- Cost of materials, skilled labour and interest rates driving construction firms out of business. Interest rates probably the biggest factor.
- Investors are holding back due to interest rate fears.
- Wages are stagnant again except in top tier of employment market due to low skill mass migration, coupled with higher rates. This means the masses can’t bid up housing.
- One of the world’s easiest money laundering setups remains Australian housing. How much loss can money launderers wear as a transaction cost? Will their money keep coming?
- Epic overseas migration driving massive shortage of rentals
- People with few or no children occupying more space
- Unoccupied dwellings (associated with Chinese buyers, money launderers) are still around. Does anyone have a read on this?
- Rents are included in inflation figures. Do you think Labor knows this? If NOM continues to drive rents to the stratosphere, high rents may not rescue the property market. Instead they will feed back into inflation forcing rates to follow. This will make investors even more scared. Maybe a few will go bust if the rate of rent increase doesn’t keep up with interest rate rises. This is likely since most investors are highly leveraged. Each % of interest rate rise requries a much greater % of rental rate rise to keep rental yields static.
- Increasing rental costs may also attenuate employment since a signficant number ofpeople will not have as much money to spend on other things, causing downstream businesses to suffer.
I don’t have a read on the weights of each of these factors or a model that can combine them. My gut feeling is that rates will resume rising after a lull caused by the Chinese resumption of production following the end of COVID zero and the working out of how to ship cheap Russian oil. But…there are100s of millions of people in India and China getting more skilled and wealthier and demanding more, including vast amounts of hydrocarbon. They won’t need to sell to the west as much. The pressure on supply chains will not let up. Prices are not done rising.