for property you are not alone.

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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

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