NEWSLETTER – September 2017
BUSINESSES AT THE COLD FACE
The ASX has steadied amongst some issues pertaining to compliance, particularly around financial institutions. Commonwealth Bank are being the hardest hit, and to that end, we feel that there is probably more pain to come. There is some correction with mining stocks, as those companies address their cost of doing business (particularly wages), and rationalise their competitiveness with world markets.
We see the all ordinaries continuing on a steady path given the cash rate should remain steady and withstanding any changes in the Australian dollar.
Source: ASX News & E-Trade News
Report on Title Office Lodgements & Settlements
Landgate document lodgements for July 2017 were 20,086 which is a 14.14% decrease when compared to the same month last year (23,394) and 34.5% decrease when compared to July 2016 (30,525) and July 2015 (30,898). It is also a 26.86% decrease from the previous month of June 2017 when 27,462 documents were lodged.
The indication of the number of settlements can be found in the Electronic Advice of Sales which are only lodged by conveyancers when settlement transactions become unconditional. These were up slightly in July 2017 from July 2016 (4,779 up to 4,823) which was encouraging. It was still substantially less than July 2015 (6,149) and July 2014 (6,929).
Thane Conveyancing continues to flourish with new contracts coming in daily. This is promising and hopefully a sign that the WA property market is improving.
THANE FINANCIAL PLANNING
The AUD is currently sitting at 0.81 against the USD and has seen considerable gains over the previous quarter, which has been largely contributed to the continuing rise of iron ore prices.
The AUD saw a rise in value in the first month of the quarter June, largely due to the rebound in commodity prices. During June, the price of iron ore alone rose from US$57 to US$64 per tonne.
In the second month of the quarter, we saw the AUD incline sharply bringing up the value of the AUD to 0.80 against the USD. Both improving Australian economic activity data and a continued sharp rally in commodity prices (iron ore price taking another jump from US$65 to US$74 per tonne) were key drivers behind the AUD’s strong performance.
The Australian dollar continued to hold strong during the last month of the quarter and has remained close to 0.80 against the US dollar. This is due to a continuation of positive Australian economic data, as well as the continued rise in commodity prices (iron ore rising once again from US$74 to US$79 per tonne).
In property, we have a far more optimistic news for the WA property market coming off the back of the last quarter.
From an overall property perspective, we are seeing some positive indicators in the sales market and increased activity in the rental market (taking into account other market indicators). We believe WA property market is stabilised and moving in a more (slightly) positive direction.
In suburbs across the metro area, recent sales data has indicated a slight form of recovery in the WA sales market. New housing figures released from the ABS revealed that first home buyers are slowing returning to the market and there is an overall increase in buyer confidence. However, as expected with the tightening of interest rates in the last quarter (according to the ABS), there was a definite downward trend in the investment area, with investment commitment dropping 1.7% at the end of the June quarter.
At the end of the June quarter, the rental price dropped further from $360.00 per week to $350.00 on average across the WA market, with the average time to secure a tenant edging over a month at 52 days. In noting the above, figures have shown increased activity in the market and some suburbs (although this is no indicator for a positive market increase) have recorded a positive growth in their medium rental prices.
In summary, across the board we are slowly seeing some signs of recovery and overall positive indicators for the Perth property market. However, note that buyers are still very sensitive around pricing of properties, and tenants still very much having the upper hand in the rental market. We do, however, look forward to seeing some more positive signs to the market in the next quarter.
THE ECONOMY AT A GLANCE
Source: Reserve Bank of Australia. Data are the latest available as at 5 September 2017.
A NOTE FROM THE PRINCIPAL
From a West Australian perspective, there has been considerable dialogue as to whether we are in recovery. Most of the intelligent voice is in favour of our property market, including rentals, showing some fairly positive signs of increased activity. However, pricing remains stagnant. One would say from a Perth perspective, it would be considered a good time to look at property. From the Eastern Seaboard, the view looks entirely different, where prices appear to be artificially inflated and in great need of correction. This is relatively academic to the West Australian market, albeit if there is a correction in the Eastern States, we may see some renewed interest in WA property from overseas investors.
Most indicators remain steady to positive, with the most challenging being retail sales (to be expected) and the Australian dollar also remains steady, but on the high side of where we would like.
International markets have all eyes on America and its political action with Korea. The current dialogue is seemingly having a positive impact on the American economy and international markets will be fairly interested to see how this plays out.
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