We have revised up our forecast for long-term bond yields in several advanced economies – most notably in the US where yields have been lifted by 50 basis points in our forecasts.
Region: Australia
Airbnb contributed $13.6 billion to Australia’s GDP and supported nearly 95,000 jobs in 2022, with guest spending boosting local businesses and domestic tourism, according to a new Oxford Economics report.
Global passenger vehicle production was heavily impacted by the pandemic. Major manufacturers’ forecasts for demand were lowered substantially at the onset of the pandemic, while supply chain disruptions continued to force manufacturers to scale back production.
The passing of the previously delayed Housing Australia Future Fund (HAFF) means that all the Albanese government’s announced housing policies are now in place. These policies represent a minimum funding pool of $5.5 billion stretching to the end of the decade, potentially lifting as high as $10 billion if all targets are met and excess fund returns achieved.
The shift to flexible ways of working and using office space was already underway prior to the pandemic with the advent of open plan offices, activity-based working, hot desking and co-working space.
The major CBD Australian office markets are oversupplied, with double-digit vacancy rates that should be suppressing rental growth. However, historically high incentives are boosting the financial appeal for tenants to move into better quality space when their leases expire, even as stated rents rise in many locations.
The Australian economy is slowing, with tight monetary policy and falling real incomes curbing demand and earlier supply constraints still affecting the realisation of investment projects.
Recession risk has become a hot topic in Australia with GDP growth slowing to just 0.2% q/q in Q1, and a sharp interest rate hiking cycle putting the clamps on growth in a bid to curb inflation.
Oxford Economics Australia was engaged by the Construction, Forestry, Maritime, Mining And Energy Union (CFMEU) to explore the economic case for investing in Australia’s social and affordable housing, potentially funded by revenue from a super profit tax.
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Australia’s rental market tightened considerably in 2022 with rents growing 13.4% y/y nationally. Momentum has continued in 2023, with an increased volume of tenants competing for a relatively static level of supply, contributing to historically low vacancy rates. Moreover, higher interest rates have significantly lifted the mortgage costs for landlords, who are keen to balance their cash flow through higher rental incomings.
The recent blame put on rising company profits as a key driver of consumer price inflation in Australia is overstated. We are not wholly convinced by claims of a causal relationship between profits and inflation as has been widely reported.
