The credit squeeze has stymied the Aussie economy to the brink of a recession – at least in per capita terms – and that’s in spite of booming commodity prices.
There was zero business credit growth in May, and the measure turned negative in June.
This helped to take annual credit growth sharply down to just 3.28 per cent, a 69-month low and flirting with recessionary conditions.
Personal credit growth slumped to -3½ per cent, perhaps in part reflecting behavioural changes, though it’s surely no coincidence that David Jones management reports that we’re now in a retail recession.
Housing credit growth was negative in June for investors as more mortgages snapped off interest-only terms, and total housing credit growth hit the lowest level since records began in 1976.
The investor share of housing credit is now well below the 15-year average, after a preceding boom.
The one thing to say about all this is that being historic data it largely reflects pre-election fears, and at least housing market sentiment has improved markedly since then.
The housing credit impulse was already marginally better by the end of June.
Meanwhile CoreLogic reported a second monthly gain in housing prices in July, with price increases recorded in Sydney, Melbourne, and Brisbane, and with units having outperformed houses for some time now.
Some lenders have become too risk averse and it’s hurting the economy, but at least the pendulum has begun to shift back in the other direction.
Also remember that housing credit growth is a backwards-looking indicator if ever there was one (recall the ‘record low housing growth’ which ran all the way until March 2013, long after it was clear as day that the Sydney market was firing up).
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