Investment

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Former Masterchef contestant Jonathan Daddia has bought an investment in Randwick.

The IT consultant, who dubbed himself 'The Terminator' during the series won by Adam Liaw, has spent $1.7 million on a two level 1920s semi.

He's leased the original two bedroom home after asking $700 a week.

NG Farah Coogee agents Cameron Airlie and Mark Feerick sold the home pre-auction.

Daddia made the final eight of the 2010 series of the popular Channel 10 food show.

<img alt="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/22/RANDWICK%202.jpg">

After contemplating opening his own restaurant, Daddia stayed in IT and works at PwC Strategy.

Having settled on the home, Daddia has briefly listed a Bellevue Hill apartment.

The renovated art deco unit in the 1920s Carinya building which cost $950,000 in 2014 as withdrawn from sale by Phillips Pantzer Donnelley agent Jason Pantzer.

<img alt="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/5/22/RANDWICK%203.jpg">

This article first appeared in The Sunday Telegraph.

<h2>Take a look at our latest projects:</h2>

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[smartcode_project:default project_id=5811]

[smartcode_project:default project_id=32227]
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firstname1-iYD4UYzvBa

Former Masterchef contestant purchases Randwick investment

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GUEST OBSERVER
Average income earners largely are the people who do get to take advantage of negative gearing - nurses, policemen and women on an average wage, investing, for instance, in a property. Most of them hold only one property, which adds to the housing stock that’s available for people as well. – Assistant Treasurer and Small Business Minister Kelly O'Dwyer, speaking on ABC TV’s Insiders, October 25, 2015
Negative gearing is a tax break available for people who own at least one other property in addition to their primary place of residence. This tax break applies only if the costs associated with the investment, including interest payments and other expenses, are greater than the rental income. Any loss made on the property can be offset against other income, thus reducing personal tax.
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It’s true many nurses and police officers and other middle-income (and even much lower) people have negatively geared properties. But are these occupations and incomes the typical beneficiaries of negative gearing?
<h2>Checking the data</h2>
When asked for a source to support her statement, a spokesperson for O'Dwyer sent the following statistics.
<blockquote>
• Taxation statistics show 66.5% of taxfilers who declare a net rental loss have a taxable income of A$80,000 or less.
• Those who use negative gearing include 22.6% of police officers, 19.2% of ambulance officers and paramedics, and 18.9% of train and tram drivers.
• Of the Australians who use negative gearing, the majority only hold one additional property.
• 73% of people with a rental property interest have only one property and 18% own two.
</blockquote>
A $80,000 per year is not a typical taxable income. Around 84% of non-investors have a taxable income below $80,000. This compares with the 66.5% of people with negative geared property.
It is true that a relatively high proportion of the listed occupations have negatively geared properties. While it may be the popular belief that these are low or middle income occupations, these are actually reasonably highly paid occupations. For example, 73% of train and tram operators earn more than A$80,000 per year.
In our analysis, we looked at the income distribution of people who negatively gear compared to that of people who do not invest in rental properties.
The data set we used is called the 2012–13 individuals sample file. To collect this data, the Australian Taxation Office (ATO) sampled 2% of all individual tax returns filed in 2012-13.
According to this ATO data set, there are 1.26 million (10%) taxpayers who negatively gear. Their average loss was A$8,930 per year. A further 700,000 with a rental investment are positively geared (meaning their rental income was greater than their costs). About 85% of taxpayers don’t have a rental investment.
<a href="/images/2015/11/23/image-20151115-10412-1h6jg2h.PNG" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/23/image-20151115-10412-1h6jg2h.PNG" alt="">
 
The chart shows what statisticians call the “smoothed” probability distribution (which is a smoothed histogram of the income distribution) of taxable income for people with negatively geared properties and people without rental investment properties. Marked also on the chart are the median and top 10% (P90) income points for both people with negatively geared properties and those without property investments.
The median income for negatively geared investors is A$60,000 per year, compared with $40,000 for non-investors.
A similar gap (50%) exists at the top end of the income spectrum. The taxable incomes of the top 10% of earners with negatively geared investments is around $150,000 compared to $98,000 for non-investors.
The chart shows clearly that, typically, people with negatively geared properties have significantly higher incomes than people without property investments.
In an April 2015 analysis commissioned by GetUp! for the Australia Institute, NATSEM found that 34% of the tax benefits of negative gearing accrues to the richest top 10% of families, as this chart from the report shows.
<a href="/images/2015/11/23/image-20151119-19345-1kb57np.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/23/image-20151119-19345-1kb57np.png" alt="">
Only around 20% of the tax benefits go to the bottom half of the income distribution.
High-income families invest more money than low-income families. The tax system benefits high-income earners more than low-income earners due to higher marginal tax rates amplifying the effectiveness of deductions.
<h2>The role of capital gains</h2>
Negatively gearing property implies that the investor is making a loss on their investment. As the chart below shows, the tax savings are greatest among those in the higher tax brackets. However, it remains the case that these investors continue to make an overall loss on their investment, even after accounting for tax deductions.
<a href="/images/2015/11/23/image-20151119-19348-1fbe7uh.png" target="_blank">Click to enlarge</a>
<img src="/images/2015/11/23/image-20151119-19348-1fbe7uh.png" alt="">
 
The success of negative gearing as an investment strategy is reliant upon capital gains. In a property upswing, this strategy can be highly successful with lucrative gains on often minimal equity investment. During a property downswing or period of limited price growth, these strategies are very poor investments.
A recent analysis by the Grattan Institute shows that while police and nurses do invest in property, it is the higher-income occupations, such as doctors and mining engineers, who are much more likely to invest.
<h2>Adding to the housing stock?</h2>
Property investment only improves housing affordability when the purchase adds to the stock of newly constructed dwellings in affordable housing.
According to CoreLogic RP Data, in 2014 there were just under 500,000 property transactions and ABS building completions data suggest only around a third of those were newly built dwellings. It therefore stands to reason that most property transactions each year are probably existing stock.
<h2>Verdict</h2>
O'Dwyer’s assertion is not supported by the data. <a href="https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Tax-statistics/Taxation-statistics-2012-13/?page=40" target="_blank">ATO data</a> shows that, typically, negatively geared investors have higher incomes than people without rental investments.
The same data shows that negatively geared investors have typical incomes around 50% higher than non-investors – even after deducting their losses from negative gearing.
The top 10% of the income distribution for negatively geared investors earn around 50% more than non-investors. Incomes for this top 10% are around $150,000 per year, compared with $98,000 for non-investors, according to the ATO.
Ben Phillips is principal research fellow, National Centre for Social and Economic Modelling (NATSEM), University of Canberra. Cukkoo Joseph is research assistant, University of Canberra. Both are authors for The Conversation and can be contacted <a href="https://theconversation.com/profiles/ben-phillips-98866" target="_blank">here</a>.
Review
While I agree with everything in the above FactCheck, I would go further in criticising Kelly O'Dwyer’s statement, particularly the reference to investors adding to the housing stock.
The figure cited above for the ratio of housing purchases for new housing stock includes owner occupiers.
The impact on housing stock is tiny, but the effect on housing affordability of all those investors bidding up the prices of existing housing is likely to be substantial. 
Warwick Smith is research economist, University of Melbourne and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/warwick-smith-95344" target="_blank">here</a>. 
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Are average earners in Australia the main beneficiaries of negative gearing?

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Negative gearing is a contentious subject. Owner-occupiers often resent it, many organisations have called for it to be abolished and it doesn’t always work for all investors.
So what are the pros and cons and what do you need to know as an investor?   Firstly it depends on your investment needs and ambitions. If you’re looking for a short-term investment where the capital growth will accumulate quickly and you can get high rental returns then negative gearing probably won’t work for you.   If you’re an Australian working overseas and looking to invest back home then negative gearing probably won’t make a lot of sense either. This is because if the bulk of your income is being earned offshore and you’re being taxed in the country you’re working in, then you won’t stand to get the tax breaks that the government offers through negative gearing.   Negative gearing itself has been decried as giving an unfair advantage to investors. The Australian Council for Social Services recently suggested that it hurts owner occupiers who aren’t given similar tax breaks. However there are clear benefits to the overall market through negative gearing.   Specifically negative gearing helps the rental market and also keeps the overall property marketing ticking along – driving up prices and keeping it buoyant.   Investors need to keep rentals low so they can effectively negatively gear. This in turn creates equitable and affordable properties for people to rent. Back in 1985 the then Labor government under Bob Hawke abolished negative gearing only to bring it back in 1987.  During that two year period, rents increased drastically across Melbourne, Brisbane and Sydney. 
In Sydney rentals skyrocketed by over 50%. So there’s a clear correlation between negative gearing and affordable housing. Nor does it only help wealthy investors, as some assert. Figures show that 80 percent of those claiming negative gearing earn less than $80 000 per year.   So while there are many benefits to the property market, what do you need to consider if you’re an investor?   The pros • Your taxable income can be significantly reduced by claiming losses on your property. • You can use depreciation of the property to your advantage. So this too can be added to negative gearing claims. • Big losses on the property (such as major strata levies or hefty property maintenance) can potentially be offset once you sell the property. • Most negatively geared properties are bought in high growth, attractive and stable areas. This the best way to achieve long term capital growth. Therefore your property should be safer from sudden market changes. • You have far more scope to develop and existing property or subdivide a block through negative gearing. The cost of building, construction, legals and developing all come back through negative gearing. It means you can potentially add a lot of - value to your long term capital growth.
Cons
• The biggest downside to negative gearing is the high out of pocket expenses you can face. These can be very prohibitive and, if you suddenly have to install a new roof or pay for water damage, exorbitant. Simply you will need to have deep pockets to cover the loss in rentals and all the maintenance of the property. This requires skilful budgeting. • The higher debt you’re potentially accumulating leaves you open to any sudden interest rate rises. Also, if you’re using equity to cover negative gearing this can leave you even deeper in debt and more vulnerable to sudden spikes in the market. • Negative cash flow properties are a longer-term strategy. So you can’t rely on them as a quick cash solution. • Vulnerable to market whims and moods. No capital growth rate is ever assured. Yes, it’s true that most negatively geared properties are in resilient, high growth suburbs. But if the entire property market’s bubble bursts or some unforseen factor drives prices down (natural disaster, industry collapse or over development) then you could be stuck with a property losing money with no capital growth. • It’s harder to build a big property investment portfolio as you have to outlay so much cash. Unless your pockets are very deep, the sheer costs of negatively gearing will prevent you from having as many property investments as you may like. At least in the short term. • It prevents you from being agile – you’re tied down to a property in the long term. If you’re a small-medium investor this limits your overall investment options. Say if some fabulous investment opportunity arises, you may not be able to tap into it because you’re committed to the long term capital growth of your property and may not have free cash available.
So there are very strong arguments both for and against negative gearing. At the end of the day, you’re best to talk to a professional about what choice will work for you. Many investors come asunder through hasty or poorly informed decisions. And with so much fevered interest in the current property market that’s not a mistake anyone wants to make. 
SAM KHALIL is founder and director of <a href="https://www.dpn.com.au/" target="_blank">Direct Property Network</a>.
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The pros and cons of negative gearing: DPN's Sam Khalil

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Sydney's recent growth is polarising investors, according to property adviser Jacob Field at Ripehouse, which supplies research and analysis tools for DIY investors.
"It is either encouraging current Sydney investors who have made recent capital growth to diversify into other markets or for those investors that have not yet entered the Sydney market, and now priced out, they are looking out into other markets.
Jacob Field told Property Observer some 80% of his clients were currently targeting <a href="https://www.ripehouse.com.au/blog" target="_blank">Brisbane</a>, which according to his metrics, was in the mid-recovery phase of cycle.
"With great upside," he said.
"We are seeing strong market growth signals and investor interest in the Logan LGA, the Wynnum area and the inner Northern Quadrant of Brisbane extending out to Nundah, Chermside area.
"Due diligence and using information and research to become local area experts in unfamiliar locations can help the investor have clarity, confidence in decision making and a higher likelihood of achieving the upside in their personal strategy."
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"Moving into Q2 2015 Brisbane is exhibiting a very strong and consistent recovery story - firmly placing it mid-phase, he said. 
"The only indicator lagging slightly behind in the Brisbane market is the seasonally adjusted sales volume figure, which in isolation, would suggest Brisbane is transitioning from the trough to the recovery phase. 
"However, Brisbane is now perhaps the strongest buy recommendation in the nation and should not be overlooked for growth, all the way through the recovery and growth phases of the cycle."
The South East region of Queensland is also exhibiting indications that it is firmly in the mid recovery phase of the cycle. 
"South east is positioned in alignment with the investment story of Brisbane, however it to a small degree, further along in the recovery process (so the upside may be slightly lower)."
Earlier this year Jacob Field reported <a href="https://www.ripehouse.com.au/Q2_2015_QLD_region_by_region.pdf" target="_blank">Brisbane and the South East regions of Queensland</a> were firmly in the recovery stage.
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"We have seen some small incremental growth in these two markets to kick off 2015, expect this to escalate and start moving much faster as we progress throughout the year."
He says Ripehouse gauges market performance, as an aggregate, from only those suburbs that qualify as  “investment grade”. 
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Sydney investors turn towards Brisbane: Ripehouse

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GEUST OBSERVER
At a time when there are stark differences in the performance of various property markets around Australia, investors need to remain level headed.
Many property investors are all too easily swayed by what everyone else is doing.
Whether it be their friends, family or colleagues or what they’ve seen in the media, many investors will feel a need to do as other do, in other words, follow the pack.
While I won’t go into the reasons behind this behaviour – I’m a qualified accountant not a psychologist – to me it’s absurd to largely base your investment decisions on what others are doing. 
Right now, the property markets in each of Australia’s capital cities are recording quite contrasting performances.
Indeed, Sydney and Melbourne are experiencing substantial capital growth while prices in other cities, such as Perth and to a lesser extent Brisbane, have remained fairly subdued.
While there a number of factors that need to be taken into consideration when purchasing an investment property, one of the fastest ways to diminish your wealth is to overpay for your asset. 
Investors typically overpay during a boom market, when confidence is high and there’s no slowdown in sight.
On the other hand, significant profits can be made when investors buy during a flat market and capitalise on the ensuing upswing in prices.
This is simply counter-cyclical investing – buying when everyone else is selling and selling when everyone else is buying.
While ebbs and flows will always occur in property markets, investors need to remember two things.
<ul>
<li>Wealth creation through property investment is a long-term strategy </li>
<li>Investing at the wrong time can significantly set you back, while purchasing at the right time can give you a massive boost</li>
</ul>
Unfortunately, many property investors often get caught up in the hype and become followers, instead of leaders.
 
Damian Collins is the founder and managing director of Momentum Wealth and can be contacted <a href="https://www.momentumwealth.com.au/damian-collins/" target="_blank">here</a>.
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Don’t be a sheep, be a shepherd: Damian Collins

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GUEST OBSERVER
Property investment is a thicket of anxiety-inducing moments, according to our recent research. There is hardly a stage in the process that doesn’t make some investors break out in a nervous sweat.
<img src="/images/2015/06/16/ev.owa.jpeg" alt="">
 
 
The most worrisome aspect of investment is choosing the right property. Which shouldn’t be a surprise given the sheer choice and variety of property types investors have to choose from. Moreover, even a novice investor knows that investment performance varies between properties and that the cost of getting it wrong is high.
The next most troublesome part of campaign is around finding a property manager and good tenants.  It’s not a misplaced fear and I’m glad to see prospective investors are thinking about it. With the excitement attached to the buying process, it is vital that attention is paid to this less glamourous aspect if money isn’t to be lost on high tenant turnover and vacancy.
The bronze medal for principal fear is shared between two elements: securing lending and negotiations. I suspect the fear of securing lending relates as much to the choice and complexity of lending options as it does to receiving a yes or no from the bank manager – although with increased talk of tightening lending standards I may be wrong.
The negotiation is the main fear for 17% of investors. I’m pretty confident that number skyrockets when it comes to making an offer!
Bringing up the fear field is settlement at 4% – a low number which may indicate a degree of complacency about a necessary part of the process that can cause huge headaches if it goes wrong. By the way, no one seems to worry about managing a portfolio. Perhaps that’s seen as looking too far into the future.
I’ve no doubt that many a hopeful investor has walked away from property over the years because these multitude of fears have been too much. Of course, like many fears they can be overcome. The key is to <a name="_GoBack" href=""></a>break the problem down into manageable parts and to do the proper research and preparation for each element.
Paul Nugent is a director of Wakelin Property Advisory. At 12.30pm, Wednesday 17 June he’ll be presenting a webinar, The six steps to safe residential property investment.<a href="https://wakelin.com.au/webinar" target="_blank"> Click here</a><a href="https://wakelin.com.au/webinar" target="_blank"> to register</a>.
 
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Different anxieties holding back property investors: Paul Nugent

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GUEST OBSERVER
Sydney’s white hot property market has defied expert predictions, with median house prices edging close to $1 million as growth and competition accelerates*.  Sydney’s market imbalance – the divide between investors and owner-occupiers – is spurring a social divide between the have not’s and the have more’s.
We have a situation where owner-occupiers are being phased-out as house prices hike. Investors are saturating the market and expanding their property portfolios while first home buyers are struggling to get a foot in the door. 
Of those first time buyers that do successfully buy, many can’t afford to move into their property and are stuck living in a rental. This is concerning, in so far that lending conditions have played a role in this dilemma.
There is also growing separation within the investment community. We have one group of investors that are more mature and astute, while others appear less sophisticated, taking on too much debt and lacking a long term investment strategy. This latter group are more likely to negatively gear their property; but if the market takes a turn and interest rates increase, these investors could face loan repayment difficulties if they’ve given themselves only a small financial buffer.
In December 2014, the Australian Prudential Regulation Authority (APRA) outlined guidelines to lending institutions on steps to reinforce mortgage lending practices**. One of these included requiring investors to pay higher deposits. I welcome this guideline. It is arguably too easy for investors, especially less sophisticated investors, to be approved low rate loans. While I actively encourage property investment, the current ratio is out of kilter, and this will inevitably lead to negative ramifications should nothing change. Not only are some investors at risk of being overconfident, they are snapping up properties that are ideal for first home buyers.
Greater lending prudence is urgently needed. We need incentives that assist Sydney’s first home buyers in entering the market so that they can physically live in their new dwelling, such as fixed, low rate, new home owner mortgages. Tighter regulations for investors are also necessary. I believe investors should pay up to 20% investment deposits. These two measures would at least be a step forward in helping redress the balance.
The influx of foreign investors also doesn’t appear to show signs of slowing down. The Government should seriously consider putting a cap on the number of properties that a foreign buyer can purchase within a new development. Right now, foreign buyers are snapping up development properties in droves, and before the first slab of concrete hits the ground. Australians are also becoming increasingly adaptive to buying off-the-plan, but right now, it’s a case of slim pickings. We need to ensure that there is a residual amount of stock available for local buyers.
The time to act is now. Sydney’s housing market is robust, but when you peel back the layers, there are several issues warranting address, and the market imbalance is a pressing issue. If left untended, the consequences could be significant.
DOUGLAS DRISCOLL is CEO of real estate agency <a href="https://www.starrpartners.com.au/" target="_blank">Starr Partners</a>.
 
*Latest monthly indices by CoreLogic shows the median value of Sydney house prices is $949,800, as at 31 May, 2015. See: <a href="https://www.corelogic.com.au/research/monthly-indices" target="_blank">https://www.corelogic.com.au/research/monthly-indices.html</a>
**Please click here to read a media release on APRA’s guidelines on residential mortgage lending practices: <a href="https://www.apra.gov.au/mediareleases/pages/14_30.aspx" target="_blank">https://www.apra.gov.au/mediareleases/pages/14_30.aspx</a>
 
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Sydney’s high-price property market fuelling social divide: Douglas Driscoll

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GUEST OBSERVER
The Sydney property market is reasonably discerning. 
With the new APRA guidelines interest rates for investors are higher than for home buyers and already in most cases investors have a 20% deposit which means they have a buffer built in.
Some, particularly those with self managed super funds have hefty deposits.
It is also important to remember that only 30% of Australians actually have mortgages.
Real estate is also attractive as negative gearing creates affordability and there is tax effectiveness and income. First home buyers should not be waiting to enter the market at the right time. It is about buying when you can afford to buy.
If the market shortens rents go up and they are worse off. First home buyers should not be trying to speculate on the property market because you don’t make money in real estate in the short term. Real estate has a seven year cycle so there is no real right or wrong time to buy or sell.
It is not like playing the share market, it has a much longer cycle.
Malcolm Gunning is president of the Real Estate Institute of New South Wales and can be contacted <a href="https://www.reinsw.com.au/imis15_prod/">here</a>.
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Spring Sydney property market is reasonably discerning: REINSW's Malcolm Gunning

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GUEST OBSERVER
Three-quarters of parents expect to make a contribution towards their adult child’s first property purchase, according to a registrant survey for our upcoming webinar, How to advise adult children about property.
Helping out with the deposit is the preferred route for 6 out of 10 parents, whilst 1 in 10 is considering helping their offspring pay the mortgage.  Just 6% of parents would go as far as buying the property on their child’s behalf.
Investment properties shade homes as the preferred first property. 35% of parents are considering an investment property compared to 27% looking for a home. But many remain open-minded, with 38% unsure whether to go for a home or an investment property.
Parents appear to prefer a house as the first home whilst apartments are more favoured amongst investor-focused parents.
Respondents voiced a number of fears around helping their children out.
The most cited was a breakdown in the relationship between their child and his or her spouse and the estranged partner making a claim on the parents’ gift. Parents also worry about encouraging a child to buy a property that fails to perform and also about ensuring all their children are treated equally.
Finally, some parents are concerned that their child won’t take the financial commitment seriously.
Paul Nugent is a director of Wakelin Property Advisory. He is co-presenting a webinar How to advise adult children about property 12.30pm, Thursday 29th October. <a href="https://wakelin.com.au/fpb_webinar" target="_blank">Click here to register.</a>
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House or apartment investment quandary facing parents: Wakelin's Paul Nugent

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GUEST OBSERVER
The Australian economy has just completed 25 consecutive years of economic growth. The last recession ended in June 1991.  
Solid growth: The economy grew by 0.5 percent in the June quarter with annual growth lifting from 3.0 percent to 3.3 percent.  
Contribution to growth: The biggest contributions to growth came from public investment (+0.7 percentage points) (pp), government consumption and inventories (both +0.3pp), household spending (+0.2pp), dwelling investment and private equipment investment (both +0.1pp). The biggest drag on growth was from non-residential building (-0.8 percentage points) and net exports (-0.2pp).  
Income: Real gross national income rose by 0.6 percent in the June quarter to be up 2.5 percent on the year. In nominal terms GDP lifted 1.3 percent in the quarter and rose by 3.4 percent over the year.  
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Productivity: Gross value added per hours worked in the market sector rose by 1.5 percent in the June quarter and by 2.9 percent over the year.  
Industry sectors: Fourteen of the 19 industry sectors expanded in the June quarter. The strongest sector was Professional, scientific and technical services, up 3.2 percent and adding 0.2 percentage points (pp) to growth. Eight other sectors added 0.1pp to overall growth. The Mining sector fell by 3.5 percent in the quarter and cutting 0.3pp from overall growth.  
What does it all mean?  
 There are no signs that Australia’s record economic expansion is coming to an end. Far from it – annual growth has lifted to 4-year highs. Australia has now notched up 100 quarters without a recession. Netherlands holds the record for the longest expansion at 103 quarters. Over the next year Australia should pick up the gold medal for the longest economic expansion of a developed economy in the modern era.  
It’s worth reflecting on Australia’s economic position. Economic growth is the fastest in four years and above long- term averages. Inflation stands at 1.0 percent. Interest rates stand at 1.5 percent. Unemployment stands at 5.7 percent. The mining construction boom may be over, but it has been replaced by a housing construction boom. There is much to like and celebrate about Australia’s economy.  
Could we be doing even better? There is always room for improvement. For instance, we could have even lower unemployment but still keeping inflationary pressures contained. The challenge for the authorities is to keep the expansion intact.  
The Reserve Bank could still cut rates – that is, if inflation remains low, rates could be cut to allow the economy to grow even faster. We continue to pencil in a rate cut in November. The question though is whether rates are already low enough to boost growth.  What do the figures show?  National Accounts:
Economic Growth: The Australian economy grew by 0.5 percent in the June quarter after a downwardly-revised 1.0 percent increase in the March quarter (previously up 1.1 percent). Forecasts had centred on 0.5 percent growth in the economy in the quarter. The economy still hasn’t experienced a recession for 25 years.  
The economy has grown 3.3 percent over the past year, above the decade-average growth rate of 2.8 percent and above the 15-year average of 3.0 percent. Annualised growth over the past six months has been 3.2 percent.  
The non-farm economy grew by 0.6 percent in the June quarter after a rising by 1.0 percent in the March quarter. Annual growth stands at 3.4 percent.  
Farm GDP fell by 4.3 percent in the June quarter after expanding by 3.4 percent in the March quarter. Farm GDP fell 3.3 percent over the year.  
At current prices, GDP rose by 1.3 percent in the June quarter to be up 3.4 percent on the year. The annual growth rate is still well below the decade average of 6.2 percent. Over the year to June 2016, the Australian economy was valued at $1,650 billion.  
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Growth drivers: The biggest contributions to growth came from public investment (+0.7 percentage points), government consumption and inventories (both +0.3pp), household spending (+0.2pp) and dwelling investment and private equipment investment (both +0.1pp). The biggest drag on growth was from non-residential building (- 0.8 percentage points) and net exports (-0.2pp).  
Inflation: In terms of domestic price pressures, the household consumption implicit price deflator rose by 0.4 percent in the June quarter after a 0.1 percent fall in the March quarter. Annual growth stands at just 0.9 percent – the lowest rate in 17 years. Real non-farm unit labour costs fell by 0.8 percent in the June quarter after a flat result in the March quarter. Real non-farm unit labour costs fell by 0.6 percent over the year.  
Productivity: Gross value added per hour worked market sector rose by 1.5 percent in the quarter and by 2.9 percent on the year. GDP per hour worked rose by 1.2 percent in the quarter and by 2.7 percent over the year. And hours worked in the market sector fell by 1.1 percent in the quarter to be up 0.1 percent on the year.  
States &amp; Territories: The only data available is state final demand (more accurate data would include net exports but it is not available for all states and territories). The ACT had the fastest annual growth rate in the June quarter (up 6.0 percent), followed by NSW (up 3.8 percent), Victoria (up 3.5 percent), Tasmania (up 1.9 percent), South Australia (up 1.7 percent) and Queensland (up 0.4 percent). The Northern Territory contracted by 10.4 percent,   followed by Western Australia (down 7.3 percent).
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Only five State and Territory economies had data on exports and imports. If you add in the trade figures, the ACT economy was up 6.3 percent over the year with NSW up 5.2 percent, Victoria up 4.5 percent, South Australia up 3.0 percent and Queensland up 1.3 percent.  
Consumer spending lifts. Household spending rose by 0.4 percent in the June quarter to be up 2.9 percent for the year. Only six of the 17 sectors recorded weaker spending in the quarter. Spending fell most in in Cigarettes &amp; tobacco (down 2.3 percent) and Electricity, gas and other fuel (down 2.2 percent). Spending rose most in Purchase of vehicles (up by 2.8 percent) and Health (up 2.1 percent).  
Industry sectors: Fourteen of the 19 industry sectors expanded in the June quarter. The strongest sector was Professional, scientific and technical services, up 3.2 percent and adding 0.2 percentage points (pp) to growth. Eight other sectors added 0.1pp to growth. The Mining sector fell by 3.5 percent in the quarter cutting 0.3pp from overall growth.  
Other points:
Profit share rises. In seasonally adjusted terms, the ratio of profits to total factor income rose from 24.5 percent to 24.9 percent in the June quarter. The wages share was steady at 54.1 percent.  
Household savings ratio steady. The household saving ratio was steady at 8.0 percent in seasonally adjusted terms in the June quarter. In trend terms household saving was steady at 7.9 percent in the June  quarter.  
Imports rose as a share of spending. The imports to sales ratio rose from 0.373 in the March quarter to  0.377 in the June quarter.  
The inventory to sales ratio was steady at 0.622 in the June quarter.  What is the importance of the economic data?  
The quarterly National Income, Expenditure and Product release (national accounts) from the Bureau of Statistics is the most complete assessment of Australia’s economic performance. Detailed estimates are provided on incomes (wages, profits), spending (such as household, dwelling investment and trade (exports and imports) and production (comparing industry performance). Other data includes household saving and the economic performance of States and Territories.  
The main use of the national accounts figures is as a historical record of economic performance. The information has little forward-looking value for currency, interest rate or share markets.  What are the implications for interest rates and investors?  
The national accounts data is backward looking. But the data is taken into account by the Reserve Bank, serving as a base for forecasts. The Reserve Bank uses six-month annualised growth figures to ascertain how the economy is travelling. And in that context growth annualises at around 3.2 per cent. The Reserve Bank had assumed growth of 3.25 percent in the June quarter.  
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Labour costs are falling, meaning that there probably hasn’t been a better time to be taking on staff. Inflation remains low but real wage gains are still occurring – wages are growing faster than prices. So there is also good news for consumers.  
Productivity calculations are more problematic. Hours worked in the market sector fell. But gross value added per hour worked market sector rose 1.5 per cent in the June quarter to be up a healthy 2.9 per cent over the year. Ideally you would like to see more employment and hours worked as well as higher output. As always, there is   scope for improvement.
GDP per capita continues to edge higher in real terms, indicating that our standard of living continues to rise. Perhaps growth is slower than in the past, but it is still rising.  
Should the Reserve Bank cut rates again?
There is nothing in the data to prevent the Reserve Bank cutting rates again. The debate to be had though is whether rate cuts at historically-low levels are actually still stimulative. The only real sign of inflation is the “ownership transfer costs” or costs associated with buying or selling a home – up 9.5 per cent over the year.  
Craig James is the chief economist at <a href="https://www.comsec.com.au/default.aspx" target="_blank">CommSec</a>.
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