There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.
Each Saturday morning I like to share some of the ones I’ve read during the week.
The weekend will be over before you know it, so enjoy some weekend reading.
Australian auction clearance rates remain below 50%
While spring has well and truly sprung, it would seem the same can’t be said for auction clearance rates.
According to this article from Business Insider despite the warmer season, clearance rates still remain below 50%.
Australian auction clearance rates remained below 50% in early October, suggesting recent prices declines are likely to continue in the period ahead.
According to CoreLogic, just 49.8% of reported auction results across the capital cities resulted in a sale last week, a modest improvement from the 45.8% level of late September that was the lowest since June 2012.CoreLogic
The small uptick came despite a sharp increase in the number of properties going under the hammer, lifting to 1,817 from 895 a week earlier.
The final clearance rate was revised down from the preliminary estimate of 53.7%, reflecting that tardy results received are often for unsuccessful auctions.
Helping to explain the downward revision, Sydney’s final clearance rate was revised down from 53.5% to just 46.1%, coming within a whisker of exceeding the 43.8% level reported in the final week of September that was the lowest in a decade.
Melbourne, the busiest market in terms of market activity last week, recorded a final clearance rate of 51.8%, down from the initial estimate of 54.4%.
A year ago, Sydney and Melbourne recorded final clearance rates of 61.3% and 70.3% respectively.CoreLogic
Across the smaller auction markets, Canberra recorded the strongest clearance rate across the country at 64.6%, followed by Adelaide at 62.3%.
Looking ahead, auction volumes look set to fall modestly this week with CoreLogic currently tracking 1,725 across the capitals. Reflecting softer market conditions, that total is well below the 2,525 properties that went under the hammer in the same corresponding week a year ago.
Read the full article here
NAB survey points to falling unemployment
What is the state of our employment system?
Hiring spree to continue
A lot of financial and markets commentary relates to stuff that was more important months or even years ago.
The business surveys are among the most timely indicators available.
NAB’s latest survey printed on the high side, with the employment index pointing to another solid six months of hiring ahead and further declines in the unemployment rate from today’s 6-year lows.
According to Commsec analysis this was the third highest result for the employment conditions index in more than a dozen years, while on a rolling annual basis the results are at record highs.
The annual average for business conditions also remains just off the recent record highs at a thumping reading of 17.
Read the full article here
Short-term emergency loans make home ownership less likely for vulnerable Australians
While short term loans sound enticing in emergency situations – they are adding far more strife for potential home ownership.
An article on Domain.com.au looks at the repercussions for vulnerable Australians.
Turning to short-term loans to cover emergency expenses puts home ownership even further out of the reach of vulnerable Australians.
Borrowers who are unaware of the impact personal loans can have on their credit scores are facing difficulties applying for a home loan further down the line, experts say.
One in 10 Australians who take out personal loans do so to meet unplanned financial difficulties, research from financial comparison website Finder has shown.
These emergencies could be unexpected medical expenses, or unexpectedly large phone or power bills.
“You don’t want a personal loan to be your only option when faced with a crisis,” said Finder’s Bessie Hassan.
“An emergency savings fund should be your ‘plan-A’ not a personal loan.”
High-risk borrowers with low credit scores could find themselves slugged with the highest rates and end up paying considerably more interest on a home loan.
Borrowers with a poor credit score and high-risk profile will pay $10,000 more in repayments over the life of a five-year, $30,000 loan than those with an excellent credit score and low-risk profile, according to Finder.
For borrowers facing unplanned emergency expenses, this financial double-whammy can make it more expensive and harder to escape the debt trap.
Consumer Action Law Centre senior policy officer Katherine Temple, said her organisation was concerned by record levels of debt in Australia.
“A loan for an emergency expense might assist in the short-term, but it can also cause bigger financial problems in the future,” she said.
“Unaffordable debt can have a serious impact on people’s lives.”
Failing to pay back personal loans, or stacking multiple personal loans and credit cards can seriously affect credit ratings, making further borrowing increasingly expensive and pushing back home ownership.
Good v bad debt
The most common reasons people took out personal loans were to fund car purchases, prepare for a baby, pay for a holiday or home renovations, or buy jet skis or snowboards, according to Finder data.
Carsten Murawski, economist in the Brain, Mind & Markets Laboratory at the University of Melbourne, said the findings were concerning, but predictable.
“The worry with an increase in debt is that debt is being used to fund consumption,” he said.
Murawski said any conversation around borrowing needed to include the concepts of ”good” and ”bad” debt.
“Good debt is to buy an asset or an income stream,” he said.
“Bad debt is debt that’s used for consumption purposes.”
He said buying a house or a car for work, or financing a renovation could be a good way to use debt.
But taking out personal loans to pay for power bills, holidays or consumer spending was a bad way to use debt.
Nine per cent of Australians use personal loans to fund home renovations, with some choosing them as the application process is simpler than other methods.
Previous Finder research has found the most renovated room in Australian houses was the kitchen, with 19 per cent reporting they’d spent on average $16,883.
Read the full article here
Paid a fortune for your property? What should you do?
What happens when you have bought a property but it’s value growth isn’t panning out quite as you thought?
In this article for Switzer, John McGrath explains why you should stop panicking and looks at what you need to consider.
There’s a cohort of home and property investment owners in Sydney and Melbourne today who bought at the top of the market, which was around mid-year 2017 for Sydney and late 2017 for Melbourne.
If you’re in this boat, I understand your disappointment in terms of timing but please don’t despair.
No one can pick the top – and that includes me, and I’ve been around in real estate for 35 years!
Unfortunately, in boom markets, there will always be people who happen to exchange at the peak but try to remember you are one of many – thousands of people did the same thing.
What’s important now is for you not to panic and to look at the situation objectively.
If you’re an owner-occupier, stop worrying.
You have a new home to enjoy for as long as you can afford your payments in what continues to be a low interest rate environment.
If the capital value of your home has come back a bit, it doesn’t matter because you’re going to be there long term and prices will eventually rise again.
If you’re an investor, you’ve bought for different reasons but the time period should be the same – always long term.
No investor likes to lose money or see the value of their asset go down.
It’s not pretty to watch but you’ve got to hang in there.
All that has changed is the amount of time your asset needs to bear fruit.
We’re in the winter period now but the sun will come out again.
Whether you invest in shares, managed funds, property or any other asset class, there are always going to be highs and lows. Smart investors ride out the lows.
Don’t feel compelled to get out.
It won’t take long for Sydney and Melbourne to rebound.
These are two major international cities with many unique factors keeping property prices strong.
You just have to be patient while the magic of capital growth takes effect.
As I said in my column last week, I think the worst is already over.
There have been 5%-10% declines in values this year and we might see another 5%-7% in some areas.
After that, there will either be a steady period of market stability or even a small positive rebound by a few per cent.
If you bought at the top and you’re negatively geared, there’s a few things you can do to keep your cash flow healthy:
1. Watch your tax deductions like a hawk.
Many property investors short change themselves by claiming less back from the taxman than they are entitled to.
Pretty much every expense is tax deductible or depreciable so keep every single receipt! So make sure you get good tax advice on this.
2. If your investment property is new, you’re entitled to depreciation benefits and these can be substantial, so get a quantity surveyor to compile a tax depreciation schedule.
It will tell you how much money you can claim every year.
3. If you’re negatively geared, you don’t have to wait until the end of the year to claim your tax back.
Say your property returns a loss of $10,000 pa; and your salary is $90,000.
This makes your estimated taxable income $80,000.
You can apply for a PAYG Withholding Variation to have your withholding rate recalculated based on this.
You’ll have more money in your pay packet each period, which you can use immediately to pay the costs of owning the property.
Finally, whether you’re an owner/occupier or investor, it would be a good idea to put some spare money into your loan or an offset account while interest rates remain this low.
Read the full article here
Seven morning rituals that set you up for success
Starting the day right is a crucial element in achieving your goals.
This article from Executivestyle.com.au looks at 7 morning rituals to set you up for success.
How you start the day makes a big difference towards setting you up for success, or setting you up for a day of feeling overloaded, distracted and fatigued.
We all have habits, both good and bad.
Habits might include repeatedly pressing the snooze button, inhaling a donut on the way to work, or spending the first few hours of the day buried in junk email.
Over time we repeat these actions and before we know it’s ingrained behaviour.
A ritual, however, is done with deliberate intention and focus.
When we choose a set of rituals to kick-start our day, we set up a process of purposeful actions designed to set the day up for success.
Research shows the early bird really does get the worm, as morning people are generally more proactive.
Proactive behavior is when a person takes action to change a situation for the better.
It’s a trait that is related to career success, job performance, salary and self-efficacy.
Seven morning suggestions
Over the years I’ve developed a set of rituals that energise me keeping me healthy and productive.
When I’m feeling tired and fatigued, following this process kick starts my body and brain into gear and before long I’m back feeling fresh again.
1. Wake up early and exercise
Most days I rise between 4.45am and 5.30am and I find the stillness before the day starts is the best time to think.
I exercise most mornings as this wakes up my body and brain and sets me up for the day ahead.
Moving and getting outside in nature is a proven way to release endorphins and get blood and oxygen pumping to the brain.
In an average week I aim to cycle three times (150km in total), do two weight training sessions, one outdoor bodyweight circuit, one yoga class, and in the warmer months I throw in one swim a week too.
2. Make your bed
I borrowed this one from Tim Ferriss, author of The 4-Hour Work Week and the idea is to have the discipline of making your bed each day before you leave the house (try cleaning up the kitchen as well) so when you come home you have order and structure.
3. Connect with loved ones
I travel quite a lot and am a single dad, my children stay with me half the time.
I find the ritual of checking in with my little ones every morning when they are not staying with me (and again later that day), and talking about our day ahead and telling them that I love them, reduces the anxiety I sometimes feel.
I must admit I don’t find this one easy first thing (I find meditation easier at night) but I know lots of people who swear that including five to 10 mins of meditation each morning of helps them focus the mind. Great Apps to try include HeadSpace and Calm.
5. Eat breakfast
Starting the day with a nutritious breakfast that combines protein, performance carbs and good fats is the perfect way to fuel your body and brain for the day ahead.
Every morning, part of my warm up ritual is ingesting a quality coffee.
There’s nothing like the aroma of freshly brewed coffee, the sound of grinding beans, and the steamer kicking into gear to jolt my brain into ‘let’s get into work’ mode.
7. Warm up
Just like an athlete warming up before a competition, you can’t be expected to press a button and expect your brain to dive into focused work.
And if you have been on email, social media and news feeds that morning, you need to put a hard stop in your diary and sit down for five to 10 minutes with a mindful approach to the day ahead.
Ask questions like:
What is the best use of my time today?
What are the four or five tasks I need to complete?
Read the full article here
Weekend video: 7 Riddles That Will Test Your Brain Power
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