Chris Gray Joins TE Team, Currency Update, Construction Costs on the Rise

Chris Gray from Your Empire Joins THE EXPATRIATE Team

We proud to announce that Chris Gray from Your Empire has joined THE EXPATRIATE team.

You may know Chris already; he's been on television as the go-to guru for property portfolio development for over a decade as the host of 'Your Property Empire' on Sky News Business Channel and was the Real Estate Judge on 'The Renovators' on Channel Ten. Chris adds to THE EXPATRIATE specialist information knowledge bank that will continue to share wealth-generating tips. Look out for Chris's blogs.

Here's your
Currency market update thanks to our Currency Specialist

Ian Cragg at Send Payment 

AUD - USD 0.73

AUD - EURO 0.68

AUD - POUND - 0.56

AUD - HKD - 5.77

AUD - SGD - 1.00

AUD - YEN - 94

AUD - CNY - 4.69

AUD - USD 0.73 AUD - EURO 0.68 AUD - POUND - 0.56 AUD - HKD - 5.77 AUD - SGD - 1.00 AUD - YEN - 94 AUD - CNY - 4.69

“The AUD has been on a roller coaster ride recently, which is not surprising for a currency that is leveraged on risk and commodity prices. This week the AUD wiped the gains made against major currencies, in spite of stable fundamentals. The AUD seems to be going through a rough patch at the moment but the question is how long will this last?  

AUD - USD

The massive gains that the AUD made against the USD two weeks ago have disappeared as the market reacts to the strengthening USD. The USD is gaining against all major currencies on the back of active monetary policy by the FED. Therefore, in spite of having satisfactory fundamentals, AUD is losing ground to USD.

The AUD - USD pairing saw a double top pattern last week, where the AUD tried to settle into a bullish trend but couldn't do so. For now the support level for the AUD is holding at 0.7390 but at present it can go either way, as the AUD is under pressure against the greenback for a number of reasons. 

Firstly, the recent jobs data has been contrary to market expectations. Unemployment rate for March has held steady at 4% which is largely good but the market was expecting it to drop to 3.9%. This news had a major impact on the AUD struggling to break the bearish pattern that has sustained since the last week. 

Secondly, the anticipation around the CPI report which is expected to come around the end of April is also putting a lot of pressure on the AUD. Analysts expect CPI rate to be higher than what RBA is expecting. Signs of this can be seen in the housing sector where prices have come down. 

This is likely to put the RBA in a catch 22 situation where raising the interest rates, as expected, may induce an economic slow down, something which the government will not want going into the elections. 

 
Lastly, as we discussed in earlier reports, the Russia - Ukraine war is going to remain a constant theme in the coming months. Intensification in Ukraine in the past week and the possibility of Baltic states joining Nato has pushed the investors into “risk on” mode once again. 

The investor sentiment is neutral for the AUD-USD in the short term.” - Ian Cragg Send Payments

"Construction costs rising at the fastest annual pace since the introduction of the GST" - CoreLogic Report.

CoreLogic's Cordell Construction Cost Index (CCCI) for Q1 2022 showed national residential construction costs increased 9% over the 12 months to March 2022, the highest annual growth rate on record outside of the introduction of the GST (10.2% over the year to March 2001). - CoreLogic

Key Factors Driving the Rise

• Metals, Timbers, and Imported Goods Driving the Costs

• Increased Shipping Costs flowing through the market to increased materials.

• Rising Fuel Costs also driving an increase

• Inflation Pressure on the economy

• Increasing Labour Shortages

Key Factors Driving the Rise

• Metals, Timbers, and Imported Goods Driving the Costs

• Increased Shipping Costs flowing through the market to increased materials.

• Rising Fuel Costs are also driving an increase

• Inflation Pressure on the economy

• Increasing Labour Shortages

Tim Lawless says, "Considering the record number of houses approved for construction during the HomeBuilder grant along with additional rebuild and repair work from the recent floods, demand for construction materials is likely to remain high. At the same time, supply side challenges persist. A shortage of key materials such as structural timbers and metal products along with higher fuel costs, and labour shortages, is likely to keep upwards pressure on building costs for some time yet."

Key findings by state – Q1 2022 CCCI Report

NSW + 8.8%

VIC + 8.8%

WA + 9.5%

QLD + 8.7%

SA + 9.8%

NSW + 8.8% VIC + 8.8% WA + 9.5% QLD + 8.7% SA + 9.8%

The most significant increase in construction costs is in South Australia, with a 9.8% annual increase, and Queensland saw the smallest with still a hefty 8.7% rise. NSW and VIC both saw the greatest increase of 8.8%, just .10% higher than the Sunshine State since 2021, and WA came with a generous 9.5%.

Keep an eye out for our updates on the Australian Federal Election on 21st May and what impact it may have on the property market.

The Expatriate always tries to make sure all information is accurate. However, when reading our website, please always consider our Disclaimer policy.

We hope that you've had a safe holiday period. Stay safe and informed.

THE EXPATRIATE Team.