CORELOGIC today announced its estimate of the total value of residential real estate in Australia has reached $8.1 trillion.
The surge in value follows the recent broad-based capital gains witnessed across the country, with many markets now at their peak.
CoreLogic head of research, Eliza Owen, said, “The Australian dwelling market has reached fresh record highs for the past four months, but the end of April marked the first time the total value of Australian housing broke the $8 trillion dollar mark.
“This puts Australian residential property at around four times the size of Australian GDP, and around $1 trillion more than the combined value of the ASX, superannuation and commercial real estate stock combined,” Ms Owen said.
CoreLogic data shows in the three months to April, national home values rose 6.8 percent, which is the highest quarterly dwelling growth rate since December 1988.
“The increase in the value of residential real estate has put Australian home owners in a strong equity position, with the RBA estimating just 1.3 percent of housing loans to be in a negative equity position at the start of 2021. However for many Australians looking to get a foot on the property ladder, the continued strength in the market is putting home ownership further out of reach despite record low mortgage rates. Wages growth simply isn’t keeping pace,” Ms Owen said.
THE 2021-22 Northern Territory Budget sets the scene for fiscal consolidation, with modest new spending and a proposed hard debt ceiling offering a glimpse of things to come, according to CPA Australia general manager external affairs, Jane Rennie.
Dr Rennie said, “There’s an element of thrift to some of the budget measures which may make it harder for the government to achieve its ambition of a $40 billion economy by 2030.
“Now is the time for expansionary fiscal policy. The Territory lags behind other states and territories on a number of economic indicators and COVID is far from over. We think it’s too early to tighten the public purse strings.”
The centrepiece of the budget is $1.6 billion in infrastructure investment. Rennie said, “When it comes to public infrastructure this is not a huge sum of money and is likely to have limited impact on jobs and growth. More investment in public infrastructure may be needed in coming budgets.”
Another challenge for the Territory’s economic recovery is attracting and retaining labour. Some $2 million is allocated to a Critical Worker Support Package, which includes training and payments to attract workers from interstate but may not be sufficient.
“Labour shortages are an Australia-wide issue right now. The Territory is competing with other regions in the battle to attract workers. This won’t be the only budget to offer inducements,” Dr Rennie said.
According to Dr Rennie, the success of labour incentives will be determined by factors such as, “Are the incentives attractive enough, is the incentive pool big enough, is affordable housing available, as well as appropriate support and infrastructure for new workers and their families."
The Territory’s net debt is expected to reach $9 billion in the next financial year – $1 billion lower than expected in the last budget.
Dr Rennie said, “With the cost of borrowing so low at present, we don’t consider the size of the Territory’s debt concerning. Nor are we concerned about the forecast $1.36 billion deficit for 2021. Additional borrowing to properly fund some of the budget measures is preferable to underinvesting.”
The government used the budget to flag its intention to legislate a hard debt ceiling of $15 billion.
“Measures like this don’t allow for events beyond the government’s control, such as natural disasters, and may need to be unwound," Dr Rennie said.
At a time when many small businesses are struggling to access finance, CPA Australia welcomed the expansion of the Local Jobs Fund to provide concessional loans and financing to small and emerging businesses. Also singled out for praise is the $12 million in funding allocated to continue the Aboriginal Ranger Grants program.
“Initiatives such as this embed environmental sustainability into Australia’s economic recovery while supporting a pro-growth, pro-jobs, economic rebuild,” Dr Rennie said.
About CPA Australia
CPA Australia is one of Australia’s leading professional accounting bodies and one of the largest in the world. CPA has more than 168,000 members in over 100 countries and regions, supported by 19 offices globally. Core services include education, training, technical support and advocacy. CPA Australia provides thought leadership on local, national and international issues affecting the accounting profession and public interest. CPA engages with governments, regulators and industries to advocate policies that stimulate sustainable economic growth and have positive business and public outcomes. cpaaustralia.com.au
THE Australian Small Business and Family Enterprise Ombudsman Bruce Billson said insurance premiums would be more affordable for small businesses in Northern Australia, under a new Federal Government scheme to launch next year.
Mr Billson welcomed plans for a reinsurance pool to be backed by a $10 billion Federal Government guarantee to cover cyclone and flood damage across Norther Australia from July 1, 2022.
He said the scheme, which is broadly in line with a recommendation in ASBFEO’s Insurance Inquiry, will make a significant difference.
“This is certainly a welcome step in the right direction when it comes to ensuring essential insurance coverage is accessible to small businesses,” Mr Billson said.
“Our Insurance Inquiry revealed that small businesses have been crippled by rising insurance costs and some can’t get it at all. A reinsurance pool will go some way to addressing this key barrier for small businesses in Northern Australia.”
Mr Billson said he also recognised barriers still exist for SME insurance coverage in other parts of Australia.
“In the course of our Insurance Inquiry, we spoke to over 800 small businesses – about 12 percent of those were from Northern Australia,” Mr Billson said.
“That means there are still many small businesses out there experiencing difficulties with accessing necessary insurance coverage.
“My office is ready and willing to work collaboratively with the government, relevant agencies and the insurance industry towards making essential insurance products affordable and accessible for small businesses across the country.
“Ultimately insurance is a necessity for small businesses to operate, which is why it is vital these products are accessible so they are protected when things go wrong.”