sydney melbourne auction clearance rates soar

Sydney and Melbourne auction clearance rates have risen above 70%. The last weekend in summer saw Sydney/NSW clearance at 73% out of the 873 scheduled and Melbourne/Victoria clearance at 75% out of a whopping 1327 scheduled auctions according to RPData. Expectation of a modest price growth of around 3-4% is expected, more for houses and less growth for units due to supply/demand and affordability issues. The widely anticipated tax changes are also beginning to hurt investor confidence and until the policy is announced, the market will continue to be weak. The first home owner's grant has been reduced to $10,000 from 1 January and is only applicable to units under $750,000 but it is suffice to say that the price boom witnessed over the past three years will provide some relief to this sector. Foreign investment in housing is about 18% and it is expected that this sector might fall slightly to about 15% due to monetary restrictions imposed by banks and financial institutions. 

​all eyes on next week's gdp data

Next week's GDP data is the next main economic news to come out of Australia. The soft unemployment data reported last week was supported by this week's soft wages data which makes the GDP data one to watch for as the RBA looks at outlook for the economy going forward. We do not anticipate any rate change this month and in fact during 2016. But the GDP data widely expected to print at 0.5% in line with the RBA outlook and the Governor's statement will consolidate the RBA's position in terms of a cash rates decision. 

gold the best asset class of 2016

This calendar year saw the worst possible start to the stock markets. The weakness in Chinese manufacturing and growth data and the wipe out of the stock markets earlier in the year saw investors flocking to Gold as safe haven. Some analysts say Gold has the momentum to reach
USD 1300 (currently at USD 1227) but there seems to be a divergence of views. If the US economy grows and if there are further US rate rises then it is expected that Gold prices growth may stop and in fact retreat as investors restore faith and flock to edge their bets on the US economic growth story. 

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
Shanghai Composite
Brent Oil (USD per BBL)
Gold Spot (USD per oz)

As at 26-Feb
2.00
2.29
2.38
1.76
0.724
0.6546
81.69
4.7325
4879
1948
16639
2767
35.1
1223.46

As at ​19-Feb
2.00
2.28
2.43
1.74
0.7107
0.6387
80.2
4.6338
4952.8
1917.78
16391.99
2860.02
33.01
1226.8