Experienced property commentator Michael Yardney\u2019s latest blog talks about a bright future in the property market.<\/p>\n
His experience tells him that the nation\u2019s housing markets are set to be reignited with a stimulus package focused on winding back lending restrictions and lower interest rates fuelling economic growth, in tandem with tax cuts and increased infrastructure spending.<\/p>\n
\u201cWhile these are positive moves that will instil confidence, there are still some underlying issues that need to be discussed,\u201d Mr Yardney said.<\/p>\n
\u201cSo, I recently had a chat about with Dr Andrew Wilson in my weekly property insiders show.<\/p>\n
\u201cThe discussions with Dr Wilson were around the Big Three Macro Drivers that now point inarguably to a rate cut.\u201d Wages<\/p>\n
Along with most other advanced economies, Australia\u2019s has failed to ignite wages growth over recent years despite the lowest interest rates on record and a strong labour market performance.<\/p>\n
This has been a severe constraint to consumption and overall economic revival in wages what remains low and stagnant growth.<\/p>\n
Inflation<\/p>\n
Low wages growth and weak consumption has logically constrained prices growth which has remained well below the RBA target range of 2-3 per cent annual growth for years now.<\/p>\n
The latest data shows inflation now flatlining.<\/p>\n
Jobs<\/p>\n
With the jobless rate having risen to 5.2 per cent recently, but employment also stronger with 28,400 new jobs created in the month of April, a dilemma has formed for the RBA on how best to interpret such employment data.<\/p>\n
The many positive events for property that occurred in recent weeks include:<\/p>\n
\u2022 With the Coalition winning the 2019 federal election, there will be no changes to negative gearing or the existing capital gains tax discounting rules, bringing certainty and therefore confidence back to real estate investors<\/p>\n
\u2022 APRA issued a letter to all authorised deposit-taking institutions (the banks) to consult about its proposed guideline changes that would increase the maximum borrowing capacity of home borrowers, and<\/p>\n
\u2022 RBA governor Philip Lowe provided an Economic Outlook on Monetary Policy raising concerns about inflation and unemployment and commented \u201cat our meeting in two weeks\u2019 time, we will consider the case for lower interest rates\u201d.<\/p>\n
What next? Yardney explains that the RBA has remained stubbornly fixed to the theory that low unemployment and strong jobs growth will lead to incomes and prices growth.<\/p>\n
The national labour market after a lengthy period of strong performances is now starting to deteriorate, influenced clearly by the anti-housing market and anti-residential development policies of the Reserve Bank and APRA the financial regulator.<\/p>\n
This is the now the final straw for the clearly belated RBA backdown on predicted rate direction, with wages and prices still dormant with the labour market now showing clear signs of deterioration that are likely to be sustained.<\/p>\n","protected":false},"excerpt":{"rendered":"
Experienced property commentator Michael Yardney\u2019s latest blog talks about a bright future in the property market. His experience tells him that the nation\u2019s housing markets are set to be reignited with a stimulus package focused on winding back lending restrictions and lower interest rates fuelling economic growth, in tandem with tax cuts and increased infrastructure […]<\/p>\n