RBA UNCONSTRAINED BY HOUSING BOOM

Dr AndrewWashington Green Property

Hi Everyone,

Happy New Year and may 2014 prove to be a prosperous one for you !

There have been many forecasts for the year ahead, and reviews about the year just passed so I thought it best just to share a few that I think we should all bear in mind so we can look at making some better informed decisions during 2014.

I think the most important piece of information is in relation to the RBA’s view of the current property market :

“Australia’s current monetary policy setting has not been constrained by the risk of an overheating property market, according to the central bank’s governor.”

“Governor Glenn Stevens told The Australian Financial Review that he is more concerned with improving dwelling construction than worried the market may overheat. Continued growth in home values is welcomed in order to stimulate further construction of new dwellings, according to Mr Stevens.”

It’s worth looking at the attached link to the global survey from Macquarie, and especially their view about the Australian economy for 2014 and monetary policy forecasts.

The RP Data report goes into some detail in relation to the major markets within Australia, but keep this comment in mind :

“Although home values increased by 9.8 per cent in 2013 the growth follows a -3.8 per cent annual fall in values in 2011 and

a further -0.4 per cent annual fall in 2012. Cumulatively, from peak to trough, capital city dwelling values were down 7.7%

prior to this current growth cycle,” Mr Kusher said.

RBA unconstrained by housing boom
Australia’s current monetary policy setting has not been constrained by the risk of an overheating property market, according to the central bank’s governor. More>>
Strong growth in non-capital cities
Satellite and regional city centres are contributing to strong growth in the housing market, according to the Real Estate Institute of Australia and Bendigo Bank quarterly market report. More>>

2 January 2014
RP Data – Rismark Home Value Index Release

Home values finish 2013 calendar year 9.8 per cent higher

Dwelling values across Australia’s capital cities increased by 1.4 per cent in December and by 2.8 per cent over the final quarter of 2013.

According to today’s release of the RP Data-Rismark Home Value Index results for December 2013, capital city home values moved 1.4 per cent higher over the last month of the year.

Over the fourth quarter of the year, capital city home values rose by 2.8 per cent following on from a 2.8 per cent increase over the first quarter, by 0.2 per cent increase over the second quarter and by 3.7 per cent increase over the third quarter. Read full press release with charts here.

Highlights over the three months to December 2013:

  • Best performing capital city: Sydney, +4.1 per cent
  • Weakest performing capital city: Hobart, -1.3 per cent
  • Highest rental yields: Darwin houses with gross rental yield of 6.0 per cent and Darwin units at 6.2 per cent
  • Lowest rental yields: Melbourne houses with gross rental yield of 3.4 per cent and Melbourne units at 4.2 per cent
  • Most expensive city: Sydney with a median dwelling price of $655,250
  • Most affordable city: Hobart with a median dwelling price of $330,000

Director’s Cut – Stocks to outpace bonds again in ‘14

  • We expect global equities to outperform bonds and commodities for a third straight year in 2014.
  • John Conomos’ global survey shows investors favour cyclical value and EPS momentum over low volatility and income strategies for 2014.
  • Jake Lynch says Middle Aged Urban Empty Nesters will be the key driver of China’s spending growth. Buy Great Wall and China Life Insurance.

> Find out more

I hope everybody gets some useful insights from this that may otherwise have been buried in, or left unread in the constant stream of information we have to seem to deal with on a daily basis

Best Wishes for 2014,

Doc