Aussie jobs market slumps, blame it on the RBA
Aussie jobs market slumps, blame it on the RBA
The Australian property market finds itself at a pivotal inflection point. In this update, I'll dissect the latest developments, focusing on jobs numbers, consumer sentiment, and the implications for interest rates – all pivotal factors influencing our property market.
I go through these points and others in the video. If you don’t have time to watch, my points are:
Jobs Market Downturn: A Concerning Signal: December 2023's jobs data revealed a significant loss of 65,000 jobs, a concerning dip hinting at the economy's downward trajectory. This followed the RBA's November rate hike, which seems to have had a more profound impact than initially observed.
Consumer Sentiment Dips: Consumer confidence, as reported by Westpac's respected survey, dipped in January 2024, reaching levels reminiscent of past recessions. As job security becomes a concern, consumer confidence is likely to continue its downward trend, impacting spending and market dynamics.
Market Clues: An interesting development is the shift in market expectations around interest rates, as observed in the trading patterns of 2-year Aussie government interest rates. The market appears to be pricing in potential rate cuts in the future, reflecting growing concerns over economic weakness.
Implications for the Property: On the demand side, we see a softening economy, which could be mitigated by falling interest rates. However, the supply side remains tight, with home building targets falling short and insufficient new constructions. This supply constraint has, to an extent, shielded the property market from more significant impacts.
Looking forward, savvy investors are eyeing potential opportunities, anticipating that a downturn in rates towards the year's end could bolster the property market. While property prices may not drop significantly due to the tight supply, the broader economic slowdown and its impact on interest rates will be key factors to watch.
Peter Esho is an economist and Founder of Esho Group. He has 20 years of experience in investments and markets.