This week we saw a bounce back in consumer confidence, with the release of the Westpac-Melbourne Institute Consumer Sentiment Survey. The Index, which previously slumped in April and May, rose by 4.7% in June and is now back into territory where optimism appears to be outweighing pessimism.
One of the questions on the survey is where consumers think the wisest place for their savings is likely to be. The majority of respondents (34%) still think that a financial institution is the best place for their money (ie cash) and the second most popular response (24.6%) was in real estate. 16% of respondents thought paying down debt was the best option and 8% were advocates of investing in shares.
While consumer confidence is once again looking healthier, business confidence hasn’t seen a similar upturn. The National Australia Bank Business Confidence Index showed a slight improvement over May, however the reading remains negative indicating that businesses are likely to remain relatively unmotivated to spend, hire or invest.
[sam id=36 codes=’true’]Housing finance data was also released this week by the Australian Bureau of Statistics. The data showed the number of owner occupier loans rose by 0.8% in April while the value of investment loans rose by 1.1% to the highest level in five years.First home buyers remain a relatively small proportion of the overall housing market, comprising just 14.3% of all owner occupier housing finance commitments.
As pointed out in our YouTube market update last week, the average size of a home loan has hardly moved over the year, up by 2.6% compared with a year ago, which goes a long way towards explaining the sluggish value growth we are seeing across the broader housing market.
The Australian dollar has come under increasing downwards pressure, trading at about US$0.95, down nearly 10% over the past month. The lower dollar is a positive for Australian manufacturing, but also means the cost of imported items (including fuel prices) will be more expensive and will likely drive inflation higher and potentially create some headwinds for the RBA when considering a lower cash rate.
National Auction Clearance Rates
RP Data was monitoring 778 auctions across the capital cities last week and we collected results for 697 (90%) properties. The number of auctions was substantially lower than normal due to the Queen’s Birthday long weekend. The clearance rate over the week took a dip, falling from 72.2% to 62.6% over the last week.
The clearance rate at the same time last year was a paltry 42%, highlighting just how far auction clearance rates and the match between buyer and seller expectations has improved over the year. Australia’s largest auction market, Melbourne, recorded a clearance rate of 70% across 170 reported auction results, lower than the previous week where 79.7% of auctions were successful.
The second largest auction market, Sydney, recorded a clearance rate of 67.7% across 319 reported results compared with a success rate of 75.2% the week before. Over the coming week we are expecting a huge week of auctions, with 1,701 scheduled across the capital cities; the largest auction week since the first week of May when there were 1,749 auctions held.
Advertised Stock on the Market
The number of new listings added to the national housing market was down 0.8% last week, with 42,037 new properties made available for sale. Across the capital cities new listings were down 1.1% over the week.
Nationally RP Data is tracking 280,231 advertised properties which is 2.9% lower than at the same time last year. At the combined capital city level we are tracking 123,111 property listings (7.0% lower than last year).
The largest reduction in listings compared with a year ago has been in Brisbane where there are now 17% fewer homes on the market. The only cities where listings numbers are higher compared with the same time last year is Melbourne (+7.5%) and Darwin (+2.4%).