by Alan Thornhill
Confidence in Australia’s property market has eased since the Reserve Bank cut the nation’s interest rates in May.
A survey that the National Australia Bank published today shows that the easing is particularly pronounced among property professionals.
In the first NAB Residential Property Survey since the RBA cut the official cash rate in May this year, housing market sentiment amongst property professionals softened.
The bank said its residential Property Index fell to +3, from +6 in Q1 2016, to remain below its long term average of +13.
“Sentiment moderated in all states except SA/NT, which rose 19 points,” it added.
New South Wales joined Victoria as the best performing state, followed by Queensland, the bank said.
“Confidence has however improved, with the national index rising to +29 next year, and +36 in two years’ time,” it added.
The bank said its residential Property Survey for Q2 2016 also found that respondents expect Victoria and Queensland to provide the best capital returns over the next one to two years.
“It’s still a mixed picture across Australia, with house price expectations for the next 12 months holding up well in the eastern states whilst staying flat in SA/NT and continuing to fall sharply in WA,” the bank’s Chief Economist Alan Oster said.
The bank said it had also revised its national house price forecasts for 2016 upwards to 5.1 per cent (from 1.5 per cent). Unit price forecasts were revised up to 3.6 per cent for 2016.
“Our upwards revisions in price forecasts reflects the strength in prices to date.
Over the last six months, Sydney and Melbourne prices have increased by an annualised rate of nearly 19 per cent and 12 per cent respectively,” Mr Oster said.
“However, while there is significant amount of uncertainty over the outlook for prices, we expect that this renewed momentum in the housing market is unlikely to be sustained over the longer term.”
Looking out to 2017, NAB forecasts prices to be flat across most capital cities, with falls particularly in Perth, Melbourne and Brisbane.
While the declines in Perth largely reflect economic conditions, the falls in Melbourne and Brisbane can be partly attributed to added supply and weaker investor demand.
“NAB is forecasting a much softer residential property market, with 0.5 per cent growth in house prices and nearly 2 per cent decline in unit prices in 2017,” Mr Oster said.
NAB Economics continues to hold the view that residential property prices are unlikely to experience a sharp ‘correction’ without a trigger from a shock that leaves unemployment or interest rates sharply higher.
The Residential Property Survey series also measures foreign buyer activity in the Australian housing market.
Market share of foreign buyers in new Australian housing markets fell for the third straight quarter in a row – to 10.4 per cent.
A sharp fall in foreign buyer activity in Queensland was offset by growth in Victoria and a modest rise in NSW.
Market share of foreign buyers in established markets was unchanged at 7.2 per cent.
About 230 property professional participated in the Q2 Survey, the bank said.
by Alan Thornhill
New vehicle sales were flat in June, on trend figures the Bureau of Statistics published today.
On this basis, 97,801 new vehicles were sold during the month.
The biggest rise, of 2 per cent, occurred in the ACT.
And the biggest fall – of 1.1 per cent – was seen Western Australia, where new vehicle sales have been falling since December last year.
by Alan Thornhill
Australia is making too little progress in tackling climate change, according to the Climate Council.
The council’s CEO Amanda McKenzie said this is confirmed by new data.
She said a new survey, by the Australian Bureau of Statistics shows coal’s market share has barely moved over the past three years., slipping only marginally from 65.3 per cent to 64.9 per cent
Yet burning coal to generate electricity is one one of the major drivers of climate change.
Ms McKenzie noted that renewable power generation has increased from 9.6 per cent to 12 per cent, according to the survey.
However, shr said the true test of a climate change policy is how much emissions are reduced.
And the US is doing much better than Australia in this regard.
“In the U.S, emissions from the electricity sector fell 18 per cent in 2014 and coal-fired power generation fell from 39 per cent in 2014 to 33 per cent in 2015,” Ms McKenzie said.
She said also that the fact that electricity generation from coal has barely moved in Australia, is a sign of two things.
One, the renewable energy industry is not growing at anywhere near the rate we need it to in order to tackle climate change.
“That’s because of the chopping and changing of policy.
“We’ve got enough renewable energy resources to power the country 500 times over – but we are not capitalising on it.
‘And two, it’s a sign that there is our climate policy is not robust enough to reduce emissions at the source.
“We must introduce climate policy which reduces our fossil fuel emissions if we are to effectively tackle climate change and protect the Great Barrier Reef,” Ms McKenzie said .
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by Alan Thornhill
What happens now that Malcolm Turnbull has at least the 76 lower house seats that he needs to form majority government?
We can expect to see tight government, as the Prime Minister takes up the reins, to start his fresh three year term.
Not quite as tight, though, as the independent Bob Katter has suggested.
Mr Katter warned, not altogether seriously, that a government with a majority of one, might lose a critical vote, if he left Parliament to attend his mother’s funeral, or to respond to a call of nature.
That’s not a worry
Australian parliaments, thankfully, have civilised arrangements called “pairing” to deal with exigencies like these.
The Opposition Leader, Bill Shorten, though, did raise as serious matter, when he warned of divisions in the Liberal party, particularly those involving the hard right, which supported Tony Abbott against Malcolm Turnbull, last September.
They have not forgotten or forgiven.
That became clear this week, when one member, Cory Bernardi, sent e-mails to supporters, urging them not to “… allow the political left to keep eroding our values, undermining our culture and diminishing our important institutions.”
The ratings agency, Standard and Poors, delivered the biggest challenge Mr Turnbull will face late last week, though, when it put Australia’s triple A credit rating on “negative watch.”
It cited both uncertainties which then existed about the July 2 election results and high levels of both domestic and international debt.
This means that the agency might well downgrade Australia’s presently excellent credit rating, if we don’t get those issues under control, over the next two years.
An astute Prime Minister might see it as more than that, too.
A “get out of jail free card” in fact.
Even governments which want to keep their pre-election promises often find it very difficult to do so.
So what could Mr Turnbull do, if he finds himself in that all-too-likely position?
Mr Shorten warned, during that eight week election campaign, that this is no time to be giving big companies $50 billion worth of tax cuts, over 5 years, even if they are to be phased in slowly.
And a report funded by Getup and published just days before the election said big miners and cigarette companies would be among the main winners, from that policy, which Mr Turnbull repeatedly said would create more “jobs and growth.
The miners, perhaps.
The cigarette companies.
So some adjustments can be expected there.
Nick Xenophon might also be in for some disappointment when he comes to Canberra, seeking more money, to protect the jobs of steel workers, in his home State of South Australia.
Mr Turnbull might even be able to convince voters that some restraint in these areas is virtuous, as well as necessary, to avoid extra interest rate pain, for home buyers and others.
If he is astute enough.
by Alan Thornhill
The Federal government and opposition differed sharply today, after a major ratings agency, Standard and Poors, put Australia’s prized triple A status on negative watch.
It did so citing both the still unresolved Federal election result and high levels of both household and external debt.
The Treasurer, Scott Morrison, said the agency’s move, “reaffirmed the government’s fiscal direction and the need to “stick to the plan” the Coalition set out in its last budget.”
However the shadow treasurer, Chris Bowen, said it underlined the government’s “fiscal failure” and cast further doubt on its budget projections.
The agency’s warning means that Australia’s AAA credit rating might be slashed in future if there is no improvement in its budgetary performance.
This could increase government borrowing costs and weaken international investment.
Mr Bowen said S&P statement is “sombre reading.”
He said the agency “…calls out the Government on three years of fiscal failure, based on unrealistic Budget revenue forecasts and savings measures that will never pass the Parliament.
“S&P makes it clear that it doesn’t have much faith in the Government’s Budget revenue forecasts – a point Labor has consistently made since the Budget in May,” Mr Bowen added.
However Mr Morrison took a different view.
He said the agency’s warning reinforces the government’s message that Australia must “live within its means”.
He said S&P were clearly concerned about the outcome of the election and that “the pace of fiscal consolidation may be postponed”.
Mr Morrison said it would be irresponsible to increase the deficit over the next few years, because “that increases the debt and you can’t get that money back”.
by Alan Thornhill
Middle aged women shoppers typically experience much higher anxiety levels than men.
This is confirmed in a study that the National Australia Bank published today.
Overwhelmingly though its results were positive.
The study found, for example, that anxiety levels among Australian consumers have now fallen for the fourth straight quarter.
The bank said this had happened as Australians responded to sustained improvements in the labour market and recovery in the non-mining economy.
Its chief economist, Alan Oster, said: “…this is the fourth Survey in a row where overall consumer anxiety has trended downwards.
“Consumer anxiety is now at its lowest level since half-way through 2013 and well below its long-term average,”Mr Oster said
And he added: “while we continue to expect moderate growth in consumer spending throughout 2016, this is contingent upon further pick-up in labour market conditions and risks associated with further declines in the household savings rate.”
The bank said its Consumer Anxiety Index had eased slightly to 60.2 points in Q2 2016, from 60.4 points in the previous quarter.
“Lower overall consumer anxiety was driven by decreasing anxiety associated with the cost of living, government policy (post the 2016-17 Federal Budget) and health expenditure,” it added.
However the bank also said: “overall women reported much higher anxiety than men.
And it added that: “… women aged 30-49 now the most stressed group overall.
“In contrast, men over 50 are among the least stressed,” it added.
The study did find, though, that some worries are persistent.
It concluded: “financing retirement, providing for their family’s future and healthcare were identified by Australians as the biggest drivers of financial stress.”
by Alan Thornhill
Australia has had great success in attracting visitors over the past year, particularly from South Korea and Japan.
The Bureau of Statistics reported today that, in trend terms, the number of visitors arriving from South Korea increased by 30.8 per cent, in the 12 months to the end of May, while arrivals from Japan rose by 30.6 per cent.
Overall, too, the number of arrivals also rose strongly in this time, chalking up a 10.9 per cent increase.
Visitor numbers from the United States rose by 18.4 per cent.
Relatively new markets are also rapidly gaining strength, too, in Australia.
On trend figures, for example, 99,400 visitors arrived in this country from China, during May this year.
That number was 18.6 per cent higher than that seen 12 months earlier.
The Statistician also reported that the number of Australians travelling overseas, as short term visitors rose by 3.4 per cent, over the 12 months to the end of May this year.
by Alan Thornhill
The Reserve bank left interest rates on hold today, but hinted that there could be another rate cut soon.
After a meeting of the bank’s board today, its Governor Glenn Stevens noted that Australia’s inflation is low – at 1.3 per cent – and likely to remain so.
Then he added: “Over the period ahead, further information should allow the Board to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate.”
Mr Stevens also said: “Several advanced economies have recorded improved conditions over the past year.”
However he added: “but conditions have become more difficult for a number of emerging market economies.
He said: “China’s growth rate has moderated further, though recent actions by Chinese policymakers are supporting the near-term outlook.”
The bank last cut its marker interest rate from 2 per cent, to a new record low of 1.75 per cent, in May.
Mr Stevens said: “Commodity prices are above recent lows, but this follows very substantial declines over the past couple of years.”
“Australia’s terms of trade remain much lower than they had been in recent years.”
He also noted the impact of Britain’s Brexit decision to leave the European Union but said nothing about Australia’s cliffhanger election, last Saturday.
Mr Stevens said global financial markets had been “volatile recently as investors have re-priced assets after the UK referendum.
“But most markets have continued to function effectively,” Mr Stevens added.
“Funding costs for high-quality borrowers remain low and, globally, monetary policy remains remarkably accommodative.
“Any effects of the referendum outcome on global economic activity remain to be seen and, outside the effects on the UK economy itself, may be hard to discern,” he concluded.
Weathercoast by Alan Thornhill
A novel on the murder of seven young Anglican Christian Brothers in the Solomon Islands.
Available now on the iTunes store.
Alan Thornhill is a parliamentary press gallery journalist.
Private Briefing is updated daily with Australian personal finance news, analysis, and commentary.
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