"Well, the shutdown continues in the US, though as it is the middle of the night there, no further news yet. The markets seem to believe that this will only last a few days before some temporary resolution appears, but having got this far the Republicans seem determined to extract some political benefit, and the trigger could be the threat of a US default by October 17. This was referred to by Paul Ryan, who said “we think the debt limit is the forcing mechanism, that’s what we think will bring the 2 parties together.” Well at least there is talk of bringing the parties together.
Meanwhile the US dollar has started rising as investors start moving liquid funds in anticipation of higher interest rates in the US, which has seen our dollar fall half a cent in the last day.
Apart from the fact that nearly a million people are effectively out of a job, little else is happening, and the nation has turned to humour to pass the time.
One Republican joke, taking a dig at Obama, goes “Rumor has it that a pile of toys has been found on the White House lawn, believed to have been thrown from a pram”.
While the Democrats respond with “got to love Team America”.
Donald Trump said “It is crucial for Republicans to remain united during this shutdown”. Oh wait, that wasn’t a joke.
Meanwhile the US dollar has started rising as investors start moving liquid funds in anticipation of higher interest rates in the US, which has seen our dollar fall half a cent in the last day.
Apart from the fact that nearly a million people are effectively out of a job, little else is happening, and the nation has turned to humour to pass the time.
One Republican joke, taking a dig at Obama, goes “Rumor has it that a pile of toys has been found on the White House lawn, believed to have been thrown from a pram”.
While the Democrats respond with “got to love Team America”.
Donald Trump said “It is crucial for Republicans to remain united during this shutdown”. Oh wait, that wasn’t a joke.
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| Picture SOURCE: SCMP.COM |
Meanwhile, back in Australia we are digesting the latest update by the Reserve Bank, in the light of housing price trends. While the headlines in the news is of increases in house prices, this is really only true of Sydney and Melbourne, which both saw increases of about 2.5% in the past month.
Elsewhere, with the possible exception of Adelaide, prices actually fell during September, a month which is normally one of the strongest in the year.
Feedback from our valuers, in Sydney in particular, paints a picture of a boom market, particularly at the lower end, and perhaps the need for higher interest rates to curtail the price increases.
However, in other markets the picture still seems to be one of weakness.
The market for residential land and new houses is a case in point. Residential building approvals actually decreased 4.7% in August and the trend in dwelling approvals growth remains weak. This does vary from state to state. New South Wales was the only state to record actual growth in dwelling approvals in August, while Victoria posted negative monthly growth for the 13th month in a row.
Growth in most states has been offset by declines in Victoria and Tasmania. While demand may increase in most states, an eventual cyclical upturn is expected to be weaker than in previous cycles. The poor outlook for high density housing construction in Victoria is expected to weigh on that market in particular.
Somehow, the Reserve Bank is supposed to make sense of all this and fix a level of interest rates that slows down New South Wales while stimulating growth elsewhere, but the interest rates tool is too blunt to fine tune like that. So this explains why interest rates are unchanged at the present time, since they are okay on average, even if some markets are too hot and others too cold."
Elsewhere, with the possible exception of Adelaide, prices actually fell during September, a month which is normally one of the strongest in the year.
Feedback from our valuers, in Sydney in particular, paints a picture of a boom market, particularly at the lower end, and perhaps the need for higher interest rates to curtail the price increases.
However, in other markets the picture still seems to be one of weakness.
The market for residential land and new houses is a case in point. Residential building approvals actually decreased 4.7% in August and the trend in dwelling approvals growth remains weak. This does vary from state to state. New South Wales was the only state to record actual growth in dwelling approvals in August, while Victoria posted negative monthly growth for the 13th month in a row.
Growth in most states has been offset by declines in Victoria and Tasmania. While demand may increase in most states, an eventual cyclical upturn is expected to be weaker than in previous cycles. The poor outlook for high density housing construction in Victoria is expected to weigh on that market in particular.
Somehow, the Reserve Bank is supposed to make sense of all this and fix a level of interest rates that slows down New South Wales while stimulating growth elsewhere, but the interest rates tool is too blunt to fine tune like that. So this explains why interest rates are unchanged at the present time, since they are okay on average, even if some markets are too hot and others too cold."
This article was sourced from propell.com.au
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