If you’re confused about the mixed messages about our economy and the future of our property markets you’re in good company
There were some strong fundamentals reported last week:
- ANZ Roy-Morgan consumer confidence was up,
- NAB business conditions remain well above average (though the index did fall),
- wage growth accelerated with the diffusion index the highest since 2010 and
- the labour market continues to be strong.
Yet all the news seemed to be about our flat or falling property markets, low auction clearance rates and the crisis in confidence of home buyers and real estate investors.
A recent report from the ANZ Bank put it well…
If it wasn’t for the weakness in housing there would almost be nothing to worry about.
The ANZ noted there has been a debate about whether the weakness has been driven by softer demand or tighter credit.
The bank agree with the RBA that both are at work, but we think the trigger for the weakness was tighter credit.
The turndown in the market in early 2017 coincided with the macroprudential limit on the growth in investor lending and the impact this had on credit supply to investors.
By late 2017, early 2018 it seemed like the property market was stabilising – with the auction clearance rate rising and house prices essentially moving sideways.
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