2-Sense: Business insolvencies at 15-year highs, office towers take a major hit & population surge drives rental vacancies to a new low

Welcome to this week's edition of 2 Sense on The Australian Property Podcast, where we take a look at the week's most interesting news headlines and break down what this means for you.

Mortgage Broker Chris Bates and Buyer's Agent Pete Wargent are discussing: business insolvencies hitting a 15-year high, why office towers are taking a major hit & Australian population surge driving rental vacancies to a new low.

Story 1: Business Insolvencies Hitting a 15-year High

• Firms are starting to fail as the cost of capital rises
• Why is this happening? The business cycle has been unusual, stimulus could have papered over the cracks
• Big surge in small business failures, rising unemployment, and a fall in employment, particularly in the retail segment
• What does it mean for property? 
• Distressed sales are still low for now. The unemployment rate is still 3.7%

Story 2: Office towers to take a major hit (according to a recent Morgan Stanley report)

• ABS value of dwelling stock rose $325bn in the June quarter to over $10 trillion, driven mainly by increases in the mean dwelling price in NSW (+$32k) and QLD (+$26k)
• However, Morgan Stanley reports office tower valuations could fall another 10-15%
• Why is this happening? Working from home phenomenon has persisted, at least for 3 days per week 
• What does it mean? This could be interesting news for REITs and super funds
• What does it mean for property? Commercial office prices to fall 

Story 3: Record low rental vacancies

• Record high population growth, and record low rental vacancy rates.
• International arrivals in January hit 1.7m, the highest since January 2020
• Why is this happening? Temp visas are at a record high of 2.55m, including a record 650,000 international students, with population growth at 2.4%.
• What does it mean? Despite this, the rental market seems to be a bit steadier and less panicked 
• What does it mean for property? Ongoing rental shortages and pressures to continue for the next 2-3 years?

Australian Property Podcast resources:

• ABC - Insolvencies
• REA Housing Crisis
• International Students
• Pete's blog
• Australian Property Podcast online - videos, notes & resources
• Ask a question
• Chris' mortgage broking
• Amy's new property course
• Amy's 100-point checklist (PDF)
• Pete Wargent's property coaching
• Join Owen's Rask Core  membership for $0.99

INFORMATION WARNING!

This podcast contains general financial information only. That means the information does not take into account your objectives, financial situation, or needs. Because of that, you should consider if the information is appropriate to you and your needs, before acting on it. If you’re confused about what that means or what your needs are, you should always consult a licensed and trusted financial planner. Unfortunately, we cannot guarantee the accuracy of the information in this podcast, including any financial, taxation, and/or legal information. Remember, past performance is not a reliable indicator of future performance. The Rask Group is NOT a qualified tax accountant, financial (tax) adviser, or financial adviser.

Full individual disclosures for each guest are available via the show notes page. Owen and The Rask Group Pty Ltd do NOT receive anything for mentioning Super funds, products, shares, bank accounts, etc.

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