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Tuesday 16th August 2016 - 1:48 pm
Comments Off on Housing price growth “overstated” RBA

Housing price growth “overstated” RBA

by Alan Thornhill

The Reserve Bank admitted today that estimates of recent housing price growth had been “overstated.”

 

The admission, made in the minutes of the meeting of the bank’s board meeting on   August 2 , is significant.

 

That’s because the bank has been relying on stronger than expected growth in the building and housing sectors to offset weaker performances in major resource export sectors, such as coal and iron ore.

 

However in today’s minutes the bank said:  “data on housing price growth from CoreLogic, which had been discussed at previous meetings, indicated that housing prices had increased very strongly in several cities in April and May.”

 

 

But it added:  “… new information had revealed that these growth rates were overstated.”

 

 

The bank said that had happened: “.. because of changes to CoreLogic’s methodology.”

 

 

And it added:  “data from other sources indicated that housing price growth had instead remained moderate in the June quarter.

 

 

“Other information showed that, while auction clearance rates had recently picked up a little in Sydney and Melbourne, the number of auctions was lower than in the preceding year and the average number of days that properties were on the market had increased.

 

“Housing credit growth had been little changed in recent months and remained below that of a year earlier.

 

“Rent inflation had declined to its lowest level since the mid 1990s and the rental vacancy rate had drifted higher to be close to its long-run average.”

 

However, the minutes also noted that net exports are expected to make a positive contribution to output growth over the forecast period, supported by the earlier exchange rate depreciation and ramp-up in LNG production.

 

“ In contrast, mining investment was expected to fall further,” the bank said.

 

It said there had been some signs that non-mining business investment was rising in some parts of the economy.

 

But, overall,  “it is still expected to remain subdued in the near term,” the bank’s notes said.

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Tuesday 16th August 2016 - 12:18 pm
Comments Off on South Australian families “ripped off” on electricity bills

South Australian families “ripped off” on electricity bills

by Alan Thornhill

South Australian families are paying hundreds of dollars  a year more for their electricity than those in other parts of the country, according to a new report.

 

The report by the research group GetUp says that’s because the big three energy companies have been exploiting their market power in that State.

 

It says AGL, Origin and Energy Australia regulate what retailers can charge their customers.

 

Miriam Lyons  of GetUp   says the report, written by Bruce Mountain, reveals the hidden costs of big three’s stranglehold on the South Australian retail market.

 

And she said South Australian families, in particular, are being “ripped off. “

 

“Many South Australians are just keeping their head above water, and they shouldn’t be being ripped off by companies who are taking advantage of their oligopoly position to rake in massive profits,” Ms Lyons added.

 

“How is that, after deregulation, retail charges went from next to nothing to a huge 38 per cent slice of the average customer’s bill?” she asked.

 

The report says AGL, Origin and Energy Australia have a stranglehold on the state’s retail market.

 

 

“How is that, after deregulation, retail charges went from next to nothing to a huge 38 per cent slice of the average customer’s bill?” she asked.

 

This has huge impacts for people struggling to pay unaffordable energy bills.

 

 

Ms Lyons said the three companies are still  lining the pockets of  their energy executives “at the expense of Australian families.”

 

 

“Companies like AGL, Origin and Energy Australia are big enough that they should be able to undercut new entrants to the market ,”  Ms Lyons said.

 

“Instead the new players are much cheaper and the big guys have been able to overcharge customers whatever they want,”   she added.

 

 “When this kind of behaviour was revealed in the UK, there was a huge public outcry – yet their retail charges are a fraction of what the Big Three charge here.”

 

So far, none of the three companies has replied to these allegations.

 

 

 

Monday 15th August 2016 - 7:42 pm
Comments Off on Tourist industry urges government to scrap its backpacker tax

Tourist industry urges government to scrap its backpacker tax

by Alan Thornhill

 

Young travellers will avoid Australia if the Federal government does not scrap its planned backpacker tax, tourism and transport operators warned today.

 

Margy Osmond, CEO of the Tourism and Transport Forum, said Australia would see an even bigger exodus of young backpackers from Australia if the government persists with the tax..

 

The backpacker tax, introduced in the last Federal budget, would have seen backpackers paying 32.5 cents in the dollar in tax, from the first dollar they earnt in Australia.

 

At present working holidaymakers  only pay tax on earnings above the $18,200 tax threshold.

 

However the government announced before the July 2 election that it would review working holiday visas and postpone any changes to the current tax system until January next year.

 

The delay, in implementing the new backpacker tax will cost the Federal government an estimated $40 million.

 

However the tourism and transport operators want it scrapped altogether, not just suspended.

 

Ms Osmond warned that the most likely result of keeping the proposed tax would be an exodus of working holiday makers to other countries.

 

She described it as as “ill-considered cash grab.”

 

Ms Osmond said her Federation  had welcomed the commencement of the review.

 

And she said it would be “… making the strongest case on behalf of the tourism industry for the Government to abandon the backpacker tax.”

 

Ms Osmond recalled that the Federation had been  “…one of the first industry groups to sound the alarm on the impact of the backpacker tax.”

 

“…and we will continue to campaign for the Federal Government to abandon this ill-considered cash grab,” she added.

 

She said the tourist:  “…industry wants to work in a positive and supportive manner with the Federal Government to grow the sector.”

 

“But a 32.5 per cent tax on backpackers on every single dollar they earn while working in Australia is simply absurd,” she added.

Friday 12th August 2016 - 1:19 pm
Comments Off on Commercial lending eases

Commercial lending eases

by Alan Thornhill

Commercial lending fell by 2.2 per cent in June on trend figures the Bureau of  Statistics published today.

 

On seasonally adjusted figures the fall that month  was even bigger at 8.7 per cent.

 

Lease finance fell by 2.8 per cent in June, but rose by 13 per cent on seasonally adjusted figures.

 

Personal finance rose by 0.3 per cent on trend figures, but fell by 3 per cent on seasonally adjusted figures.

 

Housing finance for owner occupation rose by 0.2 per cent in June on trend estimates, while seasonally adjusted figures showed a 1.8 per cent rise.

Friday 12th August 2016 - 11:08 am
Comments Off on Federal government decision “xenophobic” critic

Federal government decision “xenophobic” critic

by Alan Thornhill

Critics of the Federal government’s decision to block a Chinese bid for a large part of the NSW energy grid are calling it “xenophobic.”

 

However  the Treasurer, Scott Morrison, who rejects that description, says the decision was taken on “national security” grounds.

 

That led Bob Carr, a former foreign minister, who is now director of the Australia-China Relations Institute, to ridicule the decision.

 

“The Treasurer’s decision …is a huge concession – the first major policy sacrifice – to the Witches’ Sabbath of xenophobia and economic nationalism stirred up in the recent Federal election,” Mr Carr said .

 

“The Treasurer’s statement refers not to FIRB (the Foreign Investment Review Board’s) advice but to the “review process,” he noted.

 

“Does this mean that his decision is not based on the analysis of FIRB but has been arrived at in his own office?” Mr Carr asked.

 

Last year the FIRB approved State Grid bidding for Transgrid, which holds New South Wales electricity distribution and telecommunications assets.

 

“Ausgrid’s telecommunications assets are meagre in comparison.

 

“ There was a different political climate,” Mr Carr said.

 

“If State Grid’s offer for a New South Wales distribution asset raises a security risk why weren’t the same risks apparent when State Grid was allowed to purchase the distribution assets of South Australia and Victoria?” he added .

 

“Unless no foreign investment in Ausgrid is to be allowed, this decision is not driven by public opinion.

 

“A Lowy poll showed the Australian people nominating China as our best friend in Asia, over and above the Japanese.

 

“The US Studies Centre at Sydney University produced a poll that showed more Australians seeing China’s role in Asia in a positive light than America’s. ”

 

“Only one conclusion can be reached,” Mr Carr said.

 

“The Treasurer is conceding to economic populism in the Senate and sacrificing the health of the New South Wales budget and jobs and investment in infrastructure.”

 

Thursday 11th August 2016 - 1:43 pm
Comments Off on Commercial property:worth a look

Commercial property:worth a look

by Alan Thornhill

 

Commercial property?

 

With returns on interest investments at historic lows – and fresh doubts appearing about the future of residential investment, this might be worth some thought.

Especially in view of the results of the National Australia Bank’s latest Commercial Property Survey,which is for Q2 2016

 

It shows that: “sentiment in the retail commercial property market has risen to its highest level in over six years.”

 

However, the bank adds: “strong retail market confidence was not enough to offset the lower sentiment recorded across the office, industrial and CBD hotels sectors.

 

“ Overall, the NAB Commercial Property Index fell 7 points to +5 in the second quarter of this year,” it said.

 

“This was a strong quarter for capital growth in the retail property sector, with respondents expecting retail to grow 1.5 per cent in the next year.

 

“As a result, sentiment in the retail commercial property sector rose to its highest level since early 2010,” NAB Group Chief Economist Alan Oster said.

 

“However, sentiment from respondents was lower across all other sectors, particularly in CBD hotels which was the weakest sector overall .”

 

“Looking towards the future, confidence levels remain broadly unchanged over the next one to two years across all markets.”

 

Market sentiment remained strongest in NSW (+37) and Victoria (+28), likely driven by the continued non-mining recovery whilst sentiment fell heavily in SA/NT (-27

to -51) and, although still subdued, improved slightly in WA (up +4 to -48).

 

The Q2 Survey showed that one in two developers plan to start new works within the next six months.

 

“But developers have also reported further deterioration in their debt and equity funding situations.”

 

That is expected to continue over the next six months.

 

“This is coupled with respondents reporting the average pre-commitment percentage required for developments increased for the fifth straight quarter,” Mr Oster said.

 

The Bank said About 230 property professionals had participated in the Q2 Survey.

Wednesday 10th August 2016 - 1:04 pm
Comments Off on Lending for investment housing rises

Lending for investment housing rises

by Alan Thornhill

Lending for investment housing rose by 3.2 per cent last month, on seasonally adjusted figures published by the Bureau of Statistics today.

 

The Bureau’s figures show that almost $11.8 billion was made available, through fixed loans, for this purpose last month.

 

The Bureau also reported that there had been a 1.2 per cent rise, in commitments for owner occupied housing last month.

 

Loans for the construction of dwellings rose by 2.1 per cent in June, while lending for the purchase of established dwellings rose by 1 per cent.

 

Lending for the purchase of new dwellings rose by 2.7 per cent in June.

Tuesday 9th August 2016 - 2:48 pm
Comments Off on New risks loom

New risks loom

by Alan Thornhill

A new business survey shows that while the Australian economy is still strong, medium to longer term risks are becoming more apparent.

 

These are the conclusions the National Australia Bank’s Chief Economist, Alan Oster, reaches from the results of the bank’s  latest monthly business survey.

 

The bank sid: “for a while now, the NAB Business Survey has provided a relatively consistent message on the health of the Australian economy.”

 

And it added: “It continues to show a steady recovery in non-mining activity, with the services sectors clearly leading the way.”

 

However Mr Oster added a warning.

 

He said:  “there were some notable differences in business conditions across industries this month. “

 

“The largest deterioration was in mining, followed by big falls in transport and wholesale.”

 

“Retail saw the largest improvement, following a weak result last month.”

 

But  Mr Oster said:  “…the contribution from major industries suggests a relatively mixed bag.”

 

He said the service sectors continue to be the best performers.

 

“ Signs of a broadening recovery in recent months have again become more obscure following sharp deteriorations in transport and wholesale – although the recovery in retail conditions was encouraging.”

 

The bank said the economy could run into headwinds from 2017.

 

And it added: “these headwinds may require additional policy action to support growth, especially if the RBA hopes to see inflation return to within its target band.

 

“ Both global and domestic disinflationary pressures are expected to keep CPI inflation below the target band for an extended period.

 

And structural shifts in the economy and modest economic growth would leave the unemployment rate under pressure.

 

“To stabilise the unemployment rate (at around 5.5 per cent) we expect the RBA will feel the need to provide further medium term support through two more 25bp cuts in May and August 2017 (to a new low of 1 per cent).

“And thereafter raises the prospect of the RBA thinking about the use of non-conventional monetary policy measures,” it added.

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