Your weekly market update: Federal budget and property trends
Hey gang, get up to speed on this week’s financial trends with my market updates.
This Week’s Economic Pulse
– The Federal Budget is effectively balanced. The deficit for the 12 months to May 2019 was just $148 million…well below the full-year estimate of $4.2 billion made at the time of the April 2019 budget. According to Commsec, more Aussies have got jobs, boosting tax revenue. Big Aussie companies continue to make profits (although they have found it harder to lift earnings), further supporting tax revenues.
– While unemployment rose from 5.2 to 5.3% another 34,700 jobs were added in August…the 35th consecutive month of jobs growth. The reason the unemployment rate rose was because the participation rate (the number of people in, or looking for work) rose to a record 66.2% of the population.
– The US Federal Reserve (their equivalent to our Reserve Bank) cut official interest rates this week by 0.25% as expected.
Sydney Rents Are Actually Falling… now that’s a shock
I can’t remember the last rents fell in Sydney… but they have by 10 per cent over the last year.
Data released by SQM Research shows the national residential rental vacancy rate marginally declined in August to 2.2% from July. The total number of vacancies Australia-wide is now at 75,757 vacant residential properties… a decrease of 589 over the month but up 5,310 dwellings over the past 12 months.
Sydney continues to have the highest vacancy rate in the country at 3.4% which is up from 2.8% this time last year.
According to Louis Christopher from SQM Sydney vacancy rate will continue to rise to 4% by the end of the year.
When vacancy rates rise, rents fall.
Over the month, Capital city asking rents declined 0.4% for houses but remained steady for units. Over the 12 months, asking rents for houses declined 1.4% and a 0.5% decline for units.
Sydney recorded declines in asking rents over the month for both houses and units by 1.3% and 0.2% respectively. Over the year rents are down 10%
Melbourne also saw declines in both houses and units over the month, dropping 0.2% for houses and 0.7% for units. Hobart’s unit rental market increased 4.8% over the month but houses declined 0.5%.
Brisbane continues to be the only capital city to record increases in weekly rents over the month for both houses and units at 0.6% for houses and 0.9% for units.
But Perth Property Values Are On The Way Up
When I was talking to Louis Christopher on Sunrise about the fall in Sydney rents, he let slip that the Perth property market offers great value.
I nearly fell over because the Perth residential property market has been falling for years and has almost been in a recession.
But Louis reckons the market is coming back into balance and, for him, it offers the best buying opportunity of any capital city…very interesting.
Asset Rich Cash Poor
While global surveys show Australians have never been wealthier and our household finances are in the best shape for years. If that’s the case, why is it so hard to make ends meet?
Retirees and families are feeling the pinch because while their assets (superannuation and property) have been rising in value, interest rates are low and wages haven’t been rising. In other words, we may be asset rich but we’re cash poor.