At This Rate Just Get Over It

At This Rate Just Get Over It

`At the beginning of 2013 some were predicting that the cash rate would drop to around 2.00 per cent – I remained in the school of thought that it won’t go below 3.00 per cent. The gallery remains divided although one can’t help but notice that the cash rate setting is the monetary policy indicator as to the overall health of our economy. Retail and real estate suggestions that it must be lower are in my opinion self-serving.

The TG Securities Melbourne Institute Monthly Inflation Gauge increased by 0.2 per cent in March for a 2.1 per cent annual pace which just so happens to be the lowest annual inflation result for eight months. Australia as a nation has many economic problems manufacturing contracts for 14th month with Australian Industry Group chief executive Innes Wilcox commenting: “The strong dollar, falling selling prices, further cost pressures and the weakness of commercial and residential construction continue to take their toll.”

Govt should invest in infrastructure: BCA the head of Australia’s peak business group has urged the federal government to invest more in infrastructure, even if it means borrowing for top – priority projects. The only problem is that the federal government has been handing out money to buy the votes of the Independent federal MP’s win $1.5 billion for their electorates.

Freshwater

BUY PRINT

The Reserve Bank of Australia is responsible for monetary policy not fiscal policy where it should be remembered that in Australia we have approximately one third who rent, one third who own a house with a mortgage and the final third own their house with no mortgage. A difficult balancing act given two thirds would much prefer a higher cash rate with one third relying on a lower cash rate.

I don’t concur with the thought bubble ‘We are in an up cycle now’: property agents rejoice as good news rolls in with RP Data figures showing that dwelling values (houses and apartments combined) across Australia’s capital cities increased by 2.8 per cent thus far in 2013. Of course prices should be climbing due to a record low cash rate together with Australia’s population growing by 1.7% in the year to September 2012 which is the highest annual recorded rate since December 2009; this is above the 30 year average of 1.4 per cent according to the Australian Bureau of Statistics.

3-04-2013 10-20-13 AM

Mergers at eight – year low previously the resources sector led this demographic market which now appears to be slowing down. Last year Australian companies were involved in 1,037 deals worth $US65.46 billion, a marked decline from 2007, in the peak of the equities boom. In that year, companies locked in $214.7 billion in mergers and acquisitions in 2,267 deals.


This resonates through Australian homebuyer confidence hits lowest since 2008 – while Australian employers added the most jobs in almost 13 years in February and the economy expanded 3.6 per cent in 2012, business confidence and home – loan approvals declined, illustrating continuing concerns about the nation’s economic outlook. These results are more evident in the suburbs that previously relied on high investment bank participation – which is obviously the missing link today.

2-04-2013 10-44-35 AM

2-04-2013 10-47-04 AM

Again Mosman houses and apartments remain in volume rapid decline – there is a strong possibility we may very well see the lowest numbers of available properties ever seen before.

Source: Domain Property Monitors

MOSMAN – 2088

• Number of houses on the market this time 2012 – 114
• Number of houses on the market last week – 98
.Number of houses on the market this week – 90
• Number of apartments on the market this time 2012 –103
• Number of apartments on the market last week – 73
.Number of apartments on the market this week – 70

CREMORNE – 2090

• Number of houses on the market this time 2012 – 11
• Number of houses on the market last week – 11
.Number of houses on the market this week – 21
• Number of apartments on the market this time 2012 – 26
• Number of apartments on the market last week – 20
.Number of apartments on the market this week – 16

NEUTRAL BAY – 2089

• Number of houses on the market this time 2012 – 13
• Number of houses on the market last week – 9
.Number of houses on the market this week – 7
• Number of apartments on the market this time 2012 – 53
• Number of apartments on the market last week – 35
.Number of apartments on the market this week – 32

For this week’s sales in Cremorne real estate, Cremorne Point real estate, Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Neutral Bay real estate, Cammeray real estate.
Click Here

For this week’s open for inspections.
Click Here

I’m a huge fan of Warwick J. McKibbin who recently posted Poor economic policy must end no matter who wins Australian election – an excellent critique of the Australian economy since 2007. “Key to improving Australia’s performance will be the move away from populist short – term policy along a path of structural reform that increases the flexibility of the Australian economy. Large investments in infrastructure and efficient pricing of congestion and other problems are needed to drive productivity growth.

These investments should be based on independent assessment of the economic returns and not the political returns to marginal seats or the lobbying of vested interests. The Productivity Commission is critical to this process.

Most urgently there is need for comprehensive review of current government spending programs and measures to reform the tax system. Australia desperately needs the next prime minister to be a leader rather than one who is a fighter.”

Here – here!

Cheers ^__^

2 Responses to “At This Rate Just Get Over It”

  • mstokes says:

    Rob
    Thanks for the Macro & Micro economics and the eval on Monetary policy .
    Any chance of you telling us what is going to happen in the Balmoral residential market over the next 12-24 months
    Supply /Demand directions liquidity ,who s in whos out of the market .

    MJS

  • Gordon says:

    Great point about Warwick McKibbin, Rob.

    Warwick is highly intelligent and experienced on economic issues, and is fearlessly independent – so of course he was one of the people the Gillard govt had to replace on the Reserve Bank board as soon as possible. Possibly with some more, er, politically aware characters?

    The upside of that little exercise is that Warwick is now free to tell it as he sees it in regard to economic matters, so maybe the govt move wasn’t so smart after all. How unusual.

Leave a Reply

Your email address will not be published. Required fields are marked *