NEWSLETTER – September 2017
BUSINESSES AT THE COLD FACE
The Australian share market as a broad base has held its ground or moved to a very slight increase. The S&P/ASX 200 has increased by half a percent over the same period for the previous year. This flat movement is likely to continue through the coming half of the calendar year. Whilst there are some outstanding performances in some areas of mining (such as lithium and cobalt and some shares relating to infrastructure), the rest of the market has been lacklustre.
The international markets continue to show signs of mild potential, albeit, as we have mentioned before, they are coming from a low base. Most of the international markets that were hit by the GFC are now showing signs of recovery, starting with property prices (with the exception of some of the ‘over-challenged’ European countries that will need significant fiscal change to stimulate positive outcome.
Source: ASX News & E-Trade News
THANE ACCOUNTING & BOOKKEEPING
The economy was expected to grow by 0.7 per cent in the quarter and 3.0 per cent over the 12 months to September, but Australian Bureau of Statistics data showed Australia’s economy expanded 0.6 per cent in the September quarter and grew 2.8 per cent over the year.
Treasurer Scott Morrison said the figures indicated “solid” economic growth, however, with growth accelerating from 1.9 per cent to 2.8 per cent through the year.
Household consumption figures also revealed Australians were saving more than they had been in past months. Growth in household spending is now at its lowest rate since the March quarter in 2005. Aussies were cutting back spending on household furnishings and equipment, hotels, cafes and restaurants, clothing and footwear and buying new cars.
Meanwhile, spending on electricity, gas and other fuels went up 11.5 per cent and cigarettes and tobacco went up 11.1 per cent. Treasurer Morrison said the figures weren’t surprising given the cost of living pressures on essentials that Australians were feeling and had been feeling for some time.
Mr Morrison highlighted strong jobs growth as one of the most positive signs in the economic figures.
The Reserve Bank of Australia said Tuesday it is holding its benchmark cash rate unchanged at 1.5 percent. This news was widely expected. The central bank has kept rates at this level since August 2016.
Source: news.com.au & tradingeconomics.com
Report on Title Office Lodgements & Settlements
Total document lodgements at Landgate (transfers, mortgages, caveats, applications etc.) by:
- Financial year July to June were:
- Year to date were 2017/18 89,435 which is a 9.36% decrease when compared to the same time in 2016/17 (98,667).
- Months were October 2017 (23,326) which was a 7.86% increase from the previous month (21,627) and a 2.34% decrease from October 2016 (23,885).
Transfer documents lodged in October 2017 (5,549) increased 9.53% from the previous month (5,066) and increased 7.68% from October 2016 (5,153).
Mortgages. The number of mortgages lodged during October 2017 (6,067) increased 6.95% from the previous month (5,673) and decreased 7.03% from October 2016 (6,526).
Electronic Advice of Sales (an indication of sale transactions) – a total of 4,736 lodgements were registered during October 2017, a 12.74% increase from the previous month (4,201) and a 4.92% increase from October 2016 (4,514).
While activity is down on last year, the above statistics all indicate that October 2017 was an increase on the previous month. This is encouraging for the property industry.
THANE FINANCIAL PLANNING
The previous quarter has seen a steady decline of the AUD against the USD from a figure of 0.80 to 0.75.
During the first month of the quarter the AUD felt a decline against the USD largely effected by a decline in Iron ore prices during September.
The AUD continued to decline against the USD during the second month of the quarter as the retail sector felt subdued spending results in addition to the continued falling of Iron ore prices.
Following a similar trend of the past two months, the final month of the quarter continued to experience a weaker AUD against the USD reaching a figure of 0.75.
A more positive note from Thane Property this quarter with data from all our main real estate providers indicating that the market is slowly but surely looking to be a lot more stable.
REIWA’s latest market shot noted that Perth’s median sale price has increased over the last quarter and now sits at $525,000. From a rental perspective the rental price per week is still sitting at $350.00 per week with no decrease in pricing to report.
Overall, we are seeing increased activity in the market with more prospective buyers through home opens as well as tenant activity and enquiries increasing daily. We are not expecting ‘miracles’ in terms of increase in pricing but we are feeling that 2018 is going to be a much more positive year from a property market perspective and we welcome the market stability!
THE ECONOMY AT A GLANCE
Source: Reserve Bank of Australia. Data are the latest available as at 5 December 2017.
A NOTE FROM THE PRINCIPAL
The current rhetoric for the most of the industry experts are noting that the West Australian market has turned the corner on housing prices. It is widely recognised that we are now past the pivotal point of the market cycle (but only just, and moving very slowly).
Whilst we are seeing some slight upward pressure on housing prices, which is evident in the ‘time on market’ figures, the number of contracts written still remain relatively modest. This is mainly due to the pressure by the prudential regulator to control the level of investment lending and thus investment purchases.
WA remains out of sync with the Eastern States market, showing positive potential, and many experts have indicated that our mining sector and expenditure on infrastructure will return WA to a positive movement in house prices. This is also fuelled by perceived overpricing on the Eastern Seaboard, thus making WA a more attractive investment.
Rents will remain quite challenging while interest rates remain low. We see no real movement in this area in the short term. However, migration increases could lift the quality of choice of tenants.
Overall, a more positive outlook for the West Australian economy is projected.
Interest rates remain low, based on the challenges faced with the Eastern States property prices and WA will benefit from this too.
There is some upward pressure on interest rates for the medium term, depending on how the Eastern States copes with any correction in house pricing.
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