Month: May 2017

Total Housing Lending Still Powering On

Today the RBA released their financial aggregates for April.  Total credit grew by 0.4%, or 4.9% over the past year. Housing lending rose 0.5%, or 6.5% over the past year, personal credit fell by 0.1% or 1.5% in the past 12 months, and business lending rose 0.4% or 3.1% over the past year.

There was $1.1 bn of mortgages switched between investment and owner occupation categories in the month.

The 12 month view shows investor lending still accelerating, whilst business lending and other personal credit continues lower.

The more volatile measures shows a fall in housing lending and a rise in business lending.

The aggregates show total housing was $1.66 trillion, up 0.5% of $8.1 billion.  Within that owner occupied loans rose 0.55% of $6 billion and investor loans grew 0.36% or $2.1 billion.

The proportion of lending to productive business fell again, so housing lending is still dominating the scene to the detriment of the broader economy and sustainable long term growth.

The RBA noted:

Following the introduction of an interest rate differential between housing loans to investors and owner-occupiers in mid-2015, a number of borrowers have changed the purpose of their existing loan; the net value of switching of loan purpose from investor to owner-occupier is estimated to have been $52 billion over the period of July 2015 to April 2017, of which $1.1 billion occurred in April 2017. These changes are reflected in the level of owner-occupier and investor credit outstanding. However, growth rates for these series have been adjusted to remove the effect of loan purpose changes.

Bank Mortgage Up To $1.55 Trillion

The latest data from APRA, the monthly banking statistics for April 2017, shows that mortgage book growth is still well above inflation and income growth, at 0.5% in the month. Total loans are now $1.55 trillion, up from $1.54 trillion last month and 4.5% across the 12 months.

An additional $8 billion of net loans were added, with owner occupied loans accounting for $5.8 billion and investment loans $2.1 billion.

Investment loans are 35% of the portfolio.

Looking at the monthly trends, we see that the growth in investment loans slowed slightly, rising by 0.39%, whilst owner occupied lending accelerated, rising by 0.59%. Overall growth was 0.5%.

Looking at the lending profiles, CBA grew their book the most, followed by ANZ. Members Equity Bank and AMP Bank also grew quite fast and above portfolio.

CBA still leads the owner occupied market, and is continuing to chase down Westpac in the investment sector, though has not yet overtaken.

Finally, looking at 12 month portfolio growth for investment loans, the majors are well under the APRA limit. Some smaller players are still speeding.

So, whilst we see some adjustment in terms of risks in the market, growth remains strong, which explains why the auction clearance rates remain strong.

Analysis of the RBA market figures, which includes the non-banks will follow.

NAB’s Advantedge Offers New Mortgages

The white label sector of the mortgage market has been growing in recent times, and given the changes in pricing, and underwriting standards is one to watch. This is underscored by today’s news that Advantedge Financial Services has launched two variable rate special offers for new owner occupier and residential investor principal and interest loans as well as a simpler pricing structure for these products.

Advantedge is part of the National Australia Bank Group (NAB) and is a wholesale funder and distributor of white-label home loans.  

They say white label loans are an alternative to major bank loans, designed to give customers the essential home loan features they need, at competitive rates.  These white-label home loans are available through just over 85% of Australia’s mortgage brokers, and distributed under the brands of mortgage aggregators and mortgage managers. Those mortgage aggregators include PLAN Australia, FAST, Choice Aggregation Services, Australian Finance Group, Connective, Smartline, Astute, Loan Market and LJ Hooker Home Loans.

The new loans are:

  • 3.74% per annum for new owner occupier P&I variable rate loans
  • 4.24% per annum for new residential investor P&I variable rate loans

These rates will be available for mortgages with a minimum loan amount of $200,000 and a maximum LVR of 80%.

A simpler pricing structure for variable rate loans of $200,000 or more was also brought in today (31 May) across all loan purposes and repayment types.

General manager Brett Halliwell said “This new offer reflects Advantedge’s commitment to offering sharp rates that brokers can give to clients”

“Our white-label products are high quality and high value solutions and this new offer is yet another way Advantedge is proving its competitiveness to brokers.”

Advantedge will be further simplifying its pricing structure and rate cards to streamline the process for brokers, he added.

Branches still leading channel for major banks

From The Adviser.

Brokers are writing less than 50 per cent of mortgages for the big four banks but have become the dominant channel for Australia’s smaller lenders, according to fresh APRA figures.

APRA’s quarterly bank property exposure data for March found that brokers wrote $31.3 billion worth of home loans for the big four, up 8.7 per cent over last year.

While brokers currently account for 46.6 per cent of major bank mortgages, Australia’s non-major lenders are seeing 52.1 per cent of loans written through the third-party channel.

APRA figures found non-major broker originated loans increased by 19.7 per cent between the March 2016 and March 2017 quarters. Foreign bank subsidiaries saw a significant increase in broker loans, up 92.9 per cent over the year.

The data comes after a number of reports in recent weeks have flagged changes to the third-party distribution strategies of the major lenders.

A recent Morningstar research report into Mortgage Choice noted a number of “industry headwinds” for the broking industry, including a change of direction in the mortgage strategies of two major banks.

“Changes in mortgage distribution strategy by Australia’s two largest mortgage banks CBA and Westpac will over time likely slow the growth rate of home loans sourced through brokers,” the report said.

These changes have led one alternative lender to urge mortgage brokers to diversify their offering.

Pepper’s managing director of Australian mortgages and personal loans, Mario Rehayem, told The Adviser that brokers need to look beyond the big banks in today’s market.

“Your business model, and the whole value of your business as a broker, hinges on the diversity of your back book,” Mr Rehayem said. “If you want to build a business, an asset that you can one day sell as a going concern, the buyers will be looking at the diversity of your back book, the run-off rate and your arrears,” he said.

“Imagine if more than one major bank changed their distribution strategy overnight. What’s going to happen to the broker market? How will brokers react to that? If you’re going to be pigeonholed to one bank and tomorrow that bank decides that their belly is full of third-party business, what are you going to do?”

Mr Rehayem said that brokers shouldn’t be “cherry picking” clients but instead position themselves to satisfy every type of consumer. He added that brokers are being forced to radically change their business models as banks change their appetites.

Australia’s largest mortgage provider, CBA, has been clear about its plans to grow its proprietary channel, telling The Adviser in February that it was a “strategic priority” for the group.

NAB Ventures backs Canadian fintech Company Wave

NAB’s venture capital fund, NAB Ventures, has led a US$24 million (AU$32 million) Series D funding round in Toronto-based cloud fintech company, Wave.

Wave delivers cloud-based financial management software including accounting, invoicing, and payroll with seamlessly integrated financial services such as credit card processing and lending.

Hear from NAB Ventures’ Melissa Widner and Wave CEO and Co-Founder Kirk Simpson talking about the new relationship here (8.34min)

Targeting entrepreneurs with fewer than 10 employees, Wave has over two and a half million small business customers in more than 200 countries around the world, including more than 35,000 active users in Australia.

The Series D funding round also includes funding from Royal Bank of Canada (RBC), Silicon Valley venture firms CRV and Social Capital, global funds OurCrowd and Harbourvest, as well as Canadian investors OMERS Ventures, BDC IT Venture Fund, BDC Capital and Portag3.

Commenting on the equity investment, General Partner NAB Ventures, Melissa Widner, said: “We’re looking forward to working with Wave, which has developed an interesting approach to cloud software and financial services aimed at small businesses with under 10 employees.

“We were impressed with how Wave’s offering gives entrepreneurs the tools they need to be successful, along with the fact their invoicing and accounting software are free with customers able to purchase additional financial services to suit their requirements as needed.

“As the largest business bank in Australia with over 450,000 small and medium business customers, we are interested in any emerging technologies in this space that provide customers with a connected experience.”

NAB Ventures has the right to appoint an observer to the Wave board.

Wave Co-Founder and CEO, Kirk Simpson, said: “At Wave we believe that the way to help small businesses succeed is with powerfully integrated financial services and software. By helping business owners manage their cash flow, prepare for tax time and gain actionable business insights, Wave covers the spectrum of a small business owner’s financial life, and helps their businesses grow and thrive.

“We all know that small businesses power the global economy, and nobody understands Australian small businesses better than NAB. We look forward to exploring together how to serve those business owners better.

“We also believe that innovative partnerships between technology companies and world-class banks will lead to transformative solutions in the market. In NAB and RBC, Wave has forward-looking, innovative bank partners on two continents, opening the door to those transformations,” he said.

For more information on Wave, visit www.waveapps.com.

-About Wave-

Wave is changing the way small businesses make money, spend money and track money.  Wave delivers cloud-based financial management software with seamlessly integrated financial services to business owners around the world. Over 2.5 million business owners around the world have used Wave to help manage their finances, and over 60,000 new businesses join the Wave ecosystem every month. For more information, visit www.waveapps.com.

New Zealand’s financial system is sound but continues to face risks

New Zealand’s financial system remains sound and the risks facing the system have reduced in the past six months, Reserve Bank Governor Graeme Wheeler said today when releasing the Bank’s May Financial Stability Report.

“The outlook for the global economy has been improving but global political and policy uncertainty remains elevated and debt burdens are high in a number of countries. A sharp reversal in risk sentiment could lead to higher funding costs for New Zealand banks and an increase in domestic borrowing costs. New Zealand’s banks are vulnerable to these risks because of their increasing reliance on offshore funding for credit growth,” Mr Wheeler said.

“House price growth has slowed in the past eight months, in response to tighter loan-to-value ratio (LVR) restrictions, and a more general tightening in credit and affordability pressures in parts of the country.

While residential building activity has continued to increase, the rate of house building remains insufficient to meet rapid population growth and the existing housing shortage. House prices remain elevated relative to incomes and rents, and any resurgence would be of concern.

“Dairy prices have recovered significantly in the past 12 months, and the majority of dairy farms are likely to have returned to profitability in the 2016/17 season. However, parts of the dairy sector are carrying excessive debt burdens, and remain vulnerable to a fall in income or an increase in costs. Banks should continue to closely monitor and maintain full provisioning against lending to high risk farms,” he said.

Deputy Governor Grant Spencer said “The banking system maintains strong capital and funding buffers, and profitability remains robust. The banking system appears to be operating efficiently when compared with other OECD countries, based on metrics such as cost-to-income ratios, non-performing loans and interest rate spreads.

“Banks have generally tightened credit conditions in light of funding constraints and the increasing risks around housing. Banks are seeking to reduce their reliance on offshore funding and have raised deposit rates.

The Reserve Bank supports a cautious approach to managing foreign debt, in light of lessons learned in the GFC.

“While the LVR restrictions have increased the banks’ resilience to any fall in house prices, a significant share of housing loans are being made at high debt-to-income (DTI) ratios.

Such borrowers tend to be more vulnerable to any increase in interest rates or declines in income. There is evidence that borrowers with high DTI ratios are the most vulnerable to rising mortgage rates. At a mortgage rate of 7 percent, around half of existing borrowers with DTI ratios above 5 are expected to face severe stress. However, this represents just 3 percent of borrowers.

Overall, this analysis suggests that a significant proportion of New Zealand borrowers are vulnerable to a material increase in mortgage rates. A sharp and unexpected rise in mortgage rates could see the most vulnerable households default, sell their houses or reduce consumption to repay debt. Recent borrowers in Auckland and borrowers with high DTI ratios appear most vulnerable, signalling that a continued high share of lending at high DTI ratios is concerning and may present a risk to the housing market and financial stability.

The Reserve Bank will soon release a consultation paper proposing the addition of DTI restrictions to our macro-prudential toolkit.

“The Reserve Bank is making progress on a number of other initiatives.  A review of bank capital requirements is underway and we recently released an issues paper on the intended scope of the review. We recently concluded a review of the outsourcing policy for registered banks, and the Bank and other agencies are assessing the recommendations from the International Monetary Fund’s recent (FSAP) review of New Zealand’s financial system.”

Sydneysiders blame foreign investors for high housing prices

From The Conversation.

Sydneysiders are concerned that foreign investors, and particularly Chinese real estate investors, are pushing up housing prices, according to survey findings published this month. A majority believed foreign investors should not be allowed to buy residential real estate in Sydney.

The federal budget was the government’s latest attempt at navigating a policy solution that supports its pro-foreign investment position while responding to public concern about housing affordability in Australian cities.

China’s government is also searching for a policy solution to restrict the large amount of capital that’s flowing out of the country. But the Chinese crackdown “doesn’t appear to be working”.

We surveyed almost 900 Sydneysiders to investigate their views on foreign real estate investment. The effectiveness of government regulations on foreign investment and investors was a major concern for respondents.

Views on government regulations

The survey obtained the views of people aged over 18 living in the Greater Sydney region. They were asked about housing affordability, foreign investment, the drivers of Sydney housing prices, and perceptions of Chinese investors specifically.

Support for the government’s regulation of foreign investment in housing was weak. Only 17% of respondents thought it was effective.

Almost 56% of participants believed foreign investors should not be allowed to buy residential real estate in Sydney. Only 18% believed this should be permitted.

More than 63% of participants disagreed that the “government should encourage more foreign investment in greater Sydney’s housing market”. Only 12% of participants agreed with this.

These views stand in stark contrast to the government’s geopolitical support for foreign investment in Australia.

Views on foreign investors

There is little fine-grained data about the impacts of foreign capital and investors on specific neighbourhoods and developments in Australian cities. Therefore, we did not set out to compare public attitudes against the limited empirical evidence on the effects of foreign real estate investment in Sydney.

What’s significant about the survey results is that Sydneysiders have strong views on foreign investment, despite the absence of reliable evidence. Participants’ concerns about foreign investors and investment were consistent with their concerns about the government’s foreign investment rules.

Around 63% of Sydneysiders identified the Chinese as the heavyweights of foreign investment. This is likely to be accurate, given the concentration of Chinese investment in Sydney and Melbourne.

When presented with the statement “I welcome Chinese foreign investors buying properties in my suburb”, more than 48% of participants disagreed.

Other studies, however, have shown the potential for public confusion between domestic Australian-Chinese and international Chinese buyers.

Views on the drivers of housing prices

Respondents were asked to choose up to three drivers of house prices based on their understanding of Sydney’s housing market. By far the most commonly nominated driver of house prices (64% of respondents) was foreign investors buying housing.

Roughly one in three survey participants saw low interest rates (37% of respondents) and domestic home owners (32%) and investors (32%) as the drivers of higher housing prices. Local housing analysts generally agree with this.

But more than three in four participants (78%) agreed with the statement:

Foreign investment is driving up housing prices in greater Sydney.

When framed inversely, as “Foreign investment has no impact or very small impact on greater Sydney’s housing market”, more than two-thirds of participants (68%) disagreed with the statement.

Only 6% of our participants disagreed that foreign investment was increasing real estate prices. Around 11% agreed that foreign investment had no or minimal impact.

Views on housing supply and affordability

We expected people to report that foreign people and capital are driving up housing prices and making it more difficult for Australians to compete in the housing market. But we were surprised by the findings about Sydneysiders’ views on foreign capital and housing supply.

A strong message from the real estate and property development industries is that foreign investment increases housing supply, which in turn puts downward pressure on prices.

Politicians and lobby groups argue this will help improve housing affordability in major Australian cities. But many housing analysts argue that this supply solution does not stack up for purchases made by either foreign or domestic investors.
It seems that Sydneysiders don’t accept the real estate industry message about foreign investors increasing housing supply, and therefore helping to ease housing affordability pressures.

When asked if “Foreign investment can help increase housing supply in greater Sydney”, 48% of participants disagreed with the statement. Another 25% “neither disagreed or agreed”.

An unresolved policy dilemma

The government’s dilemma is how to manage foreign investment alongside an increasing housing affordability problem in major Australian cities.

This month’s federal budget included a crackdown on foreign investors, but the government still supports foreign real estate investment.

Our survey results support other studies that suggest this pro-foreign investment stance must be accompanied by strategies to protect intercultural community relations. This must happen alongside efforts to improve housing affordability.

Authors: Dallas Rogers, Senior Lecturer, Faculty of Architecture, Design and Planning, University of Sydney; Alexandra Wong, Engaged Research Fellow, Institute for Culture and Society, Western Sydney University; Jacqueline Nelson, Chancellor’s Postdoctoral Research Fellow, University of Technology Sydney

7 in 10 smartphone apps share your data with third-party services

From The Conversation.

Our mobile phones can reveal a lot about ourselves: where we live and work; who our family, friends and acquaintances are; how (and even what) we communicate with them; and our personal habits. With all the information stored on them, it isn’t surprising that mobile device users take steps to protect their privacy, like using PINs or passcodes to unlock their phones.

The research that we and our colleagues are doing identifies and explores a significant threat that most people miss: More than 70 percent of smartphone apps are reporting personal data to third-party tracking companies like Google Analytics, the Facebook Graph API or Crashlytics.

When people install a new Android or iOS app, it asks the user’s permission before accessing personal information. Generally speaking, this is positive. And some of the information these apps are collecting are necessary for them to work properly: A map app wouldn’t be nearly as useful if it couldn’t use GPS data to get a location.

But once an app has permission to collect that information, it can share your data with anyone the app’s developer wants to – letting third-party companies track where you are, how fast you’re moving and what you’re doing.

The help, and hazard, of code libraries

An app doesn’t just collect data to use on the phone itself. Mapping apps, for example, send your location to a server run by the app’s developer to calculate directions from where you are to a desired destination.

The app can send data elsewhere, too. As with websites, many mobile apps are written by combining various functions, precoded by other developers and companies, in what are called third-party libraries. These libraries help developers track user engagement, connect with social media and earn money by displaying ads and other features, without having to write them from scratch.

However, in addition to their valuable help, most libraries also collect sensitive data and send it to their online servers – or to another company altogether. Successful library authors may be able to develop detailed digital profiles of users. For example, a person might give one app permission to know their location, and another app access to their contacts. These are initially separate permissions, one to each app. But if both apps used the same third-party library and shared different pieces of information, the library’s developer could link the pieces together.

Users would never know, because apps aren’t required to tell users what software libraries they use. And only very few apps make public their policies on user privacy; if they do, it’s usually in long legal documents a regular person won’t read, much less understand.

Developing Lumen

Our research seeks to reveal how much data are potentially being collected without users’ knowledge, and to give users more control over their data. To get a picture of what data are being collected and transmitted from people’s smartphones, we developed a free Android app of our own, called the Lumen Privacy Monitor. It analyzes the traffic apps send out, to report which applications and online services actively harvest personal data.

Because Lumen is about transparency, a phone user can see the information installed apps collect in real time and with whom they share these data. We try to show the details of apps’ hidden behavior in an easy-to-understand way. It’s about research, too, so we ask users if they’ll allow us to collect some data about what Lumen observes their apps are doing – but that doesn’t include any personal or privacy-sensitive data. This unique access to data allows us to study how mobile apps collect users’ personal data and with whom they share data at an unprecedented scale.

In particular, Lumen keeps track of which apps are running on users’ devices, whether they are sending privacy-sensitive data out of the phone, what internet sites they send data to, the network protocol they use and what types of personal information each app sends to each site. Lumen analyzes apps traffic locally on the device, and anonymizes these data before sending them to us for study: If Google Maps registers a user’s GPS location and sends that specific address to maps.google.com, Lumen tells us, “Google Maps got a GPS location and sent it to maps.google.com” – not where that person actually is.

Trackers are everywhere

Lumen’s user interface, showing the data leakages and their privacy risks, found for a mobile Android game called ‘Odd Socks.’ ICSI, CC BY-ND

More than 1,600 people who have used Lumen since October 2015 allowed us to analyze more than 5,000 apps. We discovered 598 internet sites likely to be tracking users for advertising purposes, including social media services like Facebook, large internet companies like Google and Yahoo, and online marketing companies under the umbrella of internet service providers like Verizon Wireless.

Lumen’s explanation of a leak of a device’s Android ID. ICSI, CC BY-ND

We found that more than 70 percent of the apps we studied connected to at least one tracker, and 15 percent of them connected to five or more trackers. One in every four trackers harvested at least one unique device identifier, such as the phone number or its device-specific unique 15-digit IMEI number. Unique identifiers are crucial for online tracking services because they can connect different types of personal data provided by different apps to a single person or device. Most users, even privacy-savvy ones, are unaware of those hidden practices.

More than just a mobile problem

Tracking users on their mobile devices is just part of a larger problem. More than half of the app-trackers we identified also track users through websites. Thanks to this technique, called “cross-device” tracking, these services can build a much more complete profile of your online persona.

And individual tracking sites are not necessarily independent of others. Some of them are owned by the same corporate entity – and others could be swallowed up in future mergers. For example, Alphabet, Google’s parent company, owns several of the tracking domains that we studied, including Google Analytics, DoubleClick or AdMob, and through them collects data from more than 48 percent of the apps we studied.

Data transfers observed between locations of Lumen users (left) and third-party server locations (right). Traffic frequently crosses international boundaries. ICSI, CC BY-ND

Users’ online identities are not protected by their home country’s laws. We found data being shipped across national borders, often ending up in countries with questionable privacy laws. More than 60 percent of connections to tracking sites are made to servers in the U.S., U.K., France, Singapore, China and South Korea – six countries that have deployed mass surveillance technologies. Government agencies in those places could potentially have access to these data, even if the users are in countries with stronger privacy laws such as Germany, Switzerland or Spain.

Connecting a device’s MAC address to a physical address (belonging to ICSI) using Wigle. ICSI, CC BY-ND

Even more disturbingly, we have observed trackers in apps targeted to children. By testing 111 kids’ apps in our lab, we observed that 11 of them leaked a unique identifier, the MAC address, of the Wi-Fi router it was connected to. This is a problem, because it is easy to search online for physical locations associated with particular MAC addresses. Collecting private information about children, including their location, accounts and other unique identifiers, potentially violates the Federal Trade Commission’s rules protecting children’s privacy.

Just a small look

Although our data include many of the most popular Android apps, it is a small sample of users and apps, and therefore likely a small set of all possible trackers. Our findings may be merely scratching the surface of what is likely to be a much larger problem that spans across regulatory jurisdictions, devices and platforms.

It’s hard to know what users might do about this. Blocking sensitive information from leaving the phone may impair app performance or user experience: An app may refuse to function if it cannot load ads. Actually, blocking ads hurts app developers by denying them a source of revenue to support their work on apps, which are usually free to users.

If people were more willing to pay developers for apps, that may help, though it’s not a complete solution. We found that while paid apps tend to contact fewer tracking sites, they still do track users and connect with third-party tracking services.

Transparency, education and strong regulatory frameworks are the key. Users need to know what information about them is being collected, by whom, and what it’s being used for. Only then can we as a society decide what privacy protections are appropriate, and put them in place. Our findings, and those of many other researchers, can help turn the tables and track the trackers themselves.

Significant Questions Remain on Bank Tax – ABA

The legislation for the major bank levy introduced today shows the Federal Government’s original design had major flaws and significant questions remain on how this rushed legislation will affect the economy, the Australian Bankers’ Association said today.

“The Government has been forced to make concessions to the bank levy following the banks’ one and only opportunity to meet with Treasury on such a major Budget measure,” ABA Chief Executive Anna Bligh said.

“Banks welcome the concessions which would have had unintended consequences across the financial system, but despite these changes, major banks remain concerned about the Government’s poorly-designed tax grab,” she said.

The legislation, revealed to the public for the first time today, showed the levy will no longer apply to:

  • Derivative transactions, which banks use to minimise their risk.
  • Money the banks hold with the RBA.

Banks had argued for both of these changes.

“This is a tax on all Australians even with these changes. The Government’s own analysis released today acknowledges that the impact of this tax could hit “bank borrowers, lenders, shareholders or some combination of these groups”1,” Ms Bligh said.

“This levy will impact on investor confidence in Australia’s major banks and make it more expensive for banks to raise the money they need to lend to businesses and individuals,” she said.

“The major banks’ market value has already fallen by around $39 billion since the Budget.”

Despite these changes the Government still maintains that the levy will raise $6.2 billion over the four years of forward estimates in the Budget.

“Treasury has not provided sufficient modelling to explain their calculations in the Budget. At this stage, we are still uncertain just how much the levy will raise.

“There is no sunset clause which is unfair to those who will be impacted by the tax. One of the rationales for the levy is that it will contribute to budget repair,” Ms Bligh said.

“If that is the case then let’s be fair and remove the tax once the budget is back in the black.”

Stock-picker Altair’s shock sell-off could trigger the crash

From The NewDaily.

A veteran stock-picker’s shock decision to sell out of the share market entirely and return millions in cash to investors could trigger the very “calamity” he fears, according to experts.

Philip Parker, head of Altair Asset Management, announced in an open letter on Monday that he has given up on picking the market for the next six to 12 months because share and property prices will soon collapse.

It has triggered widespread speculation in the industry. Is it a publicity stunt or a prescient warning?

Many have pointed to the latest CoreLogic figures for May, which showed a drop in Melbourne and Sydney dwelling prices, to say the fund manager is onto something.

Preliminary figures from the property researcher showed dwelling values in Sydney fell 1.3 per cent and 1.8 per cent in Melbourne in the first 29 days of May.

Prices in Perth fell 0.6 per cent, while Brisbane was up 0.8 per cent and Adelaide prices increased by 0.5 per cent.

CoreLogic acknowledged that prices normally fall or moderate in April and May, but it attributed this result to banking regulator APRA’s crackdown on investor lending.

Last month, Sydney’s red-hot market showed early signs of cooling, with dwelling values inching down 0.04 per cent, while Melbourne values rose but at a slower pace than one month earlier.

Mr Parker, who markets Altair as a “high conviction” fund, wrote that he could not in good conscience keep charging fees “when there are so many early warning lead indicators of clear and present danger”.

“To me there are specific identifiers that are extremely recognisable that remind me of the late eighties and early nineties housing calamity,” he said.

“Giving up management and performance fees and handing back cash from investments managed by us is a seminal decision however preserving client’s assets is what all fund managers should always put before their own interests.”

Martin North, a property market analyst, said the only upside for the Australian economy at the moment is “sentiment and enthusiasm”, and that a shock move like Altair’s could be all it takes to tip the scales.

“Sentiment is crucial, which is why everyone wants to be buoyant and talk positive. There’s no doubt that with the international connectivity of the international markets, sentiment can be amplified and become self-fulfilling,” Mr North told The New Daily.

“If you call it right at the right point, you can make a lot of money. But what’s the collateral damage?”

Despite these concerns, Mr North gave credence to the potential triggers identified by Altair, namely: a property bubble burst in Melbourne and Sydney; a stock market bubble burst Australia-wide; a debt bubble burst in China; and political uncertainty in the US.

However, another property market expert, Dr Nigel Stapledon at the University of New South Wales, said Altair is “entitled to their view, but I don’t share it”.

He agreed that property prices are too high, but he said even if prices in Melbourne and Sydney fall by 10 per cent, Australians will barely notice so long as they are not forced to sell their homes.

If population growth persists, prices will recover, Dr Stapledon told The New Daily.

“Almost every year you have someone predicting Armageddon in the property market. Clearly prices are overpriced. You could easily have a 10 per cent price fall, but I don’t call that Armageddon.”

If the Chinese economy collapses, the Australian economy could enter a recession, and then immigrants might stop flocking here. Then we’d be in real trouble, he said.

“Those are risks. But there are always risks. It’s not clear to me those risks are going to emerge.”