An interesting side-effect of rising property prices around Australia is the fact that luxury car sales are also booming.
This is caused by what is called the Wealth Effect – we feel good, we feel wealthy when the value of our home increases.
In fact, the Reserve Bank counts on this wealth effect of rising house prices caused by their lowering of interest rates to drive spending and boost our economy.
If you think about it, that makes sense. 
When we feel more comfortable about our finances, our job security, and our futures we’re more likely to spend more.
In particular, we’re more likely to spend on big-ticket items like new cars and upgrading our homes.
The CommSec luxury car index which tracks sales of 19 luxury car brands like Porsche, Aston Marti, Bentley, Mercedes, and Jaguar amongst others and this index now clearly shows that luxury car sales are growing in tandem with rising residential property prices with both measures posting their fifth month of consecutive rises.
Of course, when we feel wealthy we also splurge more on discretionary spending, and interestingly new Treasury analysis shows our economy grew $7.5 billion in the December quarter alone due to people holidaying at home and spending their money here in Australia rather than abroad.
While there are some sectors in the economy that continue to do it tough, overall the economic turnaround has been unprecedented- which is a word that only last year everyone was using about the effects of Corona Virus on our economy.
So to get an informed perspective of what’s happening in our economy and our property markets watch this week’s Property Insider chat with Australia’s leading housing Economist Dr. Andrew Wilson.
Booming auction markets refocus as holiday distractions ease.
Home auction markets continue to produce strong results for sellers generally, with buyers and sellers refocusing is the holiday distractions of the recent weeks eased.
Last weekend all capitals recorded auction clearance rates well above 80% with the exception of Melbourne, which was nonetheless just below 79.7%.
Listing numbers remain similar to the previous weekend’s offerings, providing sound choices for buyers and well ahead of last year’s auctions over the same Saturday.
Although the weekend auction markets remain clearly in favour of sellers with boom-time results continuing on Saturday, clearance rates in all capital cities remain below the record highs of recent weekends.
Watch this week’s video as Dr. Andrew Wilson explains the auction market trends and what’s likely to be ahead.
The Sydney housing market rebounded at the weekend following the previous weekend’s season-low clearance rate, producing another super-strong result for sellers generally.
The Melbourne weekend home auction market reported that second consecutive weekend with clearance rates below 80%, likely reflecting the typical distracting impact of school holidays.
Unemployment Rate Continues to Fall – Despite Gloomy JobKeeper Predictions
The national unemployment rate continues to fall despite gloomy predictions on the negative impact on the labour markets from the end of the JobKeeper allowance.
The ABS reports that the national jobless rate (seasonally adjusted) fell 5.6% over March down from the previous months 5.8% and the fifth consecutive monthly fall in the unemployment rate.
Watch this week’s video is Dr. Andrew Wilson explains how the jobless rate is now within striking distance for the pre-Covid March 2020 result of 5.2%.
Jobs growth was also strong over March – up to 70,700 and workforce participation levels increased over March to 66.3% and now well above pre-coronavirus levels reflecting increase job opportunities.
Watch this week’s video as Dr. Andrew Wilson explains how unemployment has dropped in Perth to 4.8% as many jobs in the construction industry have driven down the unemployment rate.
Consumer confidence keeps rising
As Australians become more optimistic about their futures, the weekly ANZ-Roy Morgan Consumer confidence index keeps rising now almost at a 17-month high. Confidence is up by 74.6% since hitting record lows on March 29, 2020.
Similarly, the CBA Household Spending Intentions series rose; and combined these figures have positive implications for our economy.
Watch this week’s video as Dr. Andrew Wilson and I discuss what all this means.
Holidaying at home is boosting the economy
New Treasury analysis shows the economy grew by $7.5 billion in the December quarter alone due to people holidaying at home and spending their money here rather than abroad, as the government said the vaccine setback should not damage its budget projections. 
The boost, equivalent to about 1.5 per cent of GDP for the quarter, shows domestic spending more than offset the impact of the severe restrictions on international borders and the effect these had on international tourism and other dependent sectors.
The federal government had forecast a $198bn Budget deficit for 2020-21 in its mid-year economic and financial outlook.
The Department of Finance has advised that the Budget bottom line improved by $23bn during the first eight months of the financial year; and some economists now expect the full-year deficit to be about $50bn lower than had been forecast in December.
New home sales surge
Sales of new homes soared 90.3 per cent in March, the second strongest monthly result since 2004, as buyers rushed in to access the second and final phase of the HomeBuilder grant before eligibility for the scheme ended last month. 
Eligibility to apply for the reduced HomeBuilder grant finished on March 31. More than 121,000 people had applied for the grant by then.
This surge in home sales together with a shortage of materials and skilled labour will / already has pushed up the cost of construction.
The federal government decided to extend by a further 12 months the deadline for work to start on dwellings contracted under the stimulus program – giving builders until September 30 next year to begin work, rather than the end of September this year.
Watch this week’s video as Dr. Andrew Wilson and I discuss what all this means for our property markets.
Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on
If you’re confused about the mixed messages in the media you are not alone.
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from Property UpdateProperty Update https://propertyupdate.com.au/property-news-headlines-forecasts/
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