…But You Won't See Any Headlines On The 6 O'clock News
We will get to that, I promise… but first;
Here's a couple of news items I bet you didn't pick up over the weekend:
- A man was hitch-hiking on the Pacific Highway. A truck pulled over and gave him a really nice lift all the way to Sydney and now they're facebook friends.
- A child was playing in a park by himself in Brisbane. It was unusually warm and he had a lovely time.
- An Australian woman had too much to drink in Thailand. A local man drove her home and made sure she got into her hotel ok.
Now if you're thinking, “C'mon Jon, these aren't news stories,” ask yourself, why not?
They're events. They are things that happened…
You might be tempted to say, “Well they're not significant. They're not relevant.”
But one of the biggest news stories this month was about 3 women kidnapped and locked in a basement somewhere in the U.S. That led the papers for days. So, ask yourself, what possible impact does this have on your life? Is it relevant? Does it impact on your world at all?
No. It's interesting. It's exciting. It's something to talk about. It's front-page news.
The evening news is half an hour of entertainment. Nothing more. It's a bit of titillation and excitement we let our selves indulge in because we tell our selves that it's good to be “informed”.
But that's like saying it's good to watch horror movies because then you'll be better able to deal with a zombie apocalypse.
(Note to self: Write off “The Saw III” as an educational expense.)
How much of the news is actually useful to you?
Or ask yourself this: how much really useful information neve makes it though your news feeds because it isn't exciting, sexy or horrific?
As a case in point, did you pick up on this? There's a quiet revolution happening in the housing data, and it's going right under the radar.
The housing finance data, released last week by the ABS, show a solid pick up in demand for housing. It's been on a steady upward trend for a while, but there was a real spike in March. It was up a thumping 5.2 percent.
This chart from SQM Research highlights they latest improvement.
They note that it's broken back though the 5-year moving average, and the upward momentum is unmistakeable.
The red dot on this graph also represents SQM's estimate of a sort of steady-state point, where house prices are growing as fast as nominal GDP. That's where we're at right now.
North of that point, prices are growing more and more quickly. That's the territory we're moving into.
And if we break the finance data down, we can see there's been a real surge in owner-occupied finance (note all these numbers exclude refinancing).
Owner-occupier finance was up a stellar 7.2 percent in the month of March.
Investor finance was up a more steady 2 percent in March, but investors have been performing well for a while now, and have been driving the current recovery. Investor finance is now 21 percent higher than a year ago, and is at the highest level since January 2008.
There was even good news for the construction industry, with finance for new homes up a booming 10.1 percent in the month, and 21 percent over the year.
The finance data is a pretty reliable series, so this is all good news for the property market.
And it confirms what I've been saying for a while: the property market bottomed a full year ago, and there's only one way prices are going from here.
And the story's not difficult to understand. Interest rates are at record lows, the world is awash with easy money, and it's getting funnelled straight into asset prices.
Have a look at what's happening to credit data: This chart here comes from Veda's consumer credit demand index.
Year on year, credit demand was up 4.7 percent – the strongest rate of growth since the onset of the GFC. A lot of it was driven by personal credit, including car loans.
So Glenn ‘let the good times roll' Stevens will be breathing a sigh of relief. It took a bit to get there, but there are now clear signs that interest rate cuts are gaining traction – credit is expanding, and home financing is bouncing back.
But this is all pretty normal. This is exactly what you'd expect credit and finance to be doing on the back of record low interest rates.
And maybe that's why it's barely rated a mention in the press
There's no shock value. Nothing sexy. No body parts in the back of the car.
But for investors, this is probably the most important story of the year.
And it won't be long before the EZ money and boom in finance translates into booming prices. Then it might be front page news.
But by then, most people will have missed the boat.
If you wait til then, you'll have missed the opportunity to get in on the ground floor and make some real money.
So now is the time to get involved and get active.
Get in now while people are still worried about things that are happening to people they'll never meet.
Forget the “news”. Real information's what you need.