Category: Property Market

The Trading Up and Trading Down Imbalance

Just rounding out our analysis of households and their property buying inventions, having looked at investors and first time buyers we now turn to those seeking to trade up (sell their current property and buy bigger) and those trading down (sell their current property and buy smaller).

Those trading up are driven by expectations of greater capital growth (42%), for more space, 27%, life-style change (14%) and job change (11%).

Those seeking to trade down are driven by the desire to release capital for retirement (37%), to move to a place which is more convenient (either location, or for easier maintenance) (31%), or a desire to switch to, or invest in an investment property (18%).

In the past we saw a relative balance between those seeking to trade up and those seeking to trade down, but this is now changing.

Intention to transact, highlights that relatively more down traders are expecting to transact in the next year, compared with up traders.

Given that there around 1.2 million Down Traders and around 800,000 Up Traders, we think there will be more seeking to sell, than buyers able to buy. As a result, this will provide a further drag on future price growth, especially in the middle and upper segments of the markets, where first time buyers are less likely to transact. This simple demand/supply curve provides another reason why prices may soon pass their peaks. Up Traders have more reason to delay, while Down Traders are seeking to extract capital, and as a result they have more of a burning platform.

This analysis will be taken further in the next edition of the Property Imperative, due out in a month or so. Meantime, you can still get the April 2017 edition.

 

Auction Volumes Increase Across All But One of the Capital Cities This Week

From CoreLogic.

Auction volumes increase across all but one of the capital cities this week, returning a preliminary clearance rate of 70.7 per cent across 2,759 auctions.

Auction volumes have increased across all but one of the capital cities this week with a total of 2,759 homes taken to auction, making it the busiest week for auctions since the end of May. So far, 2,226 results have been reported to CoreLogic, returning a preliminary clearance rate of 70.7 per cent, up from last week’s final clearance rate of 66.7 per cent across 2,510 auctions.

The final clearance rate across the combined capital cities has been holding around 66 per cent for the last 3 weeks so it will be interesting to see if this is the case again on Thursday once the remaining results have been collected. One year ago, the final auction clearance rate was recorded at 75.4 per cent and there were 2,480 auctions held across the capital cities.

2017-09-25--auctionresultscapitalcities

Auction Results 23 Sep 2017

The preliminary auction results from Domain are in, and Melbourne is still leading Sydney significantly. Sales Volume appear lower compared with last week, and this time last year. We will see where the final counts settle later. This confirms our view that momentum continues to ease.

Brisbane cleared 50% of 94 scheduled auctions, Adelaide 78% of 91 auctions, (above even Melbourne), and Canberra 65% of 65 scheduled.

Going Up? – The Property Imperative Weekly – 23 Sep 2017

We look at another massive week in property and finance, examine the arguments around mortgage rate rises, and consider which households are more likely to buy in the current market.

Welcome to the Property Imperative weekly to 23rd September 2017, our summary of the key events from the past week. Watch the video, or read the transcript.

We start with mortgage arrears. Moody’s said the number of Australian residential mortgages that are more than 30 days in arrears has shot up to a five year high with a 30+ delinquency rate of 1.62% in May this year and with record high rates in Western Australia, the Northern Territory and South Australia. Arrears were also up in Queensland and the Australian Capital Territory while levels decreased in New South Wales, Victoria and Tasmania.

Ratings agency Standard & Poor’s (S&P) Global Ratings also recorded an increase in the number of delinquent housing loans underlying Australian prime residential mortgage-backed securities (RMBS). This rate rose from 1.15% in June to 1.17% in July. Delinquent loans underlying the prime RMBS at the major banks made up almost half of all outstanding loans and increased from 1.08% to 1.11% from June to July. For the regional banks, this level rose from 2.30% to 2.35%.

Fitch says 30+ days arrears were 3 basis points higher compared with last year despite Australia’s improved economic environment and lower standard variable interest rates.  However, default rates on Retail Mortgage Back Securities was 1.17%, 4 basis points better than the previous quarter.  They made the point that losses experienced after the sale of collateral property remained extremely low, with lenders’ mortgage insurance payments and/or excess spread sufficient to cover principal shortfalls in all transactions during the quarter. So, banks are protected in this environment, even if households are not.

Much of the debate this week centred on how well the economy is doing, and what this means for interest rates. Globally, the Fed is maintaining its tightening stance, with the removal of some stimulus and further lifts in their benchmark rate soon. The financial markets reacted by lifting bond yields, and if this continues the cost of overseas funding will rise, making out of cycle mortgage rate hikes more likely here.

The RBA was pretty positive about the outlook for the global economy, as well as conditions locally.  Governor Philip Lowe said to quote “The Next Chapter Is Coming”. In short, the global economy is on the up, central banks are beginning to remove stimulus, and locally, wage growth is low, despite reasonable employment rates. Household debt is extended, but in the current low rates mostly manageable, but the medium term risks are higher.  Business conditions are improving. He then discussed the growth path from here, including the impact of higher debt on household balance sheets. He said we will need to deal with the higher level of household debt and higher housing prices, especially in a world of more normal interest rates. In this environment, a small shock could turn into a more serious correction as households seek to repair their balance sheets.

I debated the trajectory of future interest rates, and the impact on households with Paul Bloxham the Chief Economist HSBC on ABC’s The Business. In essence, will the RBA be able to wait until income growth recovers, thus protecting household balance sheets, or will they move sooner as global rates rise, and put households, some of whom are already under pressure, into more financial stress?

The Government announced late on Friday night (!) before the school holidays, a consultation on the formation of a new entity to help address housing affordability –  The National Housing Finance and Investment Corporation or NHFIC.  It also includes, a $1 billion National Housing Infrastructure Facility (NHIF) which will use tailored financing to partner with local governments in funding infrastructure to unlock new housing supply; and an affordable housing bond aggregator to drive efficiencies and cost savings in the provision of affordable housing by community housing providers.

Actually, this simply extends the “Financialisation of Property” by extending the current market led mechanisms, on the assumption that more is better. Financialisation is, as the recent UN report said:

… structural changes in housing and financial markets and global investment whereby housing is treated as a commodity, a means of accumulating wealth and often as security for financial instruments that are traded and sold on global markets.

So, we are not so sure about these proposals.  Also, we are not convinced housing supply problems have really created the sky-high prices and affordability issues at all.  And, by the way, the UK, on which much of this thinking is based, still has precisely the same issues as we do, too much debt, too high prices, flat incomes, etc. Anyhow, the Treasury consultation is open for a month.

More lenders dropped their mortgage rates to attract new business, including enticing property investors. For example, Virgin Money decreased the principal and interest investment rates by between 5 and 10 basis points, for loans with an LVR of 80% or below.  Westpac cut its two-year fixed rate for owner-occupiers paying principal and interest by 11 basis points to 4.08 per cent (standalone rate) or 5.16 per cent comparison.

Net, net, demand is weakening and the Great Property Rotation is in hand. Lenders are tightening their underwriting standards further. This week NAB said it would apply a loan to income test to interest-only and principal and interest loans.  The new ratio, which aims to determine the “customer’s indebtedness to the loan amount” takes the total limit of the loan and divides it by the customer’s total gross annual income (as disclosed in the application). Ratios greater than eight will be declined, according to the new policy. This is still generous, when you consider the LTI guidance from the Bank of England is 4.5 times. But good to see Loan to Income ratios being brought to bear – as they are by far the best risk metrics, better than loan to value, or debt servicing ratios.

Our latest surveys showed that more first time buyers are looking to purchase now. We see that 27% want to buy to capture future capital growth, the same proportion seeking a place to live! 13% are seeking tax advantage and 8% greater security of tenure. But the most significant change is in access to the First Home Owner Grants (8%), thanks to recent initiatives in NSW and VIC, as well as running programmes across the country. The largest barriers are high home prices (44%), availability of finance (19% – and a growing barrier thanks to tighter underwriting standards), interest rate rises (9%) and costs of living (6%). Finding a place to buy is still an issue, but slightly less so now (18%).

On the other hand, Property Investors, who have been responsible for much of the buoyant tone in the eastern states are less bullish.  For example, in 2015, 77% of portfolio investors were intending to transact, today this is down to 57%, and the trend is down. Solo investors are down from a high of 49% to 31%, and again is trending lower. Turning to the barriers which investors face, the difficulty in getting finance is on the rise (29%), along with concerns about rate rises (12%). Other factors, such as RBA warnings (3%), budget changes (1%) only registered a little but concerns about increased regulation rose (7%). Around one third though already hold investment property (33%) and so will not be buying more in the next year. So, net demand is weakening.

CBA was the latest major bank to jettison lines of business, as banks all seek to return to their core banking business, by announcing the sale of 100% of its life insurance businesses in Australia (“CommInsure Life”) and New Zealand (“Sovereign”) to AIA Group for $3.8 billion. We have been watching the expansion and contraction cycle for many years, as banks sought first to increase their share of wallet by acquiring wealth and insurance businesses, then found that bankassurance, as the model was called, was difficult to manage and less profitable than expected, as well as being capital intensive. Hence the recent sales –  and expect more ahead. We think considerable shareholder value has been destroyed in the process, especially if you also overlay international expansion and then contraction. Now all the Banks are focussing on their “core business” aka mortgages – but at a time when growth here is on the turn. The moves will release capital, and thanks to weaker competition across the local markets, they can boost returns, but at the expense of their customers.

The Productivity Commission Inquiry into Banking Competition is well in hand, with submissions released this week from the Customer Owned Banking Association. They said that we don’t have sustainable banking competition at the moment. A lack of competition can contribute to inappropriate conduct by firms, and insufficient choice, limited access and poor quality products for consumers. The current regulatory framework over time has entrenched the dominant position of the largest banks. Promoting a more competitive banking market does not require any dilution of financial safety or financial system stability. They also showed that borrowers could get better rates from Customer Owned Lenders, compared with the big players. So shop around.

So back to property. The ABS Property Price Index to June 2017 show considerable variations across the states, with Melbourne leading the charge, and Perth and Darwin languishing. Annually, residential property prices rose in Sydney (+13.8%), Melbourne (+13.8%), Hobart (+12.4%), Canberra (+7.9%), Adelaide (+5.0%) and Brisbane (+3.0%) and fell in Darwin (-4.9%) and Perth (-3.1%). The total value of residential dwellings in Australia was $6.7 trillion at the end of the June quarter 2017, rising $146 billion over the quarter.

Auction clearance rates are still quite strong, if off their highs, but we expect loan and transaction volumes to continue to drift lower as we head for summer.

Putting all the available data together we think home prices in the eastern states will still be higher at the end of the year, but as rates rise from this point, price momentum will ease further, that is unless income growth really does start lifting. The current 6% plus growth in mortgage lending, when incomes and inflation are around 2% is a recipe for disaster down the track. Despite all the jawboning about future growth prospects we think the debt burden is going to be a significant drag, and the risks remain elevated.

And that’s the Property Imperative Weekly to 23th September.

First Time Buyers On The Up

As we continue our series based on our most recent household surveys, we look at first time buyers, who seem to be picking up at least some of the slack from property investors (which we covered yesterday).

We see that 27% want to buy to capture future capital growth, the same proportion seeking a place to live! 13% are seeking tax advantage and 8% greater security of tenure. But the most significant change is in access to the First Home Owner Grants (8%), thanks to recent initiatives in NSW and VIC, as well as running programmes across the country.

We see more are looking to buy units, at the expense of suburban houses.

The largest barriers are high home prices (44%), availability of finance (19% – and a growing barrier thanks to tighter underwriting standards), interest rate rises (9%) and costs of living (6%). Finding a place to buy is still an issue, but slightly less so now (18%).

So expect to see more first time buyers active, though there are not enough of them to offset the fall in interest from investors, so expect price weakness as we go into 2018.

The Great Property Rotation

Today we commence a short series on the results from our latest household surveys, as we examine the drivers of property demand by household segment.

These results, from our 52,000 sample to September 2017 reveals that a significant rotation is underway, with first time buyers seeking to buy, supported by recent enhanced first home owner grants, while property investors are now significantly less likely to transact. We will examine the underlying drivers, initially across the segments, and then later in more detail within a segment.

The segmentation we use is based on the master property definitions as described in our segmentation cookbook. It is essential to look across the segments, as cohorts have significantly different imperatives, which at an aggregate level are lost.

We start with an indication of which segments are most likely to transact over the next year (either buying or selling property).  We can trace the trends since 2013, as displayed below, and until recently both portfolio investors (holding multiple properties for investment purposes) or solo investors (holding one or two properties) led the field. But we are now seeing a marked slow down in investors intending to transact. For example, in 2015, 77% of portfolio investors were intending to transact, today this is down to 57%, and the trend in down. Solo investors are down from a high of 49% to 31%, and again is trending lower. Later we will examine the drivers behind these trends.

In contrast, the proportion of Down Traders is 49%, has been rising a little. Demand remains quite strong, and has overtaken demand from solo investors.  We also see a rise in demand from those seeking to refinance, with around 31% expecting to transact, in 2013, this was 13%. Finally, we see an uptick in First Time Buyers looking to buy, support, as we will see later by the FHOG available. First Time Buyers are also saving harder, with 82% saving, up from a low of 71% in 2014.

Given the rotation we have described, there is a slowing of demand for more finance (relatively speaking) from both Portfolio and Solo Investors, while demand from First Time Buyers, Up Traders and those seeking to Refinance is greater.

Overall the home price growth expectations is lower, and trending down. We see that Up Traders now more bullish than Portfolio or Solo Investors.

Finally, we see that usage of mortgage brokers continues to vary by segment, with those seeking to refinance most likely to use a broker, (77%), then First Time Buyers (64%) and Portfolio Investors (50%)

Next time we will look in more detail and the drivers within each segment.

The results from this analysis will also flow into the next edition of our flagship report The Property Imperative, due out next month.

 

Volumes Rise Across the Combined Capital Cities Returning a Preliminary Clearance Rate of 70.3%

From CoreLogic.

There were 2,490 auctions held across the combined capital cities this week, up from 2,258 last week, making it the busiest week for auctions since the beginning of June. Based on preliminary results, the combined capital city clearance rate was recorded at 70.3 per cent this week, up from 66.9 per cent last week, although this will likely revise lower over the next few days as the remaining results are collected. Over the corresponding week last year, auction volumes were lower, with 2,149 properties taken to auction and a clearance rate of 76.2 per cent was recorded. Melbourne had the highest number of auctions this week, with 1,268 auctions held, and a higher preliminary clearance rate week-on-week (73.6 per cent), while the highest preliminary clearance rate was recorded in Adelaide (75.0 per cent across 72 reported auctions).

2017-09-18--auctionresultscombinedcapitals

An affordable housing own goal for Scott Morrison

From The New Daily.

There was considerable shock on Friday when Treasurer Scott Morrison announced legislation that could block billions of dollars of new housing supply – bizarrely enough, in the name of ‘affordable housing’.

Property developers are aghast at Mr Morrison’s draft legislation, because although they see it as giving a small leg-up to the community housing sector, they think it will block literally billions of dollars in investment in mainstream rental dwellings.

Both measures relate to an established way of bringing together large pools of money from institutions or wealthy individuals as ‘managed investment trusts’ (MITs).

Mr Morrison’s draft law is offering MITs a 60 per cent capital gains tax discount for investing in developments run by recognised ‘community housing providers’, rather than the normal 50 per cent discount.

But at the same time the legislation bans MITs from investing in all other residential developments.

The reason that has shocked property developers is that they have been anticipating for some time that MITs would play a major role in the emerging ‘build-to-rent’ housing market.

Two types of build-to-rent

There is some confusion around the term ‘build-to-rent’ at present, because it is being used to describe two quite different kinds of housing, both of which are booming in the UK and US.

The first is a straightforward commercial proposition. A developer might build a 100-dwelling development – be it townhouses, low-rise apartments, or high-rise flats – but instead of selling off each home to speculators or owner-occupiers, it retains ownership and rents them out directly.

The second variation is similar, but involves government subsidies and the input of community housing providers, to keep rents low.

That model, being championed by the likes of shadow housing minister Doug Cameron, would connect large investors such as local super funds or overseas pension funds, with long-term investments that provide secure, good-quality rental properties to lower-income Australians.

So when you read the term ‘build-to-let’, have a look at who is using it – it could mean fancy apartments with swimming pools, gyms or other communal facilities, or just decent housing that cash-strapped people can afford.

A fatal contradiction

What’s so surprising about Mr Morrison’s two new measures, is that they appear to work against each other.

One is trying to push rents down for low-income groups squeezed out of the mainstream market, but the other looks to crimp supply in the mainstream market and thereby push rents up.

That would be a big mistake, because both kinds of new dwellings are needed as our increasingly dysfunctional capital cities look for ways to ‘retro-fit’ sprawling suburbs with higher-density housing.

For many years now I have complained that the housing market didn’t have to get to this point – negative gearing and the capital gains tax breaks that have helped push home ownership out of reach of many Australians should have been reined in years ago.

But they were not, and the market, and the economy more generally, has become dangerously unbalanced by the housing credit bubble that those tax breaks created.

If that imbalance is successfully unwound – by wages catching up to house prices – it will be a small miracle, but it will also take a long time.

In the meantime, increasing housing supply in the right areas of our capital cities is a good way to keep a lid on prices, albeit rents rather then purchase prices – though an abundance of good rental properties can lower those, too.

That is what Mr Morrison’s draft legislation is jeopardising.

Labor, as you might expect, has slammed the ban on MIT investments, which shadow treasurer Chris Bowen says “has completely ambushed the property and construction sector”.

Much rarer, is for the Treasurer to be at odds with the Property Council – the lobby group he worked for between 1989 and 1995.

But it has also been scathing of the change.

It said on Friday: “The answer to Australia’s housing problem is more supply. Build to rent has the potential to harness new investment that could deliver tens of thousands of new homes and provide a greater diversity of choice for renters.

“… the unintended consequence of the draft legislation is to completely close down the capacity for Managed Investment Trusts (MITs) to invest in build to rental accommodation. This risks stalling build-to-rent before it starts.”

Given that kind of opposition, it’s hard to see the MIT investment ban becoming law – or if it did, the government that put such a ban in place ever living it down.

Liar Loans and Household Finances – Property Imperative Weekly 16th Sept 2017

Risks in the property sector continue to rise, as we look at new data on household finances, the competitive landscape in banking and liar loans. Welcome to the Property Imperative to 16th September 2017.

We start our weekly digest looking at the latest data on the state of household finances. Watch the video, or read the transcript.

The Centre for Social Impact, in partnership with NAB released Financial Resilience in Australia 2016. This shows that while people are more financially aware, savings are shrinking and economic vulnerability is on the rise. In 2016, 2.4 million adults were financially vulnerable and there was a significant decrease in the proportion who were financially secure (35.7% to 31.2%). People were more likely to report having no access to any form of credit in 2016 (25.6%) compared to 2015 (20.2%) and no form of insurance (11.8% in 2016 compared to 8.7% in 2015). A higher proportion of people reported having access to credit through fringe providers in 2016 (5.4%) compared to 2015 (1.7%).

The ABS published their Survey of Household Income and Wealth. More than half the money Australian households spend on goods and services per week goes on basics – on average, $846 out of $1,425 spent. Housing costs have accelerated significantly. The data shows that more households now have a mortgage, while fewer are mortgage free. Rental rates remain reasonably stable, despite a rise in private landlords.

We published our Household Finance Confidence Index for August, which uses data from our 52,000 household surveys and Core Market Model to examine trends over time. Overall, households scored 98.6, compared with 99.3 last month, and this continues the drift below the neutral measure of 100. Younger households are overall less confident about their financial status, whilst those in the 50-60 year age bands are most confident. This is directly linked to the financial assets held, including property and other investments, and relative incomes. For the first time in more than a year, households in Victoria are more confident than those in NSW, while there was little relative change across the other states. One of the main reasons for the change is state of the Investment Property sector, where we see a significant fall in the number of households intending to purchase in NSW, and more intending to sell. One significant observation is the rising number of investors selling in Sydney to lock in capital growth, and seeking to buy in regional areas or interstate. Adelaide is a particular area of interest.

There was more mixed economic news this week, with the trend unemployment rate in Australia remaining at 5.6 per cent in August and the labour force participation rate rising to 65.2 per cent, the highest it has been since April 2012. However, the quarterly trend underemployment rate remained steady at 8.7 per cent over the quarter, but still at a historical high, for the third consecutive quarter. Full-time employment grew by a further 22,000 in August and part-time employment increased by 6,000.

The RBA published a discussion paper The Property Ladder after the Financial Crisis: The First Step is a Stretch but Those Who Make It Are Doing OK”. Good on the RBA for looking at this important topic. But we do have some concerns about the relevance of their approach. They highlight the rise of those renting, and attribute this largely to rising home prices. As a piece of research, it is interesting, but as it stops in 2014, does not tell us that much about the current state of play! A few points to note. First, the RBA paper uses HILDA data to 2014, so it cannot take account of more recent developments in the market – since then, incomes have been compressed, mortgage rates have been cut, and home prices have risen strongly in most states, so the paper may be of academic interest, but it may not represent the current state of play.   Very recently, First Time Buyers appear to be more active. More first time buyers are getting help from parent, and their loan to income ratios are extended, according to our own research. Also, they had to impute those who are first time buyers from the data, as HILDA does not identify them specifically.  Tricky!

ANZ has updated its national housing price forecast. They think nationwide prices will finish the year 5.8% higher, though prices are now 9.7% higher than a year ago. They attribute much of the slow-down in home price growth to retreating property investors. They also think Melbourne will be more resilient than Sydney.

Banks have been putting more attractor rates into the market to chase low risk mortgage loan growth this week.  CBA advised brokers that the bank is offering a $1,250 rebate for “new external refinance investment and owner-occupied principal and interest home loans” and some rate cuts.  ANZ increased its fixed rate two-year investor loans (with principal and interest repayments) by 31 basis points to 4.34 per cent p.a., while its two-year fixed resident investor loan with an interest-only repayment structure fell by 10 basis points to 4.64 per cent p.a. Suncorp also reduced fixed rates on its two and three-year investment home package plus loans by 20 and 30 basis points, respectively. The new rate for both is 4.29 per cent p.a., provided that the loan is for more than $150,000 and the loan to value ratio (LVR) is less than 90 per cent. MyState Bank has announced a decrease in its two-year fixed home loan rates for new, owner-occupied home loans with an LVR equal to or below 80%, effective immediately. Data from AFG highlights that the majors are reasserting their grip on the mortgage market – so much for macroprudential.

A UBS Report on “liar loans” grabbed the headlines. It is based on an online survey of 907 individuals who had taken out mortgages in the last 12 months and claimed 1/3 of mortgage applications (around $500 billion) were not entirely accurate. Understating living costs was the most significant misrepresentation, plus overstating income, especially loans via brokers. ANZ was singled out by UBS for an alleged high proportion of incorrect loans. Of course the industry rejected the analysis, but we have been watching the continued switching between owner occupied and investor loans – $1.4 billion last month, and more than $56 billion – 10% of the investor loan book over the past few months. This has, we think been driven by the lower interest rates on offer for owner occupied loans, compared with investor loans. But, we wondered if there was “flexibility with the truth” being exercised to get these cheaper loans. So UBS may have a point.  They conclude “while household debt levels, elevated house prices and subdued income growth are well known, these finding suggest mortgagors are more stretched than the banks believe, implying losses in a downturn could be larger than the banks anticipate”. Exactly.

The Treasury released their Affordable Housing draft legislation, which proposes an additional 10% Capital Gains Tax (CGT) benefit for investors who provide affordable housing via a recognised community housing entity. It also allows investment for affordable housing to be made via Managed Investment Trusts (MIT). The focus is to extend market mechanisms to get investors to put money into schemes designed to provide more rental accommodation via community housing projects. Whilst the aims are laudable, and the Government can say they are “Addressing Affordable Housing”, the impact we think will be limited.

APRA’s submission to the Productive Commissions review on Competition in the Australian Financial System review discusses the trade-off between financial stability and competition. They compared the banks’ cost income ratios in Australia with overseas, and suggests we have more efficient banks here – but they fail to compare relative net income ratios and overall returns – which are higher here thanks to a weaker competitive environment. They conclude that whilst some competition is good, too much risks financial stability.

The House of Representatives Standing Committee on Economics heard from the regulators this week. The focus was the banks’ out of cycle mortgage rate price hikes. Some of the banks have attributed the rise in rates to the regulatory changes but are they profiteering from the announcement? ASIC said the issue was whether the public justification for the interest rate rise was actually inaccurate and perhaps false and misleading, and therefore in breach of the ASIC Act. ASIC is currently “looking at this issue” and will be working with the ACCC, which has been given a specific brief by Treasury to investigate the factors that have contributed to the recent interest rate setting.

APRA was asked if lenders’ back book IO repricing practices were “actually opportunistic changes” that had effectively used the APRA speed limits as excuses to garner profit. Deflecting the question, APRA said it would wait to see what came out of inquiries by the ACCC and ASIC, but it was not to blame for any rate hikes, saying “a direct assertion that we made them put up interest rates is clearly not true”.

We think at very least the banks were given an alibi for their rate hikes, which have certainly improved margins significantly.

Finally, the ABS Data on Lending Finance to end July highlighted the rise in commercial lending, other than for investment home investment, was up 2%, while lending for property investment fell as a proportion of all lending, and of lending for residential housing. This included significant falls in NSW, further evidence property investors may be changing their tune.

So, finally some green shoots of business investment perhaps. We really need this to come on strong to drive the growth we need to stimulate wages. The upswing is there, but quite small, so we need to watch the trajectory over the next few months.  Overall lending grew 0.64% in the month, (which would be 7.8% on an annualised basis), way stronger than wages or cpi. So household debt will continue to rise, relative to income, so risks in the property sector continue to grow.

And that’s the Property Imperative to 16th September 2017. If you found this useful, do subscribe to get future updates and thanks for watching.