Your weekly market update: Economic growth, interest rates and property listings

market-update-by-david-koch

Hey gang, get up to speed on this week’s financial trends with my market updates. 

This has been a huge week for economic data and a barrage of diverse media commentary scaring everyone. So here’s my take:

– Economic growth for June quarter came in at 0.5 per cent which translates to annual growth of 1.4 per cent.

Yes the annual growth rate is about half the long term average but remember it was for the months of April, May and June. That was election time when everyone went into the bunker because of the uncertainty over who would win and take Government. There’s lots of more recent data showing the economy has picked up in this September quarter.

– Record trade surplus of $50.2 billion for the last 12 months and the first quarterly current account surplus since 1975.

Bottom line is, exports are going gang busters. While media coverage about the US-China trade war is scaring us… the reality is that we’re actually benefitting. China is basically buying less from the US and more from Australia. Plus, the low Australian dollar is making our exports more competitive.

– Car sales are down 10 per cent in August.

Car sales have been suffering because when wages are not growing and property prices are falling, we’re all not confident enough to commit to buying a car. Plus, getting car finance is still tough.

– Reserve Bank keeps official interest rates on hold.

…and they keep saying low interest rates will stay for the foreseeable future. So interest rates on loans, and savings, not rising anytime soon.

How dividends can fight low interest rates

Now the profit reporting season is over it’s interesting to see what the big dividend payers are offering shareholders. With interest rates on savings accounts and term deposits well below 2 per cent, dividends look increasingly attractive.

Yes, the risk from shares is higher because the prices can fluctuate, but getting a 7 per cent  dividend is a pretty good buffer against falling share prices.

According to Commsec, the best dividend payers from the Top 200 listed companies are:

CompanyDividend yields %
Alumina11.93
Perpetual11.1
Estia Health9.3
Whitehaven Coal8.75
Bank of Qld7.92
BHP7.81
Pendal Group7.37
McMillan Shakespeare7.22
Spark Infrastructure7.11
Janus Henderson7.08
Platinum Asset6.92
New Hope Corp6.84
Harvey Norman6.79
Charter Hall Retail6.78
Adelaide Brighton6.78
CSR6.74
Inghams Group6.62
NAB6.62
Westpac6.6
Bendigo and Adelaide6.43
Speedcast6.29
AGL6.26
Unibailroadwestfield6.22
Stockland6.2
Vicinity Centres6.16

Understand Your Data is Being Sold

Interesting the consumer watchdog, the ACCC, has put big business loyalty programs like Qantas FF, Velocity FF, Woolworths Rewards, Flybuys and Priceline Sister Club on notice about telling their customers about what they do with their data.

The ACCC says customers of these big reward schemes wouldn’t know that their data was being sold to other companies. These sales are allowed under the terms and conditions (which no-one reads because they’re so long) but the ACCC says they should be clearer and simpler.

Property Listings Bouncing Back

As I keep saying property valuations are all about demand and supply. Supply is made up of new properties being built and existing properties put up for sale.

One of the reasons auction clearance rates have been so high… and prices rising… is because of a lack of stock on the market. But it looks as though that is all changing. Which is only natural. If values rise, owners who have been holding during the downturn are more inclined to put their property on the market.

Figures released by SQM Research show national residential property listings increased in August by 2.9%, to 325,693 from 316,391 in July 2019.  Compared to 12 months ago, listings were down by 2.1%.

All states experienced an increase in property sales listings over the month, with Melbourne experiencing the highest increase at 6.7% followed by Sydney with a 5.0% increase. Perth recorded the lowest increase of 1.7% over the month. 

Year-on-year Sydney’s listings declined by 15.3%.  Melbourne also declined but by a smaller margin of 1.9%. Perth and Darwin’s year-on-year listings also saw declines of 4.6% and 3.6% respectively.

All other states recorded increases on their year-on-year listings.  Hobart’s increase was 10.8%, the highest increase in the nation, followed by Canberra with an increase of 10.0%.

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