by Alan Thornhill
Still dreaming of moving out to the country?
This might be the time to act.
New research, that the Housing Industry Association published today, confirms that homes in most capitals have become less affordable, in recent months.
That is particularly so in Sydney and Melbourne.
But it also shows that the opposite is true in the country.
In fact the situation is so diverse, across Australia, that Dr Harley Dale, the Association’s Chief Economist, says these variations simply “… expose the folly” of sweeping talk of “an Australian housing boom.”
So what, really, is going on?
The rate cut, in May, certainly raised hopes that buying a home would become more affordable.
But two other factors hit those hopes in the June quarter of this year.
Home prices rose sharply, particularly in Sydney and Melbourne.
And wages, mostly, were flat.
So what was the net effect?
That depends on where you are thinking of buying your new home.
Dr Dale said that most capital city buyers will find that the benefit of that rate cut was outweighed by that combination of rising prices and flat wages.
That was particularly so, for those buying in Sydney or Melbourne.
Dr Dale said he based his assessment of the price impact on affordability on research by CoreLogic RP data.
What does that show?
He said housing affordability in capital city marketshad deteriorated by 3.6 per cent, during the June quarter.
That had been driven by developments in Sydney and Melbourne.
“This was in stark contrast to a 2.7 per cent improvement for regional Australia,” Dr Dale said.
That meant talk of a national housing boom made no sense.
“That is simply not what is occurring,” Dr Dale said.
“In many parts of Australia the extremely low interest rate environment is delivering historically favourable affordability conditions.”
“It is against this backdrop that authorities have escalated their requirements for the rationing of credit to residential investors.
The risk is that this will obstruct new housing supply, aggravating affordability conditions in markets around Australia,” Dr Dale added.
by Alan Thornhill
Tax breaks, announced in the May budget, appear to have lifted the spirits of Australians operating small to medium sized businesses.
That is reflected in the results of the National Australia Bank’s June quarter survey of these sectors.
The results, published today, show that the conditions and confidence indices rising by 2 points to +4 and +5 index points respectively.
Within the sub-indicators of SME business conditions, trading conditions stood out to be the strongest, which flowed into better profitability conditions.
However, the sectors’ continued reluctance to hire was reflected in the sustained lull in the employment conditions index, which lapsed into negative territory in the quarter.
Analysis by the size of SME businesses, though, suggested that firms have generally experienced better conditions and confidence in the quarter, with the exception of conditions for mid-tier firms.
Despite a recent improvement, low-tier firms with an annual turnover of $2-3m continued to under-perform consistently across major indicators relative to their larger counterparts.
In particular, these firms fared poorly in their cash flow conditions, with their cash flow index falling by 11 points to -17 index points.
Conditions by industry continued to paint a mixed picture, with service-oriented industries maintaining momentum ahead of non-service industries in general.
Property, business services and finance firms continued to do well, although conditions of property firms have moderated compared to last year.
Conditions in manufacturing were largely unchanged around the neutral mark. Meanwhile, retail and construction (which includes residential, non-residential and mining-related construction) overtook wholesale and transport as the worst-performing industries in the quarter, with conditions in the latter two improving significantly, albeit still marginally negative.
SMEs’ overall confidence improved slightly in the quarter to +5 to be at similar levels with that of general businesses’ as measured by the NAB Quarterly Business Survey (QBS).
Most industries recorded an improvement in confidence in the quarter except for manufacturing and accommodations, cafes & restaurants. Property and construction firms were the most confident in the quarter, while finance experienced the weakest.
Confidence by health SME firms rebounded sharply from -21 to around the neutral mark this quarter, but this could prove to be a blip in the data due to a small sample size.
Conditions across states were mixed in the quarter, with NSW continuing to claim the top spot, while a 10-point surprise jump in the conditions for South Australia (to +6) propelled it to a tie second position with Victoria.
Meanwhile, WA (-7) and Qld (-6) fared the worst in the quarter.
Forward orders leapt into positive territory at +4 index point in the quarter, with the positive reading largely driven by high-tier SME firms.
SMEs’ capacity utilisation (78.2 per cent) diverged further away from that of general businesses’ (80.9 per cent), to decrease further below its long-term average of 79.8 per cent.
by Alan Thornhill
Age pensioners have faced bigger price rises than many other Australians over the past year, according to the Bureau of Statistics.
In papers published today, for example, the Bureau reports that the living costs of Age pensioners rose by 0.6 per cent in the three months to the end of June and 1 per cent in the 12 months to the end of June.
The living costs of employees, though, rose by 0.4 per cent in the quarter and 0.9 per cent for the year as a whole.
Australia’s inflation has been low, by traditional standards, over this time.
The Bureau also reported that its broader Consumer Price Index rose by 0.7 per cent in the quarter and 1.5 per cent over the year.
It noted that rising fuel prices had a big impact on the living costs of both pensioners and employed Australians in the June quarter.
The Bureau calculated, for example, that the transport costs faced by age pensioners rose by 4.2 per cent in the June quarter.
It said this was driven by the rise in automotive fuel prices.
Employed Australians saw their transport costs rise by 3.4 per cent in the same time.
Age pensions are adjusted twice a year in Australia to reflect price rises.
They were also adjusted automatically to reflect rising national prosperity, until last year, when this was discontinued.
by Alan Thornhill
Australian motorists might be forgiven for believing they have been mugged at the petrol pump over the past three months.
The Bureau of Statistics reports that automotive fuel prices throughout Australia jumped by 12.2 per cent in that time, the biggest quarterly rise in 25 years.
That rise neatly reversed a 12.2 per cent fall on the same indicator, in the final three months of last year.
The Bureau packs highly volatile fuel prices into a category it calls its transport group.
It reports that transport prices – measured in this way – rose by 3.4 per cent in the three months to the end of June.
Perhaps surprisingly, though, the Bureau also reports that the overall prices Australians pay for their transport fell by 2.4 per cent in the 12 months to the end of June.
So how else have we been hit by price movements?
Overall, Australian prices, measured on the Bureau’s consumer price index, rose by 0.7 per cent in the June quarter and 1.5 per cent over the year.
What, though, of the particulars?
Well, the Bureau reported that our housing prices rose by 0.7 per cent in the quarter and 2.5 per cent over the year.
It said the main contributors to the annual rise were a 4.8 per cent rise in the price of new homes purchased by owner occupiers and a 1.9 per cent rise in rents.
The Bureau also calculated that recreation and culture prices fell by 1.4 per cent in the quarter, but rose by 0.9 per cent over the year.
It said, too, that its health group prices rose by 2.7 per cent in the quarter and 4.3 per cent over the year.
The price of food and non-alcoholic beverages fell by 0.2 per cent in the quarter, on the Bureau’s calculations, but rose by 1.3 per cent over the year.
by Alan Thornhill
Long suffering Sydney motorists can look forward to smoother trips – when a construction project- which began today is completed.
In a joint statement, the Prime Minister, Tony Abbott, and NSW Premier, Mike Baird, said work on the King Georges Road Interchange Upgrade, has begun 18 months ahead of schedule.
“The $130 million project will fix one of the city’s worst bottlenecks,” they added.
“More than 40,000 Sydney motorists will have their travel times slashed,” the two leaders said.”
“This vital project is the first section of WestConnex Stage Two, which involves widening and extending the M5 motorway,” they added.
So who benefits?
“Of the 100,000 motorists who use the M5 every day, nearly half get stuck at the King Georges Road interchange,” the PM and Premier said.
“The upgrade will cut travel times at the interchange by up to half, as well as alleviating delays along the M5 East and King Georges Road,” they added.
by Alan Thornhill
The Australian dollar slid below 74US cents this morning as signs of an early US rate rise strengthened.
As office workers in Sydney and Melbourne switched on their computers – at 9am local time today – they saw that the $A was trading at 73.80 US cents.
By 4pm it had slipped again to just 73.59 US cents.
The little Aussie battler had already touched a six year low overnight, when it slid to 74.54 US cents.
These developments will delight the Reserve Bank and Australian exporters.
The bank has been warning for some time now that – in its view – the $A has been overvalued.
And if present trends continue, Australian exporters will find that their products will become more competitive in world markets.
But these developments are not good news for everyone.
Australians planning to buy a new car, in the months ahead, are likely to find that its price has risen.
So what is going on?
The once-almighty US dollar leapt overnight, as Janet Yellen, who heads that country’s Federal Reserve, signaled that it could raise interest rates as early as September.
Her remarks, in parliamentary testimony, confirmed existing market expectations.
Ms Yellen said US job markets are strengthening.
She testified, too, that recent market turmoil in Greece and China is not likely to have a big impact on the US economy,
by Alan Thornhill
Pessimists now outnumber optimists among Australian shoppers.
This was confirmed today in the results of yet another study.
It was the second – in two days – to show consumer confidence sliding.
The latest, published Wednesday by the Westpac–Melbourne Institute, found that
consumer confidence hit a new low point for the year this month.
Its index of Consumer Sentiment fell by 3.2 per cent in July.
The bank’s Chief Economist Bill Evans said: “this is the lowest print of the Index since December last year.”
And he added:” the Index is now firmly in the range where pessimists
Mr Evans pointed to worries over Greek debt – and “sensational
coverage of the collapse in the Chinese share market” – as likely causes.
But he added: “while markets were volatile there was no net movement in the Australian share market.”
The findings – in today’s study – were similar to those of an ANZ Roy Morgan study – published Tuesday.
by Alan Thornhill
A new survey shows business conditions in Australia have hit their highest level for more than five years.
The National Australia Bank, which conducted the survey, said its results showed that Australian firms appear to have shrugged off global economic worries.
The upturn in business confidence, seen in May, continued into June.
These developments are is reflected in the results of the bank’s latest survey of business conditions, which were published today.
The bank said its survey was conducted from June 24 to 30, ahead of the latest bout of global turmoil centred on Greece and China.
It said the May and June snapshots, provided by its last two surveys suggest that the more accommodative policy settings are having a positive impact.
It recalled that interest rates were lowered in February and May, after the RBA had been on hold since August 2013.
As well, the Australian dollar had moved sharply lower against the US dollar.
“The Federal Budget was a positive, including a package for small businesses,” the bank said.
“Under the accelerated depreciation measure, which continues until June 2017, all small businesses will get an immediate tax deduction for any individual asset they buy costing less than $20k,” it added.
“This limit applies to each individual item and a small business can apply for as many individual items as they wish.”
The bank said its business confidence index rose 2pts to +10, a level above the long-run average for this series of +5.
It said, too, that its business conditions index rose 5pts to 11.
In trend terms, business conditions are at their highest level since May 2010, the bank added.
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.
|Bhp Blt Fpo||23.97||+0.07||+0.29%|
|Nat. Bank Fpo||33.24||+0.40||+1.22%|
The News This Week
- Postscript 2
- Postscript 1 – Australia in the age of Trump
- Thank you
- The news: Friday January 20
- Scrap debt reduction plan:Greens
- How prices are moving:ABS
- Trade:Trump warned
- The News: Wednesday January 14
- It’s one rule for them…and
- The news:Wednesday January 11
- Retail growth flattens
- The news:Tuesday January 10
- The news:Monday January 9
- The news: Sunday January 8
- Don’t come the raw prawn with us:Barnaby
- agriculture (203)
- Airlines (329)
- Banking (3,951)
- Business (4,227)
- climate (107)
- Communications (127)
- corruption (33)
- crime (84)
- defence (105)
- Diplomacy (106)
- disability (19)
- Disaster (180)
- Economics (4,246)
- education (177)
- employment (435)
- Environment (214)
- farms (135)
- Financial advice (3,783)
- Health (266)
- Housing (1,094)
- Inflation (662)
- Insurance (155)
- Investment (3,169)
- Law (34)
- manufacturing (203)
- Markets (3,121)
- Media (157)
- medical (152)
- mining (577)
- pay (348)
- pensions (121)
- Politics (4,585)
- population (1,228)
- property (138)
- Regulation (1,460)
- retail (113)
- retirement (207)
- rural (68)
- Rural australia (185)
- Security (66)
- Social security (497)
- Superannuation (324)
- Tax (672)
- terrorism (29)
- The latest (1,519)
- Trade (1,572)
- transport (112)
- Uncategorized (1,006)
- welfare (219)