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. Job ads at new record highs in April
Another sign of the strength of our economy is that SEEK’s new job ads rose 2.9% month on month in April, further extending record highs in a 4th consecutive month of growth.
Overall, job ads are an incredible 74.1% higher than pre-pandemic levels, indicating labour demand remains elevated even as employment has more than recovered pre-pandemic levels and the unemployment rate has declined to a nearly five-decade low.
2. It looks like the construction boom is over
We know the government has been stimulating the construction industry to get us through the Covid pandemic, and in general, has done a great job and allowed many first home buyers into the market.
But the latest figures show that building approvals for detached homes declined 3.1% in March.
Moving forward, rising interest rates will slow down new dwelling construction but may take up to 6 months to emerge ABS data set.
A key question going forward remains the extent that which housing construction was brought forward due to Homebuilder (and by other grants) and whether approvals continue to fall below pre-pandemic levels.
3. How high will rates go?
Strong inflation figures forced the RBA’s hand to raise interest rates, not so much because raising the cash rate would stifle inflation, but because it meant the real cash rate (i.e. taking into account inflation) was absurdly low.
The cash rate remains 3.4 percentage points below underlying inflation, and thus monetary policy remains very expansionary.
So it is not surprising that RBA Governor Lowe suggests more rate rises are on the way – possibly up to 2.5% by the end of next year.
Yet these increases remain well below the absurd predictions in the money markets, which see the cash rate above 3.9% by August next year – a speed of increase that could easily tip us into recession.
The chart from the Guardian shows how rates rose in the past.
4. More gain less pain from property
Not surprisingly the current property market has created many more winners than losers.
CoreLogic has analysed approximately 133,000 resales through the December 2021 quarter in its regular Pain and Gain report.
Through this period, it was estimated that 93.8% of resales made a nominal profit from the previous sale.
This is up from 92.4% in the previous quarter and marks the sixth consecutive quarter that the rate of profitability in Australian resales has increased.
/GettyImages-957755566-d501525291a74e78b13dc53846b66b58.jpg)
