Australia is obsessed with property ownership – and it’s set to delay RBA cuts

The Market Herald10-23

While the ASX has been doing what it does best lately – track Wall Street, more or less – there’s been no real movement on the broader macro stage. I argue it’s felt a bit directionless the last few ...

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Russia and Ukraine are stagnant; the Middle Eastern situation is stagnant, and, the world is waiting for the US election in around three weeks.As wars linger and America stands at a very interesting crossroads that will surely shape the future broadly, it’s no wonder gold has been going up and up . Locally, however, everybody is waiting for the next big Australian economic catalyst – quarterly CPI data for the September quarter due out on October 30. That’s exactly seven days away.And I don’t want to try and put people in a bad mood, but there’s a good reason that we should perhaps brace ourselves – and prepare for a possible tumble on the ASX200.Seeing as low demand for materials implies low construction volumes, and that property prices are rising due to low supply – as immigra","collect":0,"end_time":0,"defaultTopTitle":"themarketonline.com.au","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK7012":"建筑产品","BKW.AU":"BRICKWORKS LIMITED","XKO.AU":"标普/澳交所 300指数","XAO.AU":"标普/澳交所 普通股指数","XJO.AU":"标普/澳交所 200指数","BK7044":"建筑材料","FBU.AU":"FLETCHER BUILDING LTD"},"translate_title":"澳大利亚痴迷于房地产所有权，并将推迟澳大利亚央行的降息","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"BKW.AU":1,"FBU.AU":1,"XAO.AU":1,"XJO.AU":1,"XKO.AU":1},"content_text":"While the ASX has been doing what it does best lately – track Wall Street, more or less – there’s been no real movement on the broader macro stage.\nI argue it’s felt a bit directionless the last few weeks. Russia and Ukraine are stagnant; the Middle Eastern situation is stagnant, and, the world is waiting for the US election in around three weeks. \nAs wars linger and America stands at a very interesting crossroads that will surely shape the future broadly, it’s no wonder gold has been going up and up (though, it also tracks inflation, which has risen by more than +20% in major economies over the last few years.)\nLocally, however, everybody is waiting for the next big Australian economic catalyst – quarterly CPI data for the September quarter due out on October 30. That’s exactly seven days away.\nAnd I don’t want to try and put people in a bad mood, but there’s a good reason that we should perhaps brace ourselves – and prepare for a possible tumble on the ASX200.\nMore than one indicator suggests Australian inflation could remain sticky.\nThe first is our labour market – unemployment remains at 4.1%. More people with jobs means more people spending. \nSecondly, the IMF has on Wednesday forecasted Australian inflation will remain above 3% by the end of 2025. If that eventuates, it would only put us in front of Slovakia in terms of developed economies with persistent inflation (also assuming the IMF’s Slovakia forecast is correct).\nThen there’s the TradingEconomcis forecast, which predicts that Australia’s CY2024 Q3 inflation will basically remain unchanged at 3.8% compared to that CPI read for Q2.\nThat would be enough to tank the local share market – especially given Australia’s quarterly CPI data is by far the superior dataset when compared to the fairly volatile month-on-month reads. Sticky quarterly inflation basically guarantees RBA rate cuts in the second half of next year, with what data is available. \nBut then it gets worse. If we look at large ASX200 companies in the construction and building materials space, there’s more cause for worry.\nWhy that matters is because the ABS has long been pointing out the “shelter” category of CPI – in other words, housing – now remains Australia’s largest driver of inflation.\nProperty prices keep going up and up, like gold – I’d argue property values in this country are wholly irrational – but given this country feels to many to base success on whether you own property or not, people keep buying.\nAnd that’s keeping inflation high. \nSo it’s not particularly reassuring that Brickworks (ASX:BKW) and Fletcher Buildings (ASX:FBU) have both reported this week persistent weak demand for their products. \nFletcher Buildings pointed to a weak Q3 with demand down between 10-15%. \nBut Brickworks has a more bleak view: it sees demand for its construction products remaining weak into 2026. \nSeeing as low demand for materials implies low construction volumes, and that property prices are rising due to low supply – as immigration continues to increase, CPI is only set to disinflate slower and slower. And that’s not even considering labour markets. \n(That would also match up with recent analysis suggesting good news for retail stocks, except for Wesfarmers’ Bunnings division.)\nIn something of a poetic twist: Australia’s fascination with owning homes could be a prison that has locked us in for more difficulty yet. Let’s hope that isn’t the case, but, the signs are there.\nJoin the discussion: See what’s trending right now on HotCopper, Australia’s largest stock forum, and be part of the conversations that move the markets.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2477341600"}