The ASX 200 closed on an upward trend today, gaining 0.67% on lower-than-normal volume. The index has been gaining for six consecutive days now, floating on the anticipation of a supportive and stimulatory Federal Budget.
In March, the ASX 200 has gained 5.9%, with just one trading day left for the month.
Information Technology led the market up, gaining 3.84%, while Energy and Materials were the only two sectors down, shedding 0.84% and 0.29% respectively
Worsening climate endangers property
Financial services and analytics firm, CoreLogic, has rung the alarm bell on high-risk property threatened by a changing climate, just as more flooding rains inundate parts of New South Wales and cause widespread flash flooding … again.
CoreLogic used 30 years of tidal and shoreline retreat data to calculate the climate risk rating for residential properties within 800 metres of the coast, constituting some $25 billion worth of real estate.
Queensland unsurprisingly had the highest concentration of properties in the ‘Very High’ risk category, especially along the Sunshine and Gold Coast areas.
Dr Pierre Wiart, head of climate and risk management solutions at CoreLogic, cautioned that while each property must be assessed on a case-by-case basis, real estate owners would "need to have that in their mind", particularly if they have long-term debt attached to the property.
The top 10 at-risk suburbs included Runaway Bay, Caloundra and Golden Beach for Queensland, while in New South Wales’ Cronulla, Manly and Collaroy suburbs were most at risk.
Victorians in Port Melbourne, Aspendale and Brighton should also take note, but no suburb carries as high a price tag as Paradise Point in Queensland, home to some $1.466 billion in at-risk property value.
Erosion has become a key concern in many coastal nations and Australia is certainly already suffering.
A report from the Intergovernmental Panel on Climate Change (IPCC) estimates the sea level may rise 55 centimetres by 2100 but couldn’t rule out a 2-metre increase in the same period.
Rising sea levels will not only effect coastal properties, but other waterfronts too.
"As the mean sea level rise goes up in the ocean, you're also going to have the water level going up inside the estuary by a similar amount," Dr David Wainwright, a coastal engineer of almost 25 years said.
"This is a creeping issue that over time is going to inundate more and more frequently — and for certain properties, it might get to the stage where your property might be inundated by tides several times a year, even more. How are we going to manage that?"
Financial institutions like the Reserve Bank of Australia are very concerned with the ramifications of these effects, warning that 3.5% of residences in Australia fall under the international definition of ‘high-risk’ in a report underlining the risk to property values in climate change hot spots.
"If current values do not fully reflect the longer-term risks of climate change, housing prices could decline, leaving banks with less protection than expected against borrower default," The report said.
Overcoming the hurdles of a changing climate will require robust planning and potentially a re-evaluation of what we consider prime real estate, a challenge state and federal governments will likely need to take the lead on.
“Buy a house” says PM on rental relief
The Federal Budget has been the subject of furious debate since its release last night, with mixed messages on how effective the measures will be to curb cost of living pains for lower- and middle-income Australians.
Part of its package expands on the First Home Loan Deposit Scheme introduced in July 2021, expanding the pool to 50,000 places.
The program ostensibly lowers the minimum deposit required for a house from 20% to 5% with the government securing the difference.
Historically, similar schemes have led to booms in the housing market, but median prices often rose more than the funding provided by the grant, effectively wiping out any relief it may have offered.
The program also offers no support for 32% or 2.6 million households who are renting, often the most at-risk cohort with the least amount of savings to absorb periods of financial hardship.
In an interview with Nine News, Prime Minister Scott Morrison asserted that: “(The) best way to support people who are renting a house is to help them buy a house. And over the last three years, we've got over 300,000 Australians directly in their own home and particularly single mums.”
Today Show presenter Ally Langdon fired back, saying: “I'm not talking about homeownership here. I’m talking about rental relief.”
“I know, but that's my point. People who are buying houses are renters,” Morrison responded.
“Ensuring that more renters can buy their own home and get the security of homeownership – this is one of the key focuses of this budget and was one of the key pledges I’ve delivered on since the last election.”
Unfortunately for those without the capital to support a mortgage, Australian rental prices broke records in 2021, increasing 7.4% over the year, the biggest yearly increase since 2009.
"Rising unit rents have kept gross yields higher across capital cities compared to house yields, providing better investment opportunities for potential investors seeking greater cash-flow," Dr Nicola Powell, Domain's chief of economics and research said.
"Rental supply remains short in many areas providing little choice and strong grounds for further rental price hikes.
"Investors are returning to the rental property market to take advantage of these trends - this should help to slow down rent growth."
It seems the market will attempt to fill the gap the government has left.
On the small cap front
Latin Resources Ltd was 25% higher
Cooper Metals Ltd was 13.41% higher
Firefinch Ltd was 7.45% higher
Race Oncology Ltd was 5.11% higher
Alkane Resources Limited was 5.07% higher
Okapi Resources Ltd was 3.51% higher
Azure Minerals Ltd was 2.78% higher