Property Headlines: Unemployment, CBA’s 30% crash forecast, Confidence, latest property data | Property Insiders

In today’s fast-changing environment, timely statistics are important.

One of the themes for our Property Insiders video chats is that if you’re going by the numbers, make sure they’re the right numbers!

There’s some interesting property relates news that I discuss with Dr. Andrew Wilson in today’s episode of Property Insiders.

1. Consumer confidence has risen for the 7th week in a row, but how will this hold up moving forward?
2. Unemployment has been in the headlines after the Australian Bureau of Statistics released its April employment estimates – but the numbers just don’t add up
3. The media gave a lot of attention to Commonwealth Bank’s worst-case scenario property forecasts of a 30% drop. But is this just clickbait?

So to get an update on the latest in time property data as well as his thoughts on these news items, watch this week’s chat with Dr. Andrew Wilson, Australia’s leading housing economist and chief economist of My Housing Market.

Unemployment figures don’t add up

The recently released ABS unemployment figures suggest our unemployment rate stands at 6.2% of the workforce, up 1%.

But, somehow the figures don’t add up.

There were sharp falls for both full-time and part-time employed.

The ABS estimate Australian unemployment increased by only 104,000 to 823,000 in April.

However, at the same time, the ABS estimates that 12,419,000 Australians were employed in April, down 594,000 on March.

Australians are asking; how can the ABS say 594,000 Australians have lost their jobs in April but only 104,000 become unemployed?

It is also important to understand that the Federal Government estimate around 6 million Australians are on JobKeeper and the ABS considers these Australians to be employed – whether they are currently working or not.

So it is not JobKeeper which has caused this very low estimate of unemployment?

The workers who are now on JobKeeper but are working for reduced hours are significantly boosting the level of under-employment in the Australian economy.

The ABS has captured this with their under-employment estimate increasing by 608,000 to 1.82 million.

The first JobKeeper payments made by the ATO were distributed only recently, in the first week of May.

Roy Morgan Research who run their own unemployment numbers estimate that the real ABS unemployment estimate for April is closer to 1.35 million (9.8%) – an increase of 4.6% points in March.

Combined with the estimated ABS under-employment of 1.82 million (13.7%) this leads to a combined unemployment and under-employment of 3.16 million (23.5%).

This is much closer to the latest Roy Morgan April employment estimates which showed 2.16 million Australians (15.3%) were unemployed and a total of 3.48 million (24.7%) were either unemployed or under-employed.

On top of the 900,000 people who lost their jobs and the 750,000 who still had jobs but didn’t do any work, another million people did some work but had fewer hours than usual according to estimates by the Grattan Institute.

All up, that makes about 2.7 million people out of a labour force of 13.7 million people who lost their job or lost hours in just a few weeks.

This is a shocking fall in the amount of work being performed in Australia.

In March, Australians worked an average of 86 hours per adult – that’s 86 hours for every adult, whether they’re in work or not.

In April, that figure fell to 78 hours per adult.

 That drop in hours worked – 9 per cent in a single month –is the biggest ever recorded, and it takes the average number of hours worked to its lowest level on record.

Source: Grattan Institute

 

Are property values going to fall 30%?

 Australian property values will fall by up to a third!

That’s the type of forecast that’s been going around for the last few months, in fact for the last few decades, and in the past have been easy to dismiss as they were made by overseas “experts” each trying to outdo the other with sensational headlines.

But how should one respond to last week’s headline when Australia’s biggest bank, the Commonwealth Bank, forecast property values could drop by 32%.

Well … it’s important to understand that the banks produce a range of forecasts for their shareholders and clients that allow them to hope for the best but be prepared for the worst.

And this particular forecast of a 32% drop in property values was CBA’s worst-case scenario.

Not their most likely scenario. And it assumes a prolonged economic downturn as a result of the Coronavirus pandemic and also assumes unemployment will hit 9% this year before falling to 6.5% by 2022.

However, CBA’s preferred and most probable scenario is for a V-shaped recovery, in other words, a shorter economic downturn which would see house prices drop by 11%.

Think about it…if CBA really believed that house price falls of 30% were likely, they wouldn’t really be lending borrowers 80% or even 90% Loan to Value ratios, would they?

ANZ-Roy Morgan Consumer Confidence increases for the seventh straight week.

Consumer confidence has now risen for the last seven weeks in a row, recovering 70% of the significant fall it happened in the last two weeks of March.

The gain likely reflects the continued good news on the path of the pandemic in Australia and the associated progressive easing of restrictions.

The challenge for the coming week will be how households react to what is expected to be dire news on the state of the labour market.

Now 24% (up 3ppts) of Australians say their families are ‘better off’ financially than this time last year, while 36% (down 4ppts) say their families are ‘worse off’ financially.

Meanwhile, 37% (up 1ppt) of Australians expect their family to be ‘better off’ financially this time next year, and 20% (unchanged) expect to be ‘worse off’ financially.

However, just 7% (up 1ppt) expect ‘good times’ for the Australian economy over the next 12 months, while 48% (up 2ppts) expect ‘bad times’.

In addition, 34% (up 4ppts) of Australians say now is a ‘good time to buy’ major household items, while 40% (up 1ppt) say now is a ‘bad time to buy’.

The four-week moving average for ‘inflation expectations’ remained unchanged at 3.4%. The weekly reading decreased to 3.3% from 3.5%.

This week’s property data

Auction clearance rates

This was the second weekend for Sydney holding kerbside auctions and the first for Melbourne.

The preliminary auction clearance rates are reported below, however at the moment in this time of market flux the exact figures are meaningless, and more important is the market trends.

However, we look forward to following the trends.

New Homes Listing Index

The number of homes newly listed for sale has increased slightly, showing vendors are seeing a light at the end of the tunnel and tentatively tipping their toes in the property market.

 

Home sales

The turnover in property transactions is very low, with about the same number of properties transacted in a month that we transacted in a week in the past.

 

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

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from Property UpdateProperty Update https://propertyupdate.com.au/property-news-headlines-forecasts/