Housing Market Finally Turning, Lender says

Australia’s recent housing market weakness has been attributed to a lack of demand, and not a glut of new supply coming onto the market, says the nation’s largest mortgage lender.

Demand weakness was the trigger for falling prices, rather than a supply glut as was the fear in 2017-2018 according to new research from the Commonwealth Bank of Australia.

CBA chief economist Michael Blythe says home buying intentions have been in negative territory since 2018, however current readings suggest that “the market is now turning”.

“The big question right now with interest rate cuts in place and tax cuts coming is whether policy makers have done enough to keep the Australian economic story on an even keel. The overall message about household spending intentions has changed over the first half of 2019,” Blythe said.

“The weakness evident since mid-2018 spilt over into the early part of 2019, but a more diverse picture is now evident.”

CBA’s analysis is based on its databases covering 2.5 million households and 16 million customers.

Combining CBA transactions data along with household spending intentions from Google Trends search data, the analysis covers home buying and around 55 per cent of Australia’s total consumer spend across retail, travel, education, entertainment, motor vehicles, with the results showing ongoing weakness in retail spending intentions.

The latest property sentiment survey from ME Bank reveals Australians in the property market have become more optimistic about house prices over the next 12 months.

It’s the first property sentiment survey since the election, APRA changes to lending and the two RBA cash rate cuts to a new and historic low.

Compared to the last quarterly report, ME Bank says expectations for house prices over the next 12 months have become more optimistic, with only 17 per cent of people expecting them to fall, a change from 28 per cent in April.

Positive house price expectations were also seen across all property types, with owner occupiers the segment that has changed their tune the most since April.

“Australians in the property market have become more optimistic about house prices, perhaps reflecting a number of changes in the external environment since the last survey,” ME Customer Banking group executive Craig Ralston said.