Here’s what you need to know today

• On Monday we shared stories of private hospital operators - Ramsay, St Vincent’s and UnitingCare Queensland - disputes with private health insurers. Now Healthscope, Australia’s second-largest private hospital operator, has announced a national advertising blitz across radio, print and digital accusing insurers of failing the health system. Healthscope CEO Greg Horan has singled out Bupa, Australian Unity and GMHBA as the biggest under-funders.
  
  

• It’s not just Boeing having aircraft safety troubles. Cathay Pacific Airways cancelled at least 48 flights as it announced an inspection of all of its Airbus A350 jets after an engine component failed mid-flight. Shares in Rolls-Royce, the maker of these engines, fell 6% on the news.
  
  

• Australian data centre operator AirTrunk has sold for $20 billion to private equity giant Blackstone. This marks the largest acquisition of an Australian company this year and is the latest bumper valuation for data centres as they continue to offer the compute power needed for the AI revolution (another example, shares in ASX-listed NextDC have almost doubled since ChatGPT launched in November 2022)
  
  

• Volkswagen has said it is considering shutting factories in Germany for the first time, after a cost-cutting program underdelivered. Bodies representing Volkswagen workers reacted angrily after the company had previously pledged not to cut jobs before 2029.
  
  

• The Australian mortgage wars may be restarting. Macquarie is muscling in on the market, with its home loan book growing five times faster than the major banks in July, and this has increased speculation that a mortgage price war is coming. This is good for mortgage holders, bad for bank margins. Remember to periodically check your rate.
  
  

• The Australian Labor Party has banned donations from the under-fire CFMEU. In the year before the 2022 federal election, the CFMEU was the party’s top single donor, with donations of more than $3 million.

What the…?

The steady stream of good studies for semaglutide weight loss drugs like Ozempic continues. The latest finding, they could cut the risk of dying from COVID-19 by 34%. What can’t these drugs do?

Investing is a lifelong journey

Here’s what you can learn today.

This is an excerpt from our episode with Chris Bates, mortgage broker and CEO of Flint. Listen on the Equity Mates Investing podcast.

Question: What trends are you currently observing in the property market, especially from a first home buyer’s perspective, and what is your long-term outlook?

The property market today is marked by a significant compression in what first-time home buyers can afford. Over the last decade, there’s been a stark shift; where borrowing might have extended seven or eight times a salary before, current borrowing capacities have slumped around 30%, and yet property prices have continued to climb.

First-time buyers find themselves in a bind, often struggling to reach even modest property thresholds, which pushes them to seek familial support for deposits. The disparity between borrowing power and market prices is squeezing new entrants, thereby exacerbating inequities. Wealthier families or those with intergenerational wealth transfers, such as help from grandparents, navigate these challenges more adeptly. Despite these hurdles, there is an emerging urgency for many potential buyers, partly fueled by the intense rental market, which has experienced skyrocketing rates and decreased availability. This rental volatility instils a sense of insecurity, prompting many to prioritise property purchases for the assurance it provides. Additionally, a substantial segment of younger generations remains ardent believers in property as a pivotal avenue for wealth creation, though they’re met with mounting financial strains and hurdles under current market conditions.

Interestingly, the high-interest environment has resulted in a somewhat paradoxical scenario within the property market. Ideally, rising interest rates would dampen property demand, leading to a decrease or stabilisation in property prices. However, an unforeseen consequence of the elevated rates has been a sharp decline in property listings, as more homeowners choose to stay put rather than incur the costs of upgrading or switching homes. This real estate gridlock results in constrained supply, which supports property prices even as borrowing capacities shrink.

As rates start to soften, possibly sooner than anticipated based on recent economic signals, we might observe a rebound in borrowing capacities, which could amplify demand. Should the rates decline, this rejuvenated monetary flexibility might echo the conditions of 2019, where increased demand on restricted listings led to unexpected market acceleration. This environment would spur market competition and could manifest in an uptick in property values. Aspiring buyers may need to remain adaptable, ready to capitalise on their retrieved purchasing power as market confidence mounts.

Interested in speaking to Chris? Fill out the form on our website and we’ll put you in touch.

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