Recession

<p>The extended lockdown across greater Sydney could be the catalyst for another Australian recession, according to experts surveyed in this month&rsquo;s Finder RBA Cash Rate Survey.&nbsp;</p>

<p>All 40 experts and economists that weigh&nbsp;in on future cash rate moves and other issues relating to the state of the economy, expect&nbsp;a rate hold for this month.</p>

<p>With greater Sydney set to be in lockdown until at least the end of August, the majority of experts who weighed in* (63%, 19/30) believe that the lockdowns could see Australia enter another recession.&nbsp;</p>

<p>Nearly 2 in 5 (38%, 8/21) of economists think that it could take as little as another two months in lockdown for the recession to hit.&nbsp;</p>

<p>Graham Cooke, head of consumer research at Finder, said all eyes will be on the length of Sydney&rsquo;s lockdown.</p>

<p>Close to half of respondents who responded (43%, 12) think that Australia&rsquo;s response to the pandemic has hurt its international reputation.&nbsp;</p>

<p>[smartcode_project:default project_id=7363 project_image_fid=41840]</p>

<p><strong>Uncertainty returns for employment and wage growth&nbsp;</strong></p>

<p>While positivity towards both wage growth and employment surged in July, August saw both of these economic indicators dip significantly.&nbsp;</p>

<p>Cooke said it was no surprise that the latest Covid developments had driven sentiment into the ground.&nbsp;</p>

<p>&ldquo;Last month, we saw positivity towards wage growth spike to its highest point since our survey began. While this has seen a sharp decrease, it&rsquo;s employment that&rsquo;s seen the biggest dip, dropping from 71% in July to 29% in August.&quot;</p>

<p>&ldquo;Positive economic sentiment overall has dropped to 14% in August, down from 28% last month,&rdquo; Cooke added.&nbsp;</p>


All 40 experts and economists surveyed expect a rate hold for this month.

jordan_55689

Experts warn extended Sydney lockdown could lead to another recession: Finder

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<p><img src="https://counter.theconversation.edu.au/content/57114/count.gif" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>I have been analysing and forecasting economies since I worked in our Treasury in the late 1960s.</p>
<p>Over that time, I have fortunately been able to predict most of the key economic developments and events in the global and in our domestic economy – stagflation, recessions, stock and property market crashes, the Asian crisis, the tech-wreck, the global financial crisis (GFC), and so on. Yet it is much harder today to assess where to next than at anytime over that period.</p>
<p>Many of the economic relationships, that many have come to take for granted, seem to have broken down. To cite just one example, the view that if the world was flooded with liquidity, we’d not only stimulate significant real activity, but soon experience runaway inflation. Yet since the GFC, with massive “quantitative easing” (keeping interest rates low, mostly near zero, or even negative) in the US, Europe, Japan and recently China, there is still a significant risk of deflation, and the real economy, especially business investment, hasn’t really responded.</p>
<p>Europe is struggling to avoid a triple-dip recession with deflation, a risk now seriously enhanced with the Brexit vote. The US recovery seems to be faltering with the Federal Reserve threatening to raise interest rates, which could not only slow US growth, but precipitate further turmoil in emerging economies, in their stockmarkets and in their currencies.</p>
<p>Japan is still stuck in decades of rolling recessions and deflation. China’s growth is closer to 4-5 percent, much lower than the authorities would have us believe. It also has a host of structural issues – economic transition, demographic forces, aggregate debt, bad bank and non-bank loans, inequality, corruption and pollution – coming to the fore. And most emerging economies are in deep recession.</p>
<p>All these economic policy challenges are being overlaid, and further complicated, by mounting political and market volatility. This includes serious structural demographic trends like ageing and mass migration, a host of increasing geopolitical tensions, and the significant challenge of climate change to achieve net zero emissions by 2050.</p>
<p>All up, world growth forecasts by most global and regional forecasters are being downgraded consistently. It is clear that the world will have to live with lower growth for many years to come. Most commodity prices are predicted to remain subdued, and world trade will remain particularly weak, having collapsed by some 14% last year.</p>
<p>Moreover, global policy authorities have almost exhausted their traditional monetary and fiscal policy capacity and flexibility, and now must face enormous political and institutional constraints that are working against genuine structural reform. It also seems that polls and betting odds are no longer a reliable guide to the “feelings of the masses”.</p>
<p>Some of the political forces at work are also of particular concern. For example, the recent Brexit vote revealed just how easily sound economic arguments can be overtaken by fear and emotion, driven mostly by misrepresentation and exaggeration, ignorance, and prejudice.</p>
<p>The outcomes could include a disunited kingdom, a fragmentation of Europe (still the world’s second largest economy) putting the Euro under real strain, and a UK, if not global, recession. We have seen a significant, and most disturbing, increase in anti-immigration sentiment across Europe, manifesting in significant political movements.</p>
<p>Equally, the US political system has been turned on its head by the emergence of Donald Trump, running his anti-immigration, anti-China, anti-freer trade, anti-globalisation agendas.</p>
<p>These and many other political forces could easily serve to stall, if not work to reverse, the significant economic progress made globally since the second world war, by integrating the world economy with the freer flow of goods, capital and people.</p>
<p>In my experience, the world has not faced a more challenging time, with such limited policy alternatives and capacities, and with little or no historical experience on which to draw.</p>
<p>Australia has just endured one its longest and most boring election campaigns, with little more than a passing reference to some of these challenges, but certainly no genuine recognition of their significance to the policy challenges our governments now face domestically.</p>
<p>These global conditions and challenges are of such significance that it could so easily swamp anything that was said or promised by any of the parties in this campaign.</p>
<p>The need for inspired leadership in our country has rarely been greater. We saw no evidence of it in this campaign. The outcome will be more uncertainty, less stability, and even poorer government, at this most challenging time.</p>
<p><span class="fn author-name">John Hewson is p</span>rofessor and chair, Tax and Transfer Policy Institute, Crawford School, Australian National University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/john-hewson-16192" target="_blank">here</a>.</p>
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jchancellor-FAypfDUnLy

The world has not faced a more challenging economic time: John Hewson

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<p><span>Aussie John Symond has warned of a potential recession if Labor's plan to limit negative gearing to freshly constructed dwellings goes ahead, calling it "frightening" in an appearance on Seven's Sunrise program on Sunday. </span></p>
<p><span>"Who knows? I don't know whether prices will drop 10 percent, 20 percent or more," he said.</span></p>
<p><span>The property tycoon and founder of Aussie Home Loans predicted a slide in home prices under Labor.</span></p>
<p><span>"It is frightening and it will frighten others . . . and it creates this stampede. And that's my concern that there could be a glut of properties come on the market, force the prices down, and then all of a sudden it could be Armageddon with the housing industry that's propped up the Australian economy the last four years."</span></p>
<p><span>Symond joins another industry leader, Stockland boss who expressed a similiar recession fear last week. </span></p>
<p><span>Mark Steinert, chief executive of Australia's largest residential property developer, Stockland, believes Labor's housing policy has "the potential to destabilise the entire economy" – to the extent of "risking a recession".</span></p>
<p><span>"At the end of the day, house prices are unlikely to adjust so much that it would really change that affordability equation anyway," Steinert told the Australian Financial Review.</span></p>
<p><span>"And if they do, believe me it won't be a recession. It will be a depression."</span></p>
<p><span>Steinert told columnist Jennifer Hewitt property is such a major force driving Australian growth and activity, that even a small change in the market and in sentiment flows through the entire economy. </span></p>
<p><span>"Housing represents $6.5 trillion of the Australian people's wealth," he told The Australian Financial Review. </span></p>
<p><span>"It is so big and so many people are involved that even when that order of magnitude of change is obviously small compared to the stock market…its affects people.</span></p>
<p><span>"It becomes the new dinner party conversation.</span></p>
<p><span>"People feel poorer. </span></p>
<p><span>"They buy less in the shops and people employ less and people are less willing to borrow money to start a business and suddenly that goes on.</span></p>
<p><span>"That is how markets work.</span></p>
<p><span>"The only way you deal with affordability in my view is first and foremost about supply…in a structural way.</span></p>
<p><span>"You cannot deal with affordability in a manageable way by de-stabilising the largest asset in the country."</span></p>
<p><span>Symond's fears were dismissed by Labor's shadow parliamentary treasury secretary and western Sydney MP, Ed Husic, who called them "outrageous", according to a report in the Sydney Morning Herald.</span></p>
<p><span>"It's a shame that Malcolm Turnbull and John Symond have teamed up to look after their interests, having done very well for themselves, when there are so many people in my part of Sydney for example, who are trying to buy a first home but cannot," he said.</span></p>
<p><span>Turnbull called Symond an authority on the property market at a recent forum in Sydney, the report in the Sydney Morning Herald said.</span></p>
<p><span>"As you've heard today from the Real Estate Institute, from John Symond - from Aussie John - that is going to have the impact of putting up rents and reducing the amount of rental property," he said.</span></p>
<p><span>A campaign against Labor's change by many of the country's most prominent real estate firms and Coalition supporters uses a website to warn of "disastrous consequences" if negative gearing is crimped.</span></p>
<p><span>"Our industry participants pride themselves on being apolitical, but this time, the issue is far too important not to speak out," it states.</span></p>
<p><span>Labor has announced it will limit negative gearing to new housing from 1 July 2017 as part of it tax overhaul.</span></p>
<p><span>Labor says negative gearing and the capital gains discount have not achieved their aim to boost housing supply and instead will cost the budget over $10 billion this year, more than what the government spends on higher education or child care. It also claims it mostly benefits the top income earners.</span></p>
<p><span> </span></p>
<p><span>{mijopolls 142}<br></span></p>
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John Symond says Labor's negative gearing 'frightening', fears recession

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<p><span>Mike Tyson is quoted as saying, "everyone has a game-plan until you get punched in the face”.</span></p>
<p><span>So, how do we take this true to life and memorable analogy and personalize it to our business? I spilled my coffee due to convulsive laughter, when I first heard this.</span></p>
<p><span>Like many sides of our personal makeup we, as human beings, personalize or internalize and emotionally invest in what we create and believe in.</span></p>
<p><span>In this particular post, I will look at how we can recession proof “protect” our brand as we move into 2016 - a year with many unknowns when it comes to the survival of real estate agents and their offices, independent or mainstream.</span></p>
<p><span>I'm talking about building a defensive wall that won’t allow adversaries an inch of space but don’t forget, your inner voice can also work against you.</span></p>
<p><span> Yes, you too can punch yourself in the nose and sabotage your business.</span></p>
<p><span>I’m no expert, to say the least; so I called on the experience and expertise of my good friend and brand mentor, Anthony Carroll, from Yellowsneakers to help explore the idea of recession proofing my brand.</span></p>
<p><span>Anthony best explains the relevance and relationship between recession proofing our business and branding with a simple question:</span></p>
<ul>
<li><span>How relevant is your brand when it comes to your purpose and your customers needs? All the elements of your brand should radiate out from your “purpose”.</span></li>
</ul>
<p><span>Unravelling purpose is not just about having an idea, it is about solving a problem and engaging an audience.</span></p>
<p><span>A purpose is a solution to a problem that your target audience can't solve on their own. Your solution should therefore fit the problem but also be delivered in a way that is unique and different to what your competitors offer.</span></p>
<p><span>Staying true to your purpose is KEY to surviving and recession proofing your business.</span></p>
<p><span>The basic principles, on how we build a strong defensive wall, is sometimes forgotten. Most brands with no essence or belief, in other words purpose, will fail. Fail to be noticed and fail to engage the audience it needs to survive.</span></p>
<p><span> A strong brand on the other hand, can weather many storms:</span></p>
<ul>
<li><span>Product failure</span></li>
<li><span>PR fallouts</span></li>
<li><span>Corporate scandal</span></li>
<li><span>Dips in market share</span></li>
</ul>
<p><span>Therefore, the strength of your brand can be gaged by your commitment to its purpose. The purpose that underlines your daily and constant decision making and reason to stay motivated and focused.</span></p>
<p><span>A good example of a brand weathering a PR fallout is the LiveStrong brand started by Lance Armstrong.</span></p>
<p><span>Because of its strong underlying purpose: Lifestyle choices, healthier eating and so on, the brand continues flourish despite the Tour-de-France doping scandal that Lance Armstrong was at the centre of.</span></p>
<p><span>Lance had to step down from the organization he founded and distance himself completely. However, as a result the brand remains relevant in the eyes of its audience.</span></p>
<p><span>People will forgive human frailty and it’s been shown that the more human or personable the brand is, the more supportive people become of the brand.</span></p>
<p><span>More recently, we can look at the VW emissions scandal. Sales for VW and Audi have actually increased. While it might be too early for sales to be affect, yet it will be interesting to see how VW survives this scandal.</span></p>
<p><span>So what happens when we have a kick-ass brand? More people engage with the brand as soon as they understand its core purpose.</span></p>
<p><span>Reflecting on the industry I’m presently engaged in and as I re-read this post, I find myself asking the following questions:</span></p>
<ol>
<li><span>Will the main real estate brands remain true to the nature, the purpose of their founders? or Will they continue to lose the respect of both employees and clients?</span></li>
<li><span>Will the New Year 2016, usher in new real estate brands created by disillusioned employees of some of the more established brands?</span></li>
</ol>
<p><span>No matter what industry you are in and particularly if you are about to launch with a new brand; I do hope these thoughts have been of help.</span></p>
<p><span>I leave you with this thought: never underestimate small beginnings, remain true to your purpose and your brand will make the impact you aimed for.</span></p>
<p><span> </span></p>
<p><em><span>EDWIN ALMEIDA</span> is licensee in charge of <a href="https://www.just-think.com.au/" target="_blank">Just Think Real Estate</a>.<a href="https://www.just-thin.com.au/"><br></a></em></p>
<p><em>He is also the creator of <a href="https://www.youtube.com/user/JustThinkProperty" target="_blank">Oz Real Estate.TV</a> and a presenter for <a href="https://propertyinvestingvault.com/" target="_blank">propertyinvestingvault.com</a>.</em></p>
<p><span> </span></p>
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ealmedia-arK4DBYLjS

Recession proof your real estate business: Edwin Almeida

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<p class="Body">The latest doomsday forecasts for Australian real estate call to mind the shameful history of overseas spruikers and local economists in getting it spectacularly wrong on house prices.</p>
<p class="Body">There’s nothing new in individuals with ulterior motives (usually seeking publicity for a seminar tour, new business venture or a book launch) getting acres of free mileage by predicting our markets will collapse. The <em>60 Minutes</em> debacle is merely the latest.</p>
<p class="Body">I note that the nation’s worst forecaster of property trends, academic Steve Keen, has publicly admitted recently that he got it “hopelessly wrong” with his price forecasts. It’s about time - Keen famously predicted in 2008 that Australian house prices would fall 40% in 2009. Prices rose that year and in the years since Keen has rehashed his predictions in various guises with different time frames but with the same result – he’s been wrong every time. Now he has written a column for <em>Business Spectator</em> which says: “I was hopelessly wrong on house prices. Ask me how.”</p>
<p class="Body">But Keen has lots of company at the bottom when it comes to faulty forecasting, sometimes perhaps for dodgy reasons.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">One of the worst examples was US doomsday specialist Harry S Dent who came to Australian in 2011 for a seminar tour and sought (and received) publicity by predicting our home values would fall 40% in 2012. He advised Sydney owners to “sell their excess real estate”. We all know how well that forecast worked out.</p>
<p class="Body">But Dent was back in Australia two years later for another lucrative seminar tour and again went to the media for some free mileage. He said house prices would crash “some time in 2014”, with values falling at least 27% in Sydney and Melbourne. The market made a fool of him again.</p>
<p class="Body">Given the state of Australia media, I have no doubt that if Dent shows up again next year, he will make the same style of prediction and will be handed another round of massive national publicity.</p>
<p class="Body">Many others have come to our shores and used the Armageddon formula of generating publicity for their venture.</p>
<p class="Body">Little-known US spruiker Jorgan Wirsz suddenly became well-known in 2012 by forecasting a “bloodbath” in Australian real estate, with home values tipped to fall 60% in 2013. He also said land values would drop 90%.</p>
<p class="Body">Think for a moment what that means. He was suggesting that residential land in Australia would be almost worthless. Nothing remotely like has ever occurred in the history of the world, not even in the worst basket-case economy post-GFC. But Australian media chose to give these ridiculous claims credibility. And of course they were subsequently shown to be nonsense.</p>
<p class="Body">There have been many others, including another US spruiker called Jeremy Grantham who claimed in 2010 that the “Australian housing bubble” would burst that year.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">There also have been plenty of local commentators, mostly economists who don’t understand the dynamics of Australian real estate, who have forecast significant declines.</p>
<p class="Body">Morgan Stanley’s Gerard Minack said in August 2010 that property was 40% over-valued and the bubble was about to burst.</p>
<p class="Body">AMP’s Shane Oliver, who regularly calls it wrong on real estate prices, claimed in 2005 that homes were grossly over-valued and there would be no growth anywhere in Australia for the next decade. Those 10 years have come and gone, and I have to ask: How did that one work out for you, Shane?</p>
<p class="Body">Oliver was in the media again in June 2012 claiming that house prices were “over-valued’ and “chronically weak” and were heading for “a sharp fall”. Ooops, again.</p>
<p class="Body">Commonwealth Bank chief Ralph Norris said in November 2011 that the sovereign debt crisis in Europe had put Australian house prices at risk.</p>
<p class="Body">Prosper Australia claimed in August 2011 that Melbourne was about to experience “a US-style property crash with price falls of 30%”. (Those who suggest Australia must decline because it happened in the US appear to be unaware that US markets dropped for clear reasons, and those circumstances don’t exist in Australia.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Michael Power of Investec declared in September 2012 that Australian house prices would fall by up to 20% by the end of 2014.</p>
<p class="Body">The <em>Herald Sun</em> ran the headline “Prices could fall as higher interest rates bite” based on comments by CommSec’s Craig James. (This notion that rising interest rates means a market crash is quite prevalent, but there is historical evidence to support the idea.)</p>
<p class="Body">Citibank economist Josh Williamson said in June 2013 that house prices would peak in March 2014 and fall thereafter. Propell National Valuers put out a media release in June 2014 declaring the end of the Sydney boom and, around the same time, Morgan Stanley analyst Malcolm Wood also called the end for Sydney, saying:” If you’re an investor, you’ve missed the boat.”<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Fringe dweller Leigh van Onselen, who has a lifetime of raging against real estate, stated in February 2012 that the “slow melt” in Australian house prices would continue.<span style="line-height: 1.3em;"> </span></p>
<p class="Body">Another guerilla-style opponent of all things real estate, Kris Sayce, shouted in March 2011 that “the value of your home could fall 61% the minute interest rates start rising”.</p>
<p class="Body">The list goes on. And there’s a clear pattern. Since the start of the 21<sup>st</sup> Century, claims of markets collapsing, bubbles bursting and prices disintegrating have been an almost weekly occurrence. Journalists never seem to tire of doomsday stories.</p>
<p class="Body">They’ve all been wrong. And they’ve been wrong for clear reasons. Australia is not in recession, it does not have high unemployment, we don’t have a vast oversupply of dwellings nationwide and our banks don’t lend recklessly. We would need all of those circumstances to fall into alignment, as they did in the US around the time of the GFC, before our property markets would be in danger.</p>
<p class="Body"><em>Property Observer</em> would welcome a response from any of those named to give the context on their call.</p>
<p class="Body"><em>Terry Ryder is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a></em></p>
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terryryder-YECXbqmri2

Company at the bottom for faulty market forecasters: Terry Ryder

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<p><span>As the Sydney real estate markets start drawing the curtains on what has been a highly entertaining 2015 year it’s interesting to note some are framing 2016 as the recession year. </span></p>
<p><span>However before we start nailing that coffin we need to look at what possibly may cause a recession and then look for what may avert a recession. Naturally there are many that opt for the let’s wait and see option although I’m of the opinion that we won’t see a technical recession.</span></p>
<p><span>Yes in some areas property prices are falling and in many other areas property prices are still performing well. Just last week we set (nearly doubled) the all-time record price for a <a href="/expert-insights/buying/48771-cammeray-harbourfront-record-price-doubles" target="_blank"><span>Cammeray waterfront</span></a>.  This week a developer released Chatswood Place, a $300 million boutique style development, and in just three hours set a new suburb record as well as securing $160 million in off the plan sales. This is the very same investment market which many were believing was well and truly finished.</span></p>
<p><span>Last week the Australian Bureau of Statistics (ABS) revealed that business investment spending in the September quarter had fallen 9.2 %. This quarterly result was the worst in the 28 year history of the survey of business investment. The ABS also released the GDP growth which identified growth of 0.9 % thanks to the highest exports in 15 years, an increase in consumer spending and of course the much publicised housing boom more particularly in apartment construction.</span></p>
<p><span>We also need to note that Treasury has cut the nation’s potential economic growth rate to 2.75 % down from 3.25 %. This follows three consecutive years of below – trend economic growth where the elephant in the room is the decline in mining.</span></p>
<p><span>Now for that beaming light at the end of this tunnel of misery – enter the very cashed – up NSW government. Unlike the vast majority of state and territory governments NSW has an overflow of coin and it’s all going into the biggest infrastructure spend in the state’s history. Over the next four years the NSW government has allocated a staggering $70 billion infrastructure spend which is unprecedented. This in itself will singularly underpin the Sydney housing market given nothing stimulates the markets and consumer confidence like a massive infrastructure spend.</span></p>
<p><span>The breakdown is $38 billion to be spent on new transport projects which will also include the second harbour tunnel, North West rail link, South East Light rail, Sydney CBD and WestConnex. The Transgrid lease which brought in a record $10,258 billion is still to be allocated although it has been confirmed that these monies will also be directed into new infrastructure projects.</span></p>
<p><span>Following the federal government crackdown on illegal foreign real estate acquisitions in Australia the Significant and Premium Investor Visas have been running at full – speed. It will be very interesting to see the next set of figures and whether there has been a significant spike in applications since the crackdown. The low Australian dollar is also enticing many offshore purchasers and expats and this is now a very strong emerging market within the Sydney real estate markets.</span></p>
<p><span>So when one takes the time to actually look at what is going on I find myself (as do many others) not too worried about this so called recession. The last recession was 25 years ago and they aren’t very nice but when you have a state government pouring $70 billion into the NSW economy it would appear that NSW has more Zoom than Gloom. </span></p>
<p><span>To further highlight this the NSW government just appointed Lucy Turnbull (the PM’s wife) as chair of the NSW government’s newly created Greater Sydney Commission. The sole purpose of the Greater Sydney Commission is to stop the infighting at local councils and to speed up developments across the city although I still see councils incompetency as an on – going hurdle.  I’m reliably informed that the premier will hand his greater Sydney Commission special powers and the councils will not like what’s in-store.</span></p>
<p><span>Of course not everybody will be convinced but then again, that all adds to the theatre of debate. When the 2016 property markets kick off I’m of the view that the areas within a 15 kilometre radius of the CBD will do very well. But expect more than a few to tell a different tale.</span></p>
<p><span><strong>MOSMAN – 2088</strong></span></p>
<p><span>• Number of houses on the market this time last year – 103</span></p>
<p><span>• Number of houses on the market last week – 65</span></p>
<p><span>• Number of houses on the market this week – 55</span></p>
<p><span>• Number of apartments on the market this time last year – 66</span></p>
<p><span>• Number of apartments on the market last week – 60</span></p>
<p><span>• Number of apartments on the market this week – 51</span></p>
<p><span><strong>CREMORNE – 2090</strong></span></p>
<p><span>• Number of houses on the market this time last year – 13</span></p>
<p><span>• Number of houses on the market last week – 15</span></p>
<p><span>• Number of houses on the market this week – 11</span></p>
<p><span>• Number of apartments on the market this time last year – 25</span></p>
<p><span>• Number of apartments on the market last week – 18</span></p>
<p><span>• Number of apartments on the market this week – 17</span></p>
<p><span><strong>NEUTRAL BAY – 2089</strong></span></p>
<p><span>• Number of houses on the market this time last year – 10</span></p>
<p><span>• Number of houses on the market last week – 8</span></p>
<p><span>• Number of houses on the market this week – 8</span></p>
<p><span>• Number of apartments on the market this time last year– 42</span></p>
<p><span>• Number of apartments on the market last week – 33</span></p>
<p><span>*Number of apartments on the market this week – 30</span></p>
<p> </p>
<p><em><span>ROBERT SIMEON</span> is a director of </em><em><a href="https://www.rwm.com.au/" target="_blank" title="RWM" rel="nofollow">Richardson Wrench Mosman and Neutral Bay</a> </em><em>and has been selling residential real estate in Sydney since 1985. <br>He has also been writing real estate blog </em><em><a href="https://www.rwm.com.au/news/" target="_blank" title="Virtual Realty News" rel="nofollow">Virtual Realty News</a> </em><em>since 2000. </em></p>
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robertsimeon-hRNTwJyXkQ

Some framing 2016 as the recession year: Robert Simeon

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<p>EXPERT OBSERVER</p>
<div id="post-body-2344560504014387325" class="post-body entry-content">
<div>Just to add to all the other woeful data released today, the preliminary index of commodity prices was down by -3.5 per cent in November, following on from a substantially (downwardly) revised -6.6 per cent decline in October. </div>
<br><div class="separator"><a href="https://1.bp.blogspot.com/-ZpHxPyxhBS8/XeUWD1ePD_I/AAAAAAAAzJ8/cUV_89zPAP8WrA0ZWMBaCF4kiouWAPzKQCNcBGAsYHQ/s1600/Commodity.gif"><img src="https://1.bp.blogspot.com/-ZpHxPyxhBS8/XeUWD1ePD_I/AAAAAAAAzJ8/cUV_89zPAP8WrA0ZWMBaCF4kiouWAPzKQCNcBGAsYHQ/s640/Commodity.gif" width="640" height="498" data-original-height="465" data-original-width="597"></a></div>
<div> </div>
<div>Productivity figures released today were the worst in at least 25 years, and you can follow much of the other underwhelming news <a href="https://jamesfostermacro.blogspot.com/" target="_blank">here</a>. </div>
<div> </div>
<div>The Reserve Bank of Australia meets on Tuesday and the Board will need to work its way through a barrage of dire figures, including the ongoing nosedive in dwelling construction.</div>
<div> </div>
<div class="separator"><a href="https://1.bp.blogspot.com/-mxFbqv6uopM/XeUV7w27ZDI/AAAAAAAAzJ4/-6H8KzN91H8V7WueVcKddgFbefJyG2nQACNcBGAsYHQ/s1600/RW.jpg"><img src="https://1.bp.blogspot.com/-mxFbqv6uopM/XeUV7w27ZDI/AAAAAAAAzJ4/-6H8KzN91H8V7WueVcKddgFbefJyG2nQACNcBGAsYHQ/s640/RW.jpg" width="572" height="640" data-original-height="924" data-original-width="828"></a></div>
<br><div>Futures markets are unsurprisingly pricing further easing, with the economy, inflation, and wages growth all so mired in the doldrums.</div>
<div> </div>
<div>The question the Board will need to consider is: what exactly would waiting until February achieve?</div>
<div> </div>
<div>
<em><span>PETE WARGENT</span> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em><span> </span>
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pwargent-M4siyDbqQY

Is a recession brewing? Pete Wargent

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<p>EXPERT OBSERVER</p>
<p>More carnage overnight with US stocks down another -10 per cent again in early trade to smash into the circuit breakers, with the Dow Jones shedding -36 per cent in less than a month, before a late rally.</p>
<div id="post-body-2582528096951691734" class="post-body entry-content">
<p>The oil price (WTI) was down at nearly $20 at one stage, before a bouncing to $22, nestling in at the lowest level since the early 2000s...so there are some value plays emerging there.</p>
<p>But overall, cash is king at the moment while stock market valuations continue to mean revert.</p>
<p>This risks sounding like a broken record, but it bears repeating that overall US stocks are still far too expensive given the outlook, and could yet fall another -30 per cent even from here (if things got really bad they could go much lower).</p>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-lq18M1eZhts/XnKhiiXFqbI/AAAAAAAA0vY/zUHAiE2ggegAqwyOYEAT9qR84VyY8a3tQCNcBGAsYHQ/s640/CAPE.jpg" width="640" height="308" data-original-height="526" data-original-width="1090"></div>
<span id="goog_1039971940"></span><br><div><em>Source: Shiller PE</em></div>
<br>Don't forget that previously healthy earnings are about to be decimated, with JPM forecasting US GDP to shrink by 4 per cent in Q1 and 14 per cent in Q2.<br><br>I can't watch another fund manager video demanding that you stay fully invested with them.<br><br>It's time to step away from the noise and remember the <a href="https://lowrateshighreturns.com/2020/03/16/applying-the-8-timeless-principles-in-a-bear-market/" target="_blank">8 timeless principles</a>!<br><br>The <a href="https://lowrateshighreturns.com/2020/01/04/maximising-your-long-term-wealth-with-the-kelly-criterion/" target="_blank">Kelly criterion</a> demands that you keep cash aside and live to fight another day - especially when markets are as overvalued as they have been - as better opportunities will always come around in the future.<br><br>Remember Rule #1: don't lose money.<br><br>The Aussie market stock index may catch a bid after a European stimulus announcement this morning.<br><br>This is Lagarde's own 'whatever it takes' moment, but the ECB promising no limits to its commitment to the Euro, and another massive asset purchase programme.<br><br>Still on the balance of probabilities the Aussie index increasingly looks likely to hit late 2009 levels this week in the 4,800s range this month.<br><br>This is a swift and brutal lesson in the importance of <a href="https://lowrateshighreturns.com/2019/12/29/the-magic-of-rebalancing/" target="_blank">rebalancing</a> and keeping cash aside for future opportunities arising, with a decade of price gains erased in about 20 trades.<br><br>Buy and hold at all times has been mistaken at times as a panacea or even a religion, but it's not; you need and do whatever it takes to keep yourself around to capitalise on the opportunities.<br><strong><span style="text-decoration: underline;"><br></span></strong><strong>'Whatever it takes' moment</strong>
<p> </p>
<p><span style="text-decoration: line-through;">A historic</span> <span style="text-decoration: line-through;">An historic</span> A momentous day ahead for Australian financial markets.</p>
<p>The Reserve Bank is set to make a landmark announcement at 2.30pm Sydney time, with Governor Lowe lined up to speak thereafter at 4pm.</p>
<p>Lowe will likely discuss an emergency cut in the official cash rate to 0.25 per cent, central bank purchases of government bonds, the ongoing conducting of repo operations, and other measures to ensure that credit continues to flow to households and businesses. </p>
<p>Global cases of the coronavirus continue to increase at this stage, suggesting that a serious disruption to the global economy lies squarely ahead, although <em>known</em> cases in Australia remain relatively low at this stage. </p>
<p> </p>
<p class="separator"><img src="https://1.bp.blogspot.com/-PpQcwNO9df0/XnKlqpCKgHI/AAAAAAAA0vg/zHXvgYR03PYK6i4HO-HDdOhrRudmyWKYACNcBGAsYHQ/s640/CV.jpg" width="640" height="388" data-original-height="503" data-original-width="828"></p>
<p>Daily new cases hit fresh highs yesterday (the February 12 spike was a data collation or measurement issue).</p>
<div class="separator"><img src="https://1.bp.blogspot.com/-QesSeFEsy4A/XnKs4AK_b6I/AAAAAAAA0vo/i5BTQupD2EEaQuoc-z-AD4xeoeGEq6pVACNcBGAsYHQ/s640/Cases.jpg" width="640" height="342" data-original-height="482" data-original-width="897"></div>
<br>The biggest surge in cases lately has been in Italy, with 35,713 cases and 2,978 deaths recorded to date.<br><br><strong>Recession ahead</strong><br><br>Major bank economists see the Aussie unemployment rate rising to 7 to 8 per cent (not that you can really forecast in the present environment), while the government's initial stimulus package probably isn't enough to save the economy from printing negative growth for both the first and the second quarter of the year.  
<p>This would lock in Australia's first recession in three decades. </p>
<p>Recent years been characterised by the Reserve Bank 'leaning against' asset prices and continually undershooting the inflation target, with persistently slow growth in wages and living standards.</p>
<p>Nobody could've predicted the great trifecta of drought, bushfires, and a global pandemic, of course, but the economy was already running well below potential before these shocks. </p>
<p>At this stage all we have is mostly anecdotes about the likely state of the economy, but so many of them reflect sharp drops in revenue, income, commissions, and profits, that this is no time for half measures.</p>
<p>Markets will be looking for a 'whatever it takes' pledge and from Lowe, and the use of unlimited monetary ammunition until things stabilise.<br><br>Anything less than that will be brushed aside in the savage market conditions.<br><br>From the government's perspective infrastructure programs and tax cuts aren't going to cut it.<br><br>What's needed is putting cash into the hands of households and small businesses today...to prevent the R from becoming a D.<br><br>They'll write books about all this next year; it's been a momentous month. </p>
<p><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
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j.ballantyne1990-6AQqhLzZaK

Infrastructure programs and tax cuts won't be enough: Pete Wargent

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<p class="post-title entry-title">EXPERT OBSERVER </p>
<div>GDP growth was estimated at a seasonally adjusted -0.3 per cent for Q1, leading to the inevitably mind-numbing 'recession we had to have' headlines.<br><br>Over the year GDP growth slowed to +1.4 per cent. </div>
<div> </div>
<div>Q1 could yet be revised up, of course - especially the very significant negative drag from inventories - and therefore the technical definition of a recession may yet be avoided. </div>
<div> </div>
<div>However, given that GDP growth in Q2 will clearly be severely negative this is largely semantics.</div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-Pt_Gww_Reuc/XtgnFuMgFeI/AAAAAAAA2HQ/vLAGeFkHn3M9QOwI61ZNNpoOjf5yT5T5ACNcBGAsYHQ/s640/A1.jpg" width="640" height="372" data-original-height="804" data-original-width="1381"></div>
<p class="post-body entry-content"><br>Nominal GDP growth over the year is floundering again.<br><br></p>
<div class="separator"><img src="https://1.bp.blogspot.com/-ZfLhyXG8ULc/XtgnF37tlzI/AAAAAAAA2HU/Mx852eP3OhEMtJBOxcGwPqRhzAM8SiTUQCNcBGAsYHQ/s640/A2.jpg" width="640" height="362" data-original-height="794" data-original-width="1401"></div>
<p class="post-body entry-content"> </p>
<div>Real net national disposable income, as a proxy for living standards, has been fairly flat over the past six months. </div>
<p class="post-body entry-content"> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-NKWTgSUhZQs/XtgnF3i7aWI/AAAAAAAA2HY/CLQfAtv0DaM99MRoKMCyFkKHUTr-cnZfgCNcBGAsYHQ/s640/A3.jpg" width="640" height="368" data-original-height="804" data-original-width="1394"></div>
<p class="post-body entry-content"><br>And the terms of trade have held up well to date, well above the long-run average.<br><br></p>
<div class="separator"><img src="https://1.bp.blogspot.com/-HXTaXlH0wVI/XtgnGmiASCI/AAAAAAAA2Hg/GtnNP1jk36kKzW5yBz4CndeKKYu-AX0eQCNcBGAsYHQ/s640/A5.jpg" width="640" height="378" data-original-height="800" data-original-width="1348"></div>
<p class="post-body entry-content"> </p>
<div>Meanwhile, the interest payable on dwellings continues to fall, now down to the lowest level since 2009 despite the dramatic increase in the dwelling stock over that time.</div>
<p class="post-body entry-content"> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-MgkJhBkDCVg/XtgnGUlHiqI/AAAAAAAA2Hc/AKW1kQicX989EsVNqJ18tMPoeYSvBpyeQCNcBGAsYHQ/s640/A4.jpg" width="640" height="376" data-original-height="803" data-original-width="1364"></div>
<p class="post-body entry-content"> </p>
<div><strong><span style="text-decoration: underline;">Stimulus mixed</span></strong></div>
<div> </div>
<div class="separator"> </div>
<div>With the Reserve Bank fading quietly into the background, the government must now do the heavy lifting with its fiscal stimulus.</div>
<div> </div>
<div>The Aussie dollar has accordingly soared back towards US 70 cents, in turn slowing the adjustment process. </div>
<div> </div>
<div>The terms of the $688 million renovation stimulus missed the mark completely, leaving such a skinny cohort of prospective qualifying applicants that the government needn't have bothered with it. </div>
<div> </div>
<div>Essentially you must own a house and undertake an expensive renovation within the next few months, but without having a high income (while a whole heap of renovation options are excluded): </div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-F-4fNLv_G3U/XtgoiKsKFjI/AAAAAAAA2H4/wHgQFtbv05Ixdzimj9Xru2Jnvr8LUCxXQCNcBGAsYHQ/s640/rebo.jpg" width="640" height="606" data-original-height="723" data-original-width="762"></div>
<div>
<br>Perhaps some retirees might qualify for a grant, and maybe a few young homeowners with wealthy parents.<br><br>
</div>
<div>The terms of the HomeBuilder grant scheme for <em>new</em> homes are far better targeted, and will undoubtedly be a net positive for the industry. </div>
<div>
<br><strong>PETE WARGENT</strong><em> is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em>
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GDP headed down, recession all but locked in: Pete Wargent

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<div>The Australian National Accounts recorded that real GDP growth came in at a seasonally adjusted -0.5 percent for the third quarter and +1.8 percent for the year. </div>
<div> </div>
<div>Oops.</div>
<div> </div>
<div>This was the first negative quarterly result for GDP since the Queensland flood-affected quarter of March 2011, and only the fourth such result since Australia's last recession in 1991. </div>
<div> </div>
<div>With a negative contribution of -0.2ppts net exports were a drag on growth this time around, and there was a big drop in public capital expenditure (for a contribution of -0.5ppts) after a surge of government investment last quarter, summarily in helicopters, healthcare, and hepatitis drugs.</div>
<div> </div>
<div>Household consumption contributed 0.3ppts to growth this quarter, but there wasn't much joy elsewhere. </div>
<div> </div>
<div><a href="/images/2016/12/08/GDP1.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="/images/2016/12/08/GDP1.jpg" alt=""></div>
<div class="separator"> </div>
<div>With downward revisions to previous quarters, this takes annual GDP growth all the way down to +1.8 percent. </div>
<p><a href="/images/2016/12/08/GDP1-1.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/12/08/GDP1-1.jpg" alt=""></div>
<div class="separator"> </div>
<div>Nominal GDP fared somewhat better, growing by +0.5 percent in the quarter, and by +3 percent over the year.</div>
<p><strong><span style="text-decoration: underline;">Income boost</span></strong></p>
<div>It's often been pointed out that in a country such as Australia with its volatile bulk commodity prices, real GDP isn't always an ideal measure of how things are tracking. </div>
<div> </div>
<div>In this quarter, for example, there was a large +4.4 percent jump in the terms of trade, meaning that the index is now up by +1.4 percent over the past year. </div>
<div> </div>
<div>Given that the terms of trade index has been falling since Q3 2011, this is hugely welcome news!</div>
<p><a href="/images/2016/12/08/GDP3.jpg" target="_blank">Click to enlarge</a></p>
<div class="separator"><img src="/images/2016/12/08/GDP3.jpg" alt=""></div>
<div class="separator"> </div>
<div>Behind the scenes, of course, commodity export volumes have been ramping up over time.</div>
<div> </div>
<div>Thus while real GDP contracted, real gross national income, real gross disposable income and real net national disposable income all rose to record highs in the September quarter, and we can expect to see further gains in Q4. </div>
<p><a href="/images/2016/12/08/GDP5.jpg" target="_blank">Click to enlarge</a> </p>
<div class="separator"><img src="/images/2016/12/08/GDP5.jpg" alt=""></div>
<div class="separator"> </div>
<div>In real terms, gross national income increased by +0.9 percent over the quarter and +3.2 percent over the year. </div>
<div> </div>
<div>Essentially, then, this this quarter has been the mirror image of the dynamics we've seen in previous quarters, shifting to strong income growth and weaker GDP growth.</div>
<div><strong><span style="text-decoration: underline;">Two-speed</span></strong></div>
<div> </div>
<div>Research by SGS Economics and Planning has shown that Sydney and Melbourne have beendominating economic growth, while many regional economies are presently running slower as they adjust to life post-resources boom. </div>
<div> </div>
<div>State final demand was very weak in Western Australia at -3.8 percent as capex continues to work through its decline. </div>
<div> </div>
<div><a href="/images/2016/12/08/GDP4.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div><img src="/images/2016/12/08/GDP4.jpg" alt=""></div>
<div> </div>
<div>At the industry level, construction was the biggest loser, contracting by -3.6 percent, and swiping some -0.3ppts from GDP growth. </div>
<div> </div>
<div>Compensation of employees grew by +1.3 percent over the quarter and a positive +3.1 percent over the year, while the household savings ratio ticked down to 6.3 percent. </div>
<div> </div>
<div>I'll look at the impact on household incomes and expenditure in a separate post. </div>
<p><strong><span style="text-decoration: underline;">The wrap</span></strong></p>
<p>After 100 consecutive quarters without a recession, the economy posted a negative GDP result for the third quarter, but real national income measures surged to a record high.   </p>
<div>Whether or not we experience a technical recession next quarter is open for debate, but it looks to be unlikely based on the recent growth in retail spend. </div>
<div>
<br>Overall, strong public investment figures in the first half of the year masked a softening underlying trend in growth in the economy. </div>
<div> </div>
<div>An annual GDP growth figure of +1.8 percent feels much more in line with the metrics we've seen elsewhere, including low employment and wages growth, soft inflation, and a budget in deficit. </div>
<div>
<br>If hours worked are said to be the best measure of the health of the economy, then the conclusion is clear: the economy stuttered in the first half of 2016, although there was at least a moderate improvement of +0.5 percent in Q3. </div>
<div> </div>
<div><a href="/images/2016/12/08/GDP7.jpg" target="_blank">Click to enlarge</a></div>
<div> </div>
<div class="separator"><img src="/images/2016/12/08/GDP7.jpg" alt=""></div>
<div> </div>
<div>In the face of an obviously weaker result, a key question for the government now is whether it uses low yields to borrow and invest in infrastructure, as the Reserve Bank doesn't sound particularly keen on cutting the cash rate too much further!</div>
<div> </div>
<div>
<p><span><em>PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>.</em><br></span></p>
<p><em>His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.</em></p>
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