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October 1 2021

1. Housing heading higher…

CoreLogic’s latest data shows Australian house prices climbed 1.5% on average in September, with Sydney homes up 1.9%. The gains take average housing values 20.3% higher over the past year and 17.6% higher in 2021. The annual growth rate is the fastest since 1989.

Meanwhile the number of residential building approvals in Australia bounced in August, with detached house and higher-density approvals both higher. Total housing approvals are now up 31% y/y, and detached up 24% y/y.   

Source: UBS, CoreLogic

2. Environmental compliance dilemma…

China is continuing to assess the environmental impacts of its industries. This week we saw China announce they would move from 6 SOE Rare Earth producers to 2 – one in the North and one in the South. The merger is believed to have been driven by environmental compliance. This is big news, and should be a positive for NdPr pricing, which portfolio company Lynas produce.

It comes as China’s demand for thermal power has never been higher, due to their strong economic recovery post Covid. We’ve heard reports some employers are asking employees to turn off air conditioning, computer monitors and the lights to conserve energy, as Chinese utilities accelerate efforts to secure LNG supplies in preparation for winter. In Jilin province, which suffered blackouts over the weekend, they are seeking more coal import quotas as they look to boost inbound shipment.

Source: Bloomberg

3. The road to post-Covid…

As we sprint towards reopening, we had news NSW will trial allowing international students back into Aus (via special quarantine accommodation). Students must be fully vaccinated with a TGA-approved vaccine, which only includes Pfizer, Moderna, AZ and Johnson & Johnson. This will narrow the field of eligible students allowed to enter Aus, but may help with stretched labour conditions heading into the Summer hospitality season. You might even be able to find a babysitter for when the pubs open!