December economy digest

Hi Everyone, I hope the below will summarize some important updates from the economy that influences our investment decisions. These are taken from all resources found around the blog community

In Australia: Building/ from nosebleed to nosedive
Although there is still a high volume of work in the pipeline, it’s clear to see that apartment construction will need to fall, and fairly soon.
Unfortunately last month’s record spike in non-residential approvals – presumably driven by Packer’s latest Barangaroo adventures – was not replicated this month, with the value of non-residential approvals all but halving month-on-month, from $5.4 billion to $2.8 billion.

Overall, although it could take a little while, it seems that it won’t be too long before residential construction will switch from being a driving force for the economy to becoming a headwind.

Meanwhile, in New Zealand:

Download the New Zealand Property Report in full here.

The New Zealand housing market has settled into a typical pre-Christmas pattern, as Kiwis turn their focus to the upcoming holiday period.
Real-time market statistics from for the past three months (ending 30 November) show a comparative cooling in demand across the main centres – most noticeably Auckland.
Demand is measured by the average number of views per listing for September, October and November 2016 which are then compared to the same period in 2015.

Sydney home values up 14.4% this year:
While Australian share markets continue to dither at nearly 20 per cent where they were fully a decade ago, Sydney home values were up by another +14.4 per cent over the first 11 months of the year.
No wonder so many investors have given up on Aussie shares with such consistently dismal returns.
Over the last quarter capital growth has rotated towards units in Sydney (+2.9 per cent), although quarterly house prices were still up by +2.3 per cent to be a strong +15.3 per cent higher over the year to date.
Melbourne home values were up by a similarly robust +11.3 per cent over the past year.
US unemployment lowest in 9 years
Employment increased for a record 75th consecutive month, with nonfarm payroll employment up by +175,000, broadly in line with expectations.
The results for September (+208,000) and October (+142,000) were revised up and down respectively, the twin revisions netting out to ‘not a lot’.
Over the past three months employment has increased by +176,000 per month on average.
Changes to pension asset test
A good read if you’re planning on pension for your future: here.
This will take effect in Jan 2017!
Another “predict” article for where property prices will go in 2017
Very hazardous if you ask me however, you can read some “experts” from Mozo here
First time in 100 quarters… Recession?
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.
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.
Overall, strong public investment figures in the first half of the year masked a softening underlying trend in growth in the economy.
An annual GDP growth figure of +1.8 per cent 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.
Property investment on the rise
Loans to property investors rose 4.6 per cent in September to reach the highest level in more than a year, according to the latest ABS figures. The value of the loans was $12.4 billion, with most demand ($11.5 billion) for established housing stock. Over the 12 months, lending was down 15 per cent to $137.5 billion.
Price metric reveals true cost of renting has introduced the median room price metric to help renters understand the true cost of renting in Australia. Using the median room price cuts distortion attributed to property type (flat, unit, house). For example, Melbourne is one of the cheapest cities to rent an apartment or house ($380 p/w) but not an individual room ($163 p/w), the cost to rent an apartment/house in Perth is the same, but $33 per room cheaper. The metric is particularly useful for renters who share a home with others.
Strata laws in focus:
On 30 November 2016, new strata laws came into effect in NSW. The new provisions mean owners can be forced to sell the building for redevelopment if 75 per cent of owners in the strata block want to sell. The Property Council Queensland wants similar new body corporate laws to be introduced in their state to allow the majority of owners to force the sale of units in ageing strata blocks.

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