US Federal Reserve at its meeting held last week held US official interest rates on hold citing that while the case for lifting rates has strengthened, it still needs to see further evidence of continued progress towards its goals. This has put paid any chances of a US rate hike until the end of the year. However, some analysts are suggesting that such a move may not happen until next year. The US presidential elections now take the front seat with the first debate face off between Donald Trump who seems to have gained considerable ground against Hilary Clinton who had a miserable few weeks with concerns about her health and some spectacular gaffes specially comments on Republican followers of Trump. The US rates decision saw the US dollar weaken against most major currencies with the Aussie Dollar surging past 76 US cents.
HOUSING AFFORDABILITY A SERIOUS ISSUE
With prices of apartments continuing to rise in Sydney and in Melbourne, the issue of housing affordability is becoming a serious matter for young people. Someone on an annual salary of $60k with no commitments and with a monthly expenditure of $500 can borrow up to $300k. Two people in a relationship with a combined salary of $60k each with a combined monthly expenditure of $1000 can borrow jointly up to $650k or so. The low interest rate environment at least has helped but young people also need to save enough money and demonstrate to the lenders their credit standing to be actually able to borrow. We are seeing more and more young people choosing to live with their parents for as long as they possibly can as they do not want to live far from their place of work but cannot afford housing in established locations. Housing market continues to be strong in Sydney and Melbourne. Last weekend, Sydney auction clearance rates were 82% with 1154 properties on the market and Melbourne had a clearance rate of 78% with 1195 properties which went under the hammer.
MARKET DATA
| Australia Cash rate Australia 90 day bank bill Australia 10 y bond US 10y Govt bond AUD/USD AUD/EUR AUD/JPY AUD/CNY ASX 200 S&P 500 Dow Jones Industrial Average Shanghai Composite Brent Oil (USD per BBL) Gold Spot (USD per oz) Iron Ore | As at 23-Sep 1.50 1.74 1.99 1.62 0.7637 0.6819 77.13 5.0939 5,431 2,164 18,261 3,033 45.89 1,337 61.60 | As at 16-Sep 1.50 1.74 2.10 1.69 0.7511 0.6682 76.66 5.0109 5,296 2,139 18,123 3,002 45.77 1,310 55.97 |
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