Some people are calling this the weirdest recession.
Only last week I explained how we’re in the middle of a pandemic, unemployment is rising, yet our housing markets are remaining resilient.
But now there are clear signs that the modest coronavirus-induced housing correction is coming to an end and that the housing markets are on the move again.
And earlier this week Reserve Bank deputy governor Guy Debelle said the RBA believes the country’s first recession in three decades is now over.
The RBA thinks our recession ended in the September quarter because “as best as we can tell the growth elsewhere in the country was more than the drag from Victoria”.
And this week with the Melbourne lockdown easing, consumer and business sentiment have been buoyed once again.
Of course, many of us are anticipating that at its board meeting next Tuesday, Melbourne Cup day, the RBA will drop its cash and three-year rate targets by a further 0.15 percentage points to 0.1 per cent.
So it looks like we’ll have a perfect storm developing for our property markets next year when you also consider the various Federal and State government incentives and proposed spending.
In today’s Property Insider video I discuss all this plus the latest property data with Dr. Andrew Wilson, chief economist of My Housing Market.
The recession may be over: RBA
The RBA deputy governor Guy Debelle told the Senate said that it appeared the Australian economy grew through the September quarter.
The Reserve Bank believes the nation is out of recession with the economy returning to growth in the September quarter, as the economic impact of the 111 days of lockdown in Victoria might not be a deep as feared and was outweighed by recoveries in other states.
“As best as we can tell, the growth elsewhere in the country was more than the drag from Victoria, and possibly the drag from Victoria was a little less than what we guessed back in August” Dr Debelle said.
Australia recorded its first technical recession in 29 years in the first half of the year after posting falls in the gross domestic product of 0.3 per cent in the March quarter and 7 per cent in the June quarter.
But as you will hear Dr. Andrew Wilson explain in the video, this was a “Clayton’s Recession” caused by a health issue rather than fundamental economic issues.
Did Melbourne property values really drop 14%
A recent report from electronic settlements platform PEXA found that from January to September 2020, the overall median settlement price fell 14 per cent in Victoria and 9 per cent in New South Wales.
This is just another example of incorrectly interpreting data.
These figures are a reflection of the types of properties that transacted this year rather than the overall changing value of property venues.
Sure, the median price of properties transacted dropped, because in general, it was lower in properties transacted this year.
Many homeowners with higher-end price properties, had substantial equity in their home having bought them, 10, 15 or 20 years ago and they did not want to or need to sell in the uncertain 2020 property market.
The weekly ANZ Roy Morgan Consumer Confidence Index hit an 8-month high of 99.7 points last week – a smidgen below the 100 point level last seen on March 15 – the level that separates optimists from pessimists.
The improvement in the Aussie virus backdrop – especially in Melbourne – saw all five major components of the ANZ-Roy Morgan sentiment gauge lift last week.
In fact, consumer views on ‘current financial conditions’ lifted most – up 3.5 per cent – ahead of an expected Reserve Bank interest rate cut on Melbourne Cup Day.
And views on whether it’s a ‘good time to buy a household item’ rose by 0.4 per cent to an 18-week high of 5 points.
Behind the headline unemployment figures
Watch this week’s video as Dr. Andrew Wilson takes us behind the headline unemployment figures to help us better understand what’s really going on.
At first glance, it seems like the 3 big capital cities have similar unemployment rates.
Over 200,000 jobs have disappeared from Melbourne, which is not surprising after close to 4 months of lockdown.
However, with many Melburnians no longer looking for a job and the participation rate dropping, this means the unemployment level of 6.9% does not really reflect what’s happening on the ground.
This week’s property data provided by Dr. Andrew Wilson of My Housing Market
Watch our video above as Dr. Andrew Wilson gives his commentary on the following data:
Auction clearance rates remained firm in Sydney last weekend.
At these levels, when close to 80% of properties put to auction sell under the hammer, price growth tends to follow.
Is this the bottom of the Sydney property market?
And Sydney property sales remain strong, reflecting pent-up demand.
With Melbourne buyers and agents now allowed to undertake inspections, more properties are being listed for sale in Melbourne, coming from a very low base.
Auctions have returned to Melbourne, even though in low but increasing numbers, and buyers are active in the market
With more Melbourne properties being listed for sale by auction, it’s likely that one of Melbourne’s favourite weekend pastimes, on-site auctions, will return with a vengance.
Melbourne property sales have surged, reflecting pent up demand.
And the Brisbane property market is performing very strongly with more sales last week than any other capital cities.
Newly listed homes for sale:
With consumer confidence picking up, vendors are more comfortable and many more homes have come on the market for sale over the last week, particularly in Victoria.
Watch our video as Dr. Andrew Wilson gives his commentary on the latest statisticss.