Petrol prices ease for school runs

Second strongest home sales since 2004
Petrol Prices; New home sales; Used vehicle market

Fuel prices: Last week the national average price of unleaded petrol fell by 1.6 cents a litre to 142.8 cents per litre (c/l), according to the Australian Institute of Petroleum. Retail unleaded pump prices have entered the discounting phase of the fuel cycle in Brisbane, Sydney and Melbourne.

New detached home sales: In seasonally adjusted terms, private new detached home sales surged by 90.3 per cent in March to 9,691 units – the second highest level since 2004. Sales were 39.4 per cent higher in the March quarter when compared with a year ago. Over the year to March, sales were 42.6 per cent higher than the previous year.

Used car prices: Used vehicle prices fell by 2.1 per cent last week with supply surging 44.4 per cent after the quieter Easter holiday period.

Movements in the petrol price can affect consumer spending, and in turn, prospects for retailers. The home sales data has implications for banks, retailers, developers, building and building material companies. Used car price data is useful in gauging activity levels in the motor vehicle market.

What does it all mean?

• Schools back! Motorists on school runs would have noticed that fuel prices have eased in Australia’s big cities. Brisbane unleaded petrol prices are in the cheap phase of the retail fuel cycle with servos charging around $1.35 a litre on average today, according to fuel app MotorMouth. Drivers should fill up their tanks in the next few days as the discounting cycle is almost three weeks old, so retailers could begin their next price hike later this week.

• Petrol prices are easing in Melbourne with the retail discounting cycle now two weeks old. But Melburnians should hold-off filling up their tanks for now as prices should continue to fall over the next week. Retail unleaded petrol prices are averaging near $1.42 a litre today, but prices could ease to around $1.30 a litre this week. Fuel prices are already at this level or lower in Altona, Hoppers Crossing, Laverton and Seabrook.

• The average retail unleaded petrol price peaked at $1.56 a litre in Sydney last Thursday. With prices still averaging $1.53 a litre today, Sydney drivers should shop around for the best deals using real-time fuel apps to save themselves some coin, as prices gradually ease over the next fortnight. Fuel prices are already below $1.33 a litre in Bonnyrigg, Cabramatta, Fairfield, Granville, Sefton and Villawood.

• Australia’s residential property market is going gangbusters thanks to record low interest rates, the federal government’s HomeBuilder scheme and various state government housing incentives. Today the Housing Industry Association (HIA) reported that new detached home sales surged by 90.3 per cent in March to 9,691 units – the second highest level of sales since 2004. It has been an historic period for new home sales with a near record volume of sales recorded in December 2020, ahead of the tapering of HomeBuilder grants from $25,000 to $15,000 at the beginning of 2021.

• Used car prices took a breather last week, down 2.1 per cent after a rapid rise over the past 12 months. Supply lifted after the quiet Easter holiday period. Prices of the Hyundai iLoad van and Isuzu D-Max Ute both fell over 5 per cent, dragging down the price of the Light Commercial segment, which fell 5.7 per cent.

• Aussie car sales have been strong with Australia’s oldest listed automotive company Eagers Automotive straddling record highs today. The company’s share price has soared around 316 per cent over the past 12 months with the automotive retailer issuing a positive March trading update last Friday as the motor vehicle market recovers.

What do you need to know?

Weekly petrol prices

• Last week the national average price of unleaded petrol fell by 1.6 cents a litre to 142.8 cents per litre (c/l) according to the Australian Institute of Petroleum. Metropolitan prices fell by 2.0 cents to 145.4 c/l and regional prices were down by 0.7 cents to 137.7 c/l.

• Average unleaded petrol prices across states and territories over the past week were: Sydney (+14.0 cents to 153.5 c/l), Melbourne (-12.4 cents to 149.1 c/l), Brisbane (-12.6 cents to 140.1 c/l), Adelaide (+4.1 cents to 133.8 c/l), Perth (-0.8 cents at 138.5 c/l), Darwin (flat at 139.8 c/l), Canberra (-0.3 cents to 140.1 c/l) and Hobart (+0.1 cent to 143.0 c/l).

• The smoothed gross retail margin (2-month rolling average) for unleaded petrol rose from 15.60 cents per litre to 16.23 cents a litre (24-month average: 15.74 cents a litre).

• The national average diesel petrol price fell by 0.3 cents a litre to 134.8 cents a litre over the past week. The metropolitan price was down by 0.5 cents a litre to 133.5 cents a litre and the regional price lost 0.2 cents a litre to 135.8 cents a litre.

• Last week, the national average unleaded Terminal Gate Price (TGP) was down by 0.7 cents to 124.7 cents a litre. And the terminal gate diesel price was unchanged at 119.3 cents a litre.

• Today, the average unleaded TGP stands at 125.1 cents a litre, little changed over the week. But the terminal gate diesel price is up 0.9 cents to 120.0 cents a litre from a week ago.

• MotorMouth records the following average retail prices for unleaded fuel in capital cities today: Sydney 153.3c/l; Melbourne 141.9c/l; Brisbane 135.0c/l; Adelaide 141.0c/l; Perth 127.7c/l; Hobart 143.0c/l; Darwin 140.0c/l; and Canberra 140.0c/l.

• Last week the key Singapore gasoline price rose by US$5.13 or 7.2 per cent – the most in 10 weeks – to US$76.36 a barrel. In Australian dollar terms, the Singapore gasoline price lifted $5.04 or 5.4 per cent – the most in 8 weeks – to $98.59 a barrel or 62.01 cents a litre.

New home sales – March

• In seasonally adjusted terms, private new detached home sales surged by 90.3 per cent in March to 9,691 units – the second highest level since 2004. Sales were 39.4 per cent higher in the March quarter when compared with a year ago. Over the year to March, sales were 42.6 per cent higher than the previous year.

• The Housing Industry Association (HIA) reported, “HomeBuilder, combined with low interest rates, changing population dynamics and improving market confidence, led to strong sales through to the end of 2020.”

• And, “Sales in the March 2021 quarter increased across all the five largest jurisdictions compared to the same time the previous year. South Australia was up by 90.6 per cent, followed by Queensland (+54.9 per cent) and Victoria (+41.9 per cent). New South Wales increased by 24.7 per cent and Western Australia is up by 15.2 per cent over the same period.”

• HIA said, “This month’s sample captures 23 per cent of Australia’s new detached home building sector.”

• No data was published by the HIA for multi-unit sales.

Weekly used vehicle market – April 19

• Datium Insights have reported the following results for the week to April 19:

“Prices were down last week (-2.1 per cent) with ex-council vehicles (-4.3 per cent) seeing falls

Supply bounced back (+44.4 per cent) after the Easter long weekend lull

Clearance rates also increased (+3.3 per cent)

Prices for the top 15 traded vehicles were largely down with the Isuzu D-MAX (-5.3 per cent) and Hyundai iLoad (-5.1 per cent) seeing the largest falls

Stock still remains considerably low.”

What is the importance of the economic data?

• Weekly petrol prices data are compiled by ORIMA Research on behalf of the Australian Institute of Petroleum (AIP). National average retail prices are calculated as the weighted average of each State/Territory metropolitan and non-metropolitan retail petrol prices, with the weights based on the number of registered petrol vehicles in each of these regions. AIP data for retail petrol prices is based on available market data supplied by MotorMouth.

• The Housing Industry Association releases data on the sales of new homes each month. The HIA collects the data each month from a sample of Australia’s largest 100 homebuilders. The survey covers around 15 per cent of the home building industry.

• Data analytics firm, Datium Insights, provides a weekly report on the used vehicle market. Datium Insights and Moody’s Analytics also issue a monthly reading on used vehicle prices. The data assists in gauging the strength of a key component of consumer spending and provides insights on the Autos and components sector of the sharemarket.

What are the implications for investors?

• Last week, global crude oil prices posted their biggest weekly gains since early March. The release of solid US and China economic data and optimistic assessments about recovering consumption from OPEC producers and the International Energy Agency (IEA) strengthened market expectations for a recovery in global fuel demand. Over the week, Brent crude rose by 6.1 per cent to US$66.77 a barrel and the US Nymex oil price gained 6.4 per cent to US$63.13 a barrel.

• In the week ahead the IEA issues its Global Energy Review on Tuesday, detailing the outlook for global crude oil demand over 2021. In the US, oil services giants Baker Hughes, Halliburton and Schlumberger all release quarterly results. The US oil patch is still recovering after coronavirus lockdowns weighed on crude prices, but the near 30 per cent pick up in oil prices so far in 2021 could boost production and oil services activity.

• In a welcome boost for tradies and construction workers, the Federal Government announced on Saturday that the HomeBuilder commencement time will be extended by a further 12 months from the current 6 month requirement, as supply constraints and labour shortages hamper momentum. Bureau of Statistics (ABS) data issued last week showed that house commencements surged by 27 per cent to almost 21 year highs in the December quarter. Building materials companies such as Boral, Brickworks and James Hardie are benefitting from strong homebuilder demand and strong housing construction activity.

Published by Ryan Felsman, Senior Economist, CommSec