Household saving ratios have been high since the financial crisis, but data out last week from the Australian Bureau of Statistics showed that at last people may be gradually opening their wallets again.
There is a bit of a lag in the Reserve Bank’s Chart Pack figures, but let’s see what we can deduce.
Sill elevated, as compared to the levels seen over the last two decades, but low interest rates should see Aussies starting to loose the purse strings a bit.
By the time next month’s charts are in the total residential building approvals data will show approvals at their highest level in a decade.
A good thing or a bad thing?
A great thing for the economy.
And for housing prices? Well, we’ll get an oversupply in pockets, of course.
The Digital Finance Analytics blog attempts here to explain the shortfall in our construction and concludes we need to more than double dwelling construction to meet demand.
I’m not sure about the exact nature of the conclusion, since different cities and regions have different demands and requirements.
But with the population growing at 400,000 per annum and household sizes far lower than they used to be…then, yes we desperately need to get building supply, and quickly.
The third chart below on household finance shows the first signs that household debt levels as a percentage of disposable income – which have been flat or falling slightly for the last 9 years – may again be turning up, just a slight notch.
Housing loan approvals
Housing loan approvals are by aggregate dollar value are…heading to the moon, blasting through the $20 billion barrier and heading well beyond.
It’s property market boomtime.
Prices are heading sharply upwards in all major capital cities except for Adelaide.
The red line indicates that some regional markets must have picked up also, although this is best judged on a region by region basis.
Sydney property market commentary over the years has morphed from crash, to bust, to a bull trap’and then to a slow melt…but finally there seems to be an acceptance of what we forecast here long ago: we’re into a sharp property upturn, with very little stock on the market.
In our estimation the cost of production was too high for this to be otherwise, and only now are we at last seeing any meaningful supply response.
In any case, sweeping city-wide commentary adds very little value to anyone who can read a chart.
So we’ll also be looking in a bit more detail at which sectors of the Sydney market are now risky (plenty of those) and which we consider to be significantly less so.
Household wealth, household debt
With share markets driving up to a 6 year high today, Aussies’ net worth is now in a pleasing uptrend, while household debt levels have been flat for around a decade, which is good news for Aussie households.