Surprise, surprise, surprise… wouldn’t you know it, we get a new set of numbers and everyone adjusts their predictions in regards to rates. I am not sure why economist keep thinking they can predict what is going to happen.
Yesterday we received the employment numbers for February and guess what, unemployment fell from 4.1% to 3.7% and it surprised everyone. Over the past number of weeks the data has been weak and there have been calls for rates to be cut as early as May, whilst others suggested September was the earliest and the minority saying next year.
With the latest unemployment numbers falling, the RBA will certainly keep rates on hold. There is too much yet to come for the RBA not to take a watch and see approach. As of 1 July 2024, many Australians will get a tax cut, age care workers just received a big wage increase and we still have the May budget, which many believe will contain some cost of living relief measures, all of which could potentially feed into inflation.
The play book changed with Covid and now we are seeing migration growing at record rates, placing more pressure on services and housing, two of the biggest contributors to inflation. It is no wonder the RBA keeps repeating, “the war on inflation is not over”.
I think rate cuts are wishful thinking in the near term and for some, this may spell more pressure on their household budgets and whilst we haven’t experienced many forced sales as yet, they may come. The ATO has ramped up its collection regime as the amnesties put in place during Covid expire. It is being reported, company insolvencies are at their highest levels since the GFC.
Many of the companies are in construction, hospitality and retail. Poor cash flows and higher costs are forcing many in liquidation, with many owing thousands to the ATO and creditors.
The RBA still considers most households are holding up, albeit pulling back on discretionary spending, which is what they wanted. The number of mortgage holders in arrears is very low and the banks are not concerned at the moment, so we do not expect to see a lot of distressed selling, however there may be more opportunistic selling and what I mean by that is, investors and home owners taking advantage of the current conditions and cashing in – if we have learnt anything over the past several years, expect the unexpected.
The first half of this month trading has been strong, our Collective Group’s fortnightly results are as follows:
The Kim Olsen Property Team this month so far has listed 8 properties and sold 8 properties, so a very busy month. Properties are renting quickly and again we only have a couple on offer at the moment, but there’ a few new managements coming on next month.
In the near future we will have access to an AI driven platform called Nuture Cloud. This is an exclusive platform for Ray White, but what is very exciting will be the introduction of a Buyer component to the platform that will give us a huge advantage in the market. If you think about the size of Ray White (over 1,000 offices) and all the data that is collected. The AI will scan all this data and based on certain behaviours etc, it will be able to match people with property with a great degree of accuracy.
For example, someone in WA may be looking to invest in Brisbane, by way of them having an interaction with a Ray White office and based on their online activities, the AI will be able to match that person with a particular property that is listed by a Ray White agent in Brisbane. I suspect there will be more than one person per property uncovered. If you can imagine the competition and interest that can be created, owners are going to be so impressed. The good news, only Ray White has this product and they are investing heavily into it.
Don’t forget next week is Easter, it has come around early this year. We will be closed for the statutory public holidays, in fact we are not allowed to transact real estate on Good Friday.
Until next week, stay safe and be kind.