TIP: RBA watchers prepping the popcorn, signs of two-speed retail economy, regions faster than metro
This edition of Today In Property has nothing to do with the cricket. But crikey, what a comeback!
Welcome to another edition of Interest Rate Tuesday, where the plucky pundits predict potential rate cuts or stays. The smart money's on the Reserve Bank keeping rates at 1 per cent when it meets this afternoon, despite plenty of signs the economy isn't recovery as fast as watchers are hoping.
The Australian's Alan Kohler is arguing that the RBA should adopt the European Central Bank's new policy of having two different interest rates for lending and saving. Little chance of that happening off-the-cuff - but if that does happen down the track, you heard it from Alan first, folks.
We heard yesterday from Morgan Stanley that the big banks are staring down the barrel of lower profits thanks to a low-interest rate environment. Today, Morgan Stanley has followed up with the second half of the ol' one-two to report that home loan growth is at record lows among the major banks, and shadow banks are growing seven times faster. Makes you wonder why they're talking down the prospects of the big four.
Not that second-tier lenders are having an easy ride of it. This article is one long complaint from Australia's third-largest mutual bank, Heritage Bank about how he and his peers are being "crushed by a mountain of regulation" and shouldn't be subjected to the same amount of scrutiny as the big banks. Brings a whole truckload of cliches to mind a la having cake and eating it.
Morose Monday leads into Thrive Tuesday
The pessimism that has characterised reporting of the retail sector over the past week - which is relevant given its direct correlation with consumer confidence - has brought a bunch of different retailers out of the woodwork today with a common message: what recession?
For example, Amazon's Australian head, Rocco Braeuniger has said things are getting stronger in his neck of the woods, not weaker as we've seen with Australia's bricks-and-mortar department stores. People are spending money, he says - they're just choosing where and how to spend it.
And while new car sales have dropped nationally for the 16th consecutive month, in NSW sales are actually up slightly on this time last year. Nationally, Toyota Hi-Lux sales are down by more than 10 per cent YOY - which means if you're a tradie, it's a good time to be hunting a bargain for your new ute.
Speaking of tradies, we heard a month or two back that power tools retailer, Sydney Tools had a fantastic 17/18. Today, the Fin is reporting that the family-run business is looking to lease another 80,000 sqm of retail space over the next five years, the equivalent of 40 stores. A combination of business is good now, and looking stronger in the future.
Hopefully they're looking to extend some of those leases to regional areas. PRDnationwide has released predictions today that regional centres will outperform capital cities over the next six months, courtesy of more attractive affordability and stronger returns. That'll be music in the ears of investors who are prepared to sink their cash into, for example, regional TAS and WA where value growth has been the most rapid over the past 12 months.