We live in unprecedented times. Normally, good news about the economy is welcomed without question. But in the current climate, where we desire stability and a decrease in interest rates and inflation, bad news in the economy is actually more favorable. Recent updates on labor markets, homebuilding costs, and home loans have been released, and it is crucial to examine their implications for the property market. In this week's Property Insider video chat, Dr. Andrew Wilson, chief economist of My Housing Market, and I delve into these results and determine whether they are good or bad news.
Employment Falls Sharply, But the Trend is Positive and Unemployment Remains Unchanged
While the latest unemployment figures show a steady rate of 3.9% in December, a deeper analysis reveals interesting stories to tell. Let's take a closer look at the statistics:
In this week's Property Insider, we discuss the following points:
- Jobs created decreased by 65,000 following recent surges in job creation.
- Despite the influx of 500,000 people coming to Australia over the past year, unemployment has remained relatively low. However, employment growth is not keeping pace with the required levels to sustain unchanged unemployment rates. Thus, we may anticipate a rise in the unemployment rate in the coming months.
- The rate of underemployment, which refers to those employed individuals desiring more working hours, remained unchanged at 6.5%.
- Hours worked fell by 0.5% month-on-month, coinciding with the decline in employment by 65.1k, resulting in a monthly change of -0.5%.
- Full-time employment saw a decline of 106,600, while part-time employment experienced a rise of 41,400.
- Unemployment rates across states remained largely unchanged, except for a slight decrease in QLD and a slight increase in WA. NSW boasts the lowest unemployment rate at 3.4%, while QLD has the highest at 4.3%.
- Australia's participation rate remains high in comparison to some of its counterparts.
Home Building Costs Rising, but More Slowly
Dr. Wilson and I discuss how the rate of annual growth of national quarterly housebuilding costs was lower over November in this week's Property Insider video. However, it is important to note that the costs still remain high, placing pressure on home builder profitability. While the cost of construction continues to rise, the magnitude of the increase is smaller, which will positively impact the inflation figures.
The following statistics highlight the trends in building costs:
- At its peak in 2022, annual building costs rose by 23.3%.
- A year ago, building costs were rising by 17%.
- The latest figures show an annual increase of 7%.
Home Lending Rises Again
In this week's Property Insider chat, Dr. Andrew Wilson and I discuss the latest housing loan commitments, which serve as reliable indicators for our housing markets.
We cover the following points in our conversation:
- Housing loan commitments rose 1.0% in November, marking a 13.1% increase over the year.
- This rise can be attributed to both investors (a 1.9% increase over the month and an 18.0% increase over the year) and owner-occupiers (a 0.5% increase over the month and a 10.6% increase over the year), particularly first-home buyers.
Since the trough in commitments in February 2023, overall loan commitments have increased by 21.2%, with investors experiencing a 26.5% increase and owner-occupiers experiencing an 18.5% increase.
In conclusion, despite the unconventional preferences caused by the current economic climate, understanding the implications of good and bad news is crucial. By examining employment figures, homebuilding costs, and housing loan commitments, we gain valuable insights into the property market. Stay informed and make informed decisions.
Disclaimer: The images used in this article are sourced from the original article on Property Insiders.