Drop in job vacancies another signal of pending interest rate cuts
The Australian Bureau of Statistics released the latest job vacancy figures yesterday, showing the annual decline in five years. A national decline of 1.9 per cent was fueled by NSW with 9.2 per cent and VIC with 7.6 per cent decreases in job vacancies.
This puts more pressure on the Reserve Bank to cut the official cash rate when it meets next Tuesday. Whether it pulls the trigger this time around or not, RBA governor Philip Lowe warned at a business event in Armidale earlier this week that we should expect a low interest rate environment for a long, long time.
Which sounds lovely to anyone who likes cheap credit, but hurdles banks are making aspiring borrowers jump through to get a loan courtesy of the Hayne royal commission are proving insurmountable for many. Mirvac chief Susan Lloyd-Hurwitz spoke on this at The Australian Financial Review Property Summit yesterday; she backed treasurer Josh Frydenberg's plea to banks to ease up on "overly stringent lending restrictions.
"Personally I just settled myself and it was a very painful process. It's torturous. People tell us about being assessed on how many coffees they drink. It can get nonsensical about how much scrutiny there is," Ms Lloyd-Hurwitz told the assembly.
Things could get even harder for borrowers if APRA's planned capital reforms are put in place. The Australian Banking Association has the backing of the Morrison government in its efforts to convince APRA to ease up.
In an opinion piece in today's AFR, Mr Frydenberg has praised APRA for removing such restrictions as the 30 per cent cap on interest-only loans and the 7 per cent serviceability buffer. The "but" in this scenario however, is his staunch support of a common-sense approach to lending, and pulling away from the gun-shy climate we're in right now.
Given the Morrison government is pro-property and pro-construction, and its reluctance to engage in new stimulus measures, it needs the banks to open the coffers to borrowers. We've already seen several big banks easing up on rates out-of-cycle this week; it's going to be fascinating to watch what happens next if the RBA cuts the cash rate on Tuesday.
Property bosses hedging bets on recovery
Lendlease's head of property in Australia, Kylie Rampa told the Property Summit yesterday that recovery of the residential housing sector will be a very slow burn. Ms Rampa is convinced it's going to be years before we get back to 2017 levels.
The heads of Mirvac and Stockland, however, believe it's going to be a much faster return to boom. They reckon based on basic supply and demand, prices are going to shoot up 5-7 per cent over the next year - purely due to the fact that we aren't building enough new homes fast enough to fuel the already-escalating market for property in Sydney in particular.
That situation isn't going to be helped by the fact 169 NSW-based construction companies went to the wall in the June quarter alone - the highest quarterly number of construction firms going into administration, receivership or court-ordered shutdown since the 2015 September quarter.
The builder of Opal Tower, Icon doesn't want to be one of them. It has been working to settle with individual owners of apartments in the beleaguered building in anticipation of being drawn in to a class action. If the owner's corporation has its way, this preemptive action will have been for naught.