Consumption is picking up, while more people are borrowing - and borrowing more
UBS has told the market it expects increased consumption resulting from tax cuts to result in GDP surging to 0.8 per cent in Q3 and 0.6 per cent in Q4, up from 0.5 per cent in the June quarter. As of last week, the ATO had issued more than 5.5 million individual tax refunds totalling more than $14 billion.
That'll have the high streets excited; more than half of this boon is expected to be dropped on retailers.
Meanwhile, as auction clearance figures continued to rise unabated last weekend despite an increase in supply, ABS figures released yesterday showed that home lending jumped 5.1 per cent in July - the biggest monthly gain in more than four years.
The stats demonstrate a level of confidence we've not seen for a long time. The number of people taking out a loan jumped 4.2 per cent, and the amount they're borrowing increased by 5.3 per cent. First home buyers also increased their share of owner-occupier lending to nearly 30 per cent of the market; it's the highest proportion of FHB borrowers since 2012.
Investor lending also increased by 4.7 per cent.
Back-to-back rate cuts are a big part of this equation, as are the recent tax cuts and lowering of serviceability buffers. It's the fastest increase in borrowing since October 2014 - which has got some economists worried we may be watching the beginning of another bubble.
Where are they all going to live?
Today's SMH has an interactive online article showing projected population growth across greater Sydney, based on ABS figures. It allows you to review how many new dwellings are expected to be built between now and 2031 in each council area; it's no surprise that some of the regions of Sydney that are expected to be the most populous in 12 year's time are currently greenfield development sites.
Demand for future greenfield must be expected for Melbourne, if competition between Mirvac, Stockland and Frasers is anything to go by; they're all vying (among others) to buy the 127.8-hectare Maribyrnong Defence Site in Melbourne's inner west.
This renewed interest in property hasn't made the other problems go away, however. A recent survey of voters by Newspoll has shown that cost of living is our highest concern (37 per cent). Another 19 per cent cited economic management as their biggest issue, while the second-most important issue was climate change (20 per cent).
The RBA said yesterday that our increasingly ageing population is putting pressure on the economy, because more and more people are saving rather than spending...although this piece from the ABC says that it's not just boomers who are keeping their wallets closed.
Fires raging across Queensland and northern NSW
Spare a thought for the people caught up in the dozens of bushfires across Queensland and NSW at the moment. A record 60 homes were lost on the Sunshine Coast and five in NSW yesterday.
In NSW, the Rural Fire Service is predicting a crazy fire season as we head into Spring and Summer. Yesterday, 64 fires were burning across the state and 28 were out of control.