RBA first home buyer warning; ASX tumbles; Ampol shifts into EV charging

RBA first home buyer warning; ASX tumbles; Ampol shifts into EV charging

News in brief

ASX slump: The ASX suffered its worst session since March, falling two per cent and wiping about $63 billion from the market. The benchmark is now more than seven per cent below its early-August level.

 

Rural banking: Commonwealth Bank will spend $140 million upgrading its branch network and has promised not to close regional branches before the end of the decade, as access to banking services outside major cities comes under increasing scrutiny.

 

Toll sales: Transurban is spending $4.5 billion to increase its ownership of three Sydney toll roads, buying stakes from the Canada Pension Plan Investment Board as major Canadian pension funds reassess some Australian investments.

 

Ampol buys EV charges: Ampol is buying EV charging operator Evie for $225 million, adding more than 1,000 charging bays as electric vehicle sales rise and high fuel prices accelerate demand for alternatives.

 

Bond sell-off: Global bond markets remain under pressure as investors bet interest rates may stay higher for longer. US 10-year Treasury yields have climbed above 5.3 per cent, while Australian 10-year yields are around 5.4 per cent.

Fear-o-meter

Mid-cap valuation gap hits 25-year high:

 

A widening valuation gap between Australia’s largest companies and the rest of the market is creating opportunities for active investors, with earnings growth disconnected from share prices, according to Auscap co-founder and CIO, Tim Carleton.

 

He says the valuation dispersion between the ASX’s largest companies and the SMID-cap segments is at levels not seen in the last 25 years, creating what Auscap believe is a growing pool of opportunities outside the market’s largest stocks.

 

“The dispersion in multiples between the larger part of the market and the smaller and mid-cap part of the market is wider now than it was in the depths of the global financial crisis,” Carleton said.

 

“Importantly, this dislocation hasn’t been driven by earnings. Earnings expectations for the mid-cap segment have actually improved through 2026, while there have been relatively few revisions to earnings expectations for the ASX 20.”

 

Carleton attributed the divergence to a combination of strong investor demand for large-cap stocks, the growth of passive investing and enthusiasm around major themes including artificial intelligence.

 

While he expects AI to be transformative, he cautioned that the companies attracting the most attention from investors will not necessarily be the biggest beneficiaries over the long term.

 

“I have no doubt that the AI developments are going to be transformative for mankind and there are going to be incredible leaps in the things that we are able to achieve,” Carleton said.

 

“But that does not necessarily mean that there will be investment opportunities that will yield tremendous results for investors.”

 

Fear & Greed Q+A today

On Australia's housing shortage, and why the tax burden is working against the government's ambitions to increase supply:

 

“We tax housing like we tax cigarettes. Actually, cigarette taxation is at about 70%, but we routinely charge 30 to 35 [cents] in every dollar spent on a new house in a new master planned community. That goes in one level or other of state, territory, local or federal charges. That's a very high number for something you're trying to produce more of.

 

“And routinely in the eastern seaboard states it can be higher. So in Victoria, particularly in regional Victoria, it's closer to 40%.

 

“When you deprive someone of three dollars out of every ten they're spending and then tell them that you're really interested in fixing housing affordability, there is a degree of gaslighting going on in that conversation.

 

“And to be fair to all levels of state and territory government, that's really absent any meaningful tax reform at a federal level over the past 30 years.”

First home buyers who entered the housing market with small deposits are emerging as one of the groups most exposed to falling property prices, according to the Reserve Bank’s latest Financial Stability Review. While the RBA says Australia’s financial system remains resilient overall, recent buyers with low-deposit mortgages are the most likely to owe more than their homes are worth.

 

Less than one per cent of households are currently in negative equity, but the risks are concentrated among newer borrowers. Around 100,000 people — roughly half of first home buyers — have used the federal government’s five per cent deposit scheme over the past year.

 

The warning comes during a particularly difficult stretch for households. The RBA lifted interest rates this week, inflation remains too high and house prices are falling in 97 per cent of suburbs nationally. Higher rates and the federal government’s changes to negative gearing and the capital gains tax discount have also weighed on the housing market.

 

There are other signs of stress. Low-income households are increasingly selling assets or working extra hours to make ends meet. Even so, just two per cent of variable-rate borrowers are experiencing a cash shortfall, and the RBA says banks remain well placed to keep lending through a downturn.

Greed-o-meter

Market	Month %	Qtr %	Median $
Sydney	-1.4	-4.9	1,198,596
Melbourne	-0.7	-3.4	780,550
Brisbane	-1.5	-4.7	1,048,880
Adelaide	-1.3	-2.7	928,560
Perth	-1.2	-4.7	975,022
Hobart	-0.5	-1.2	741,496
Darwin	0.4	0.5	633,431
Canberra	-1.1	-3.2	861,744
Combined regional	-0.7	-1.9	758,931
National	-1.1	-3.7	899,236

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Australia’s housing downturn has become very widespread. Here are the median prices across our capital cities, following the sixth straight month of national declines.

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Source: Cotality