Rocketing Inflation, Rising Rents, Supply Shortages Leading to a ‘Much Deeper Recession’?

Rocketing Inflation, Rising Rents, Supply Shortages Leading to a ‘Much Deeper Recession’?

Editor’s note: Hi there! Callum here. Before we tuck into today’s Daily Reckoning Australia, please take a moment to check out my latest podcast here!

This week, I sat down with Peter ‘Chewie’ Bakker — Fat Tail’s resident algorithmic trader. You’ll learn what his First-Mover Algo Alert service is advising traders and investors to do with their money in today’s market.

You’ll also see why Peter is shifting his attention to the potential profits and opportunities in the cryptocurrency space. All that…and more. You can watch it on YouTube or listen on Spotify.

Enjoy!

Now over to Catherine Cashmore’s take on today’s property market…

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It’s all over the property news this week.

SQM Research released its national vacancy rate data. According to the statistics, rents are ‘exploding’.

There’s a record-low number of rental properties available on the market — 1% nationally.

The lowest percentage in 16 years.

Founder of SQM Research Louis Christopher said:

The reality on the ground will be that many families, many young people will not be able to find the home that they actually require. 

Across combined capital cities, asking rents are up 2.2%. That takes us to an 11.8% rise year-on-year.

Vacancy rates in Brisbane, Perth, Adelaide, Canberra, Darwin, and Hobart all sit below 1%.

Take a look:


Fat Tail Investment Research

Source: SQM Research

[Click to open in a new window]

If I’m not mistaken, 0.3% in Hobart is the lowest on record for the city.

There’s nothing surprising about this, despite some suggesting Louis is fearmongering:


Fat Tail Investment Research

Source: Twitter

[Click to open in a new window]

The great exodus of COVID migrants taking advantage of work-from-home arrangements and fleeing inner-city lockdowns has produced an influx of population growth into regions that are ill-prepared for it.

Shortages and rocketing increases in building material prices are further impacting oncoming supply.

Stories circulate of prospective tenants offering 6–12 months rental in advance to beat the competition.

Some are offering more than $50 a week above the asking price!

Others are staying in caravan parks because their applications have been repeatedly turned down.

It’s worth mentioning here that SQM Research is, in my opinion, the most reliable data agency for vacancy rates, auction statistics, stock on market, and much more.

I reference their data often when making forecasts on movements in the property market.

The founder, Louis Christopher, is a long-time friend of mine and one of the country’s most recognised and respected property analysts.

His reputation has been founded on consistently accurate forecasts that feature in his ‘Housing Boom and Bust’ reports each year.

Furthermore, he has some strong opinions on what’s ahead. Particularly when it comes to inflation and how you can buffer against it.

In his own words:

Inflation is going to accelerate from the current reported 3.5% and it’s going to happen soon.

It’s quite possible inflation may hit 10% or more before the year is out and highly probable we are going to at least 6%…

So, what should we do about this? Here is my gut view:

Hold tangible, real assets.

Yes, that is real estate. It’s precious metals. It’s REAL, tangible items of value that hold together during hard times. Don’t be stupid about the buying price. And don’t go overboard on taking on debt.

For at the end of this new energy and food crisis, it’s very likely we will have a deeper recession.

This has a lot to do with what we talk about over at Cycles, Trends & Forecasts.

Furthermore, we’ve given the timeline for exactly when we believe the ‘deeper recession’ will occur. (Find out why we’re so confident in this forecast by clicking here.)

I sat down with Louis this week to discuss all this and more.

It was an enlightening interview, and one I was only going to share with my subscribers.

But I think Louis’ insights are so good, it’s something Daily Reckoning Australia readers can gain a lot of insight from.

All in all, it was a great honour and pleasure to host Louis. I hope you enjoy the discussion as much as I did.

Sincerely,

Catherine Cashmore Signature

Catherine Cashmore,
Editor, The Daily Reckoning Australia