July – Jay Wu Report
I am delighted to share the exciting news that Jay Wu Estate Agents is now officially live and operational. After a decade in the making, we are thrilled to offer our comprehensive real estate services, encompassing residential sales, leasing, property management, project consulting, and off-plan marketing.
Led by Jay Wu in Sales and Stella in the Rental department, our dedicated team is committed to providing personalized, one-on-one service, ensuring a seamless real estate experience, whether you are selling or buying a property.
At Jay Wu Estate Agents, we take pride in our small, elite team of professionals. We believe in maintaining this intimate size to prioritize our clients’ experience, delivering exceptional service without compromise. Our primary focus is to invest 110% effort into each task while building long-term trust with our valued clients.
Economic Indicators – Australia (Latest data in July 2023)
- Interest rate – 4.1% (NEW)
- Unemployment rate – 3.6%
- Inflation – 7%
- GDP growth – 2.3%
- Wage growth – 3.7%
- Household Saving Ratio – 3.7%
Real Estate Market
Climbing wall of worries
Australia’s National Housing Market:
The national home values experienced a notable rise of 1.1% in June, indicating positive market momentum. Since February 2023, home values have increased by a strong 3.4%, demonstrating steady growth. In June, the number of capital city listings was 10% below average, and total listings were 25% below the 5-year average. This scarcity of listings contributed to a significant price increase during the month. However, the price growth momentum slowed down due to interest rate hikes and lower sentiment, leading to a rebalancing between supply and demand. Regional housing values continued to climb, albeit at a slower pace, with a 1.2% increase in June. Vendor discounting rates also tightened, decreasing from -4.3% last year to -3.6% in 2023. Rental prices increased by 0.7% in June, although the growth rate has started to slow down. Additionally, the rental vacancy rate hit a record low at 1.1%, significantly below the long-term average of 2.8%.
Brisbane’s Real Estate Market:
Brisbane witnessed a 1.3% rise in home values during June, highlighting a robust market performance. Compared to the challenging period of March 2020, home values in Brisbane are still 30.1% higher, demonstrating resilience and growth. The current advertised stock in Brisbane is 42% below the 5-year average, indicating limited supply within the market.
Jay Wu’s take
National property price is climbing up with wall of worries. The key factors are strong employment figure and shortage of listings in the market which leave buyers very little room for negotiations. However we started to see the divergence for days on the market between quality modern homes and homes require major renovations. The latter tend to sit on the market for a lot longer unless price in a good value. I have listed few factors for your consideration:
Headwinds and Challenges:
Despite the recent rebound in the housing market over the past three months, uncertainties persist due to a weaker economic outlook, interest rate fluctuations, and stretched household balance sheets. In 2023, approximately 800,000 fixed mortgage rates are expiring, which may result in borrowers refinancing at higher interest rates, ranging from 2% to 6%. As we enter the coming months, an increased number of listings are expected to enter the market during spring, potentially creating a larger supply of properties and influencing price adjustments.
Upsides and Positive Indicators:
On a positive note, Australia is experiencing a record level of net overseas migration, surpassing the previous high in 2008 by an impressive 27%. This influx of people contributes to the growth and demand in the housing market. Moreover, new housing approvals are currently at a record low, indicating limited supply in the short to medium term. Additionally, the unemployment rate remains at a record low, providing stability and supporting mortgage affordability and house prices.
Financial Market – FY Wrap up
Bullish momentum continues, all eyes on upcoming earning season
The financial year 2022/2023 has proven to be a period of remarkable performance for global stock markets, with Australia’s ASX 200 and the US S&P 500 delivering significant gains. Let’s explore the key highlights and factors that influenced the market movements during this period.
Both the ASX 200 and the S&P 500 exhibited impressive performance, with the ASX 200 and All Ordinaries surging by 9.7% and the S&P 500 rising by an impressive 18% throughout the financial year. These substantial gains reflect the overall positive sentiment in the market and the resilience of these indices.
Several factors played a crucial role in driving the markets during this period. The Chinese economy, US bank failures, the US debt ceiling, and the demand for artificial intelligence (AI) were among the major influencers of market sentiment. Investors closely monitored these factors, as they had the potential to significantly impact the performance of both the ASX 200 and the S&P 500.
One notable aspect was the ASX 200’s performance compared to the S&P 500. While the ASX 200 delivered solid gains, it underperformed when compared to its US counterpart. This can be attributed to the ASX 200’s stronger connection to China’s economy. As China’s economic growth slowed down, there was a decrease in demand for materials, affecting the mining sector, which holds a significant weight in the overall ASX 200 index.
During the financial year, the market rally was largely driven by the technology sector. In the first half, FAANG stocks led the recovery, while semiconductor stocks took over in the second half, further propelling the market upwards. The resilience of the technology sector played a vital role in driving the overall market performance.
Expectations regarding central bank actions also influenced market sentiment. Both the Australian and US stock markets priced in expectations of two more rate hikes from their respective central banks. Investors anticipated a soft landing for the economy, which contributed to the positive market outlook.
Looking ahead, the upcoming earnings season will play a crucial role in shaping market sentiment. The market will closely watch the results, as they have the potential to fuel further rallies if positive. Conversely, indications of a higher chance of an economic recession may lead to a significant decline in market performance.