If you’re feeling a bit poorer today, it’s probably because you are.
Pay rises are becoming rarer and smaller at less than 2 per cent, according to the Reserve Bank this morning.
Some jobs have actually taken pay cuts over the past year, according to The Sydney Morning Herald.
New Governor Philip Lowe said since the financial crisis, the rate of wage growth has halved to just over 2 per cent, which is the lowest in Australian Bureau of Statistics records.
Central bank analysis shows that of the 18,000 different jobs tracked by the ABS survey, the share of salaries receiving the biggest annual pay rises, more than 4 per cent, has dropped from 40 per cent to below 10 per cent since the global financial crisis.
No that the lack of pay rises is taking any toll on property.
The Financial Review on Monday had two fascinating stories placed side by side: One says buyers “snatched” 230 units at Macquarie Park in Sydney’s West on Saturday in a mad frenzy. On the other, Deloitte Access Economics, an august body if ever there was one, warned property could be the “worst investment” over time because of a looming “bust” in apartment prices due to a glut.
The auction clearance rate was at 80% in Sydney – so looks like no-one was taking much notice.
All of this after The Weekend Australian’s lead story on Saturday saying the Reserve Bank was warning that increases in apartment supply could cause defaults, rental and price falls.
Again, an interesting case in perspective.
For investors, the paper’s hand-ringing warning is a worry (especially for its boomer readers). For those trying to get a toe-hold on the property ladder, it’s actually good news.
The paper says 40,000 new apartments will hit the market in the next two years, causing market changes in Melbourne and Brisbane in particular.
One man’s meat is another man’s poison.
But there was more good news for home hunters. According to The Sydney Morning Herald, banks are battling to woo you to their mortgages by offering lower interest rates premiums – mainly because of the rise of smaller lenders eating into their markets.
The Weekend Financial Review urges a change in investor strategy as the era of cheaper money comes to an end…not that there is actually any sign of interest rises just yet.
Meanwhile, tracker mortgages – their interest rates move up and down with the cost of money – are backed by Greg Medcraft, the influential boss of company regulator ASIC.
The Australian reveals Westpac as the life insurer which rejected 37 per cent of claims.
The life insurance industry is under a cloud over payouts, using medical reasons and small print to avoid its obligations and huge commissions to encourage extra sales and churn.’
And stand by for more reports on bad behaviour by our banks and institutions like AMP. According to The Financial Review, a damning report will again show that banks have been failing to pay customers and charging them for nothing.
Look out for our Saturday lifestyle newsletter!
Peter Lynch
Publisher
