TIP: busiest SYD auction weekend yet, all eyes on RBA Tuesday, Ralan chickens coming home to roost

Only the devil knows and only god forgives


Real estate agents are still complaining about lack of stock to sell as Sydney saw another bumper auction weekend. CoreLogic said the harbour city hit a 78 per cent clearance rate on 939 auctions; nationally, the clearance rate was 74 per cent.


This mini-boom is at odds with our softening economy. The Reserve Bank meets Tuesday to decide whether or not to cut the official cash rate again; if you're a punter, the best you'll get is $1.25 betting on a cut tomorrow afternoon.


As usual, opinions differ on what's going to happen tomorrow. The Australian National University's RBA shadow board reckons rates will hold at 1 per cent tomorrow, while financial markets are reckoning it's a 77 per cent chance of a 0.25 per cent cut.


The man with the most accurate economic crystal ball, AMP Capital's Shane Oliver, thinks the cash rate will be at 0.5 per cent before the end of 2019 - which would require two more cuts in the next three months.


The differences of opinion are understandable given just how unpredictable the global economic forces are right now. Our boys and girls just can't pick it when - for example - a single Trump Tweet can send markets into a renewed spiral; the global order that has so much uncontrollable influence over Australia's economic fortunes is in an incredible state of flux.


If the RBA does cut tomorrow, the next question is, what will the banks do? Last time, the big four passed on 80-90 per cent of the total 0.5 per cent cut. This time around, we've seen the banks cutting rates out of cycle in the past fortnight.


RBA data released last Friday shows Australians are already swimming in debt; we have nearly twice as much debt as income. Broken out, the housing debt-to-income ratio has increased, to 140.4 per cent. Recent auction activity would suggest these numbers aren't going south any time soon, however the opinions of economists are mixed on whether we're going to see another boom in the short term.


For example, UBS says we're going to see a 5 to 10 per cent rise in house prices in the next 12 months. Westpac is expecting a 12 per cent rise in Sydney and Melbourne by the end of 2020. However, AMP's Shane Oliver and BIS Oxford Economic's Sarah Hunter are among the contingent that thinks we're in for a much more subdued period of growth.


At the moment, property prices are well below the 2017 highs. But we know that actually getting a mortgage is pretty tough at the moment; CoreLogic's latest Perceptions of Housing Affordability report reinforced the challenges in this space. Little wonder millennials still think home ownership is out of reach, and that UBS has found an increase in people who are lying on their mortgage applications to get around tightened lender scrutiny and secure home finance.


Ralan Group details emerging


Today's Herald details examples of where all the money went at collapsed developer Ralan Group, which owes creditors up to $450 million. If Sally Rawsthorne's article is correct, this is a classic tale of a lavish lifestyle being funded by apartment buyer deposits, in a business that has been described by the administrator as a "quasi Ponzi scheme".


Lawyers for Ralan Group are disputing that allegation. Meanwhile, the article says investors in the Group's current projects are unlikely to see their deposits returned or apartments built.