Australia: Life in the housing market - AmpGFX

News of the death of the Australian housing market is greatly exaggerated, with a rebound in house prices in the last month (up 2.0% in the month to 2-July in the weekly CoreLogic report and firmer auction results, albeit still down from highs early in the year), according to the research team at Amplifying Global FX Capital.

Key Quotes

“The RBA said, “Conditions in the housing market vary considerably around the country. Housing prices have been rising briskly in some markets, although there are some signs that these conditions are starting to ease. In some other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Rent increases are the slowest for two decades.”  This was a repeat from the June statement.”

“Borrowing conditions, mainly for investors, have tightened up this year due to regulatory measures designed mainly to limit growth in interest-only loans, favoured by investors. Lending for property investment (as opposed for owner-occupier lending) has moderated this year after a resurgence late last year, into January this year.  However, it is still significant at a 7.1% annualized pace over the three months to May.  Owner-occupier loan growth is running at a stable 6.5% annualized pace.  Overall housing debt is still growing faster than household incomes.”

“The RBA said, “Growth in housing debt has outpaced the slow growth in household incomes. The recent supervisory measures should help address the risks associated with high and rising levels of household indebtedness. Lenders have also announced increases in mortgage rates for investor and interest-only loans.”  This was also essentially a repeat from the June statement.”