TIP: property sentiment turns positive, economic sentiment not so much, The Opal Tower Effect

So long "orderly correction", hello property market speculators


NAB has called it: property professionals are now feeling positive about the housing market for the first time since mid-2018. NAB expects house prices to keep rising in Sydney and Melbourne, and tick upwards in every state except WA in 2020.


That sad bloke at this particular party - you know, the one you always end up finding yourself sitting next to? - is APRA. The prudential regulator is worried about a return of speculators to the housing market, which will make then think twice about the decision to lower the serviceability buffer.


Which in a roundabout way, brings us to first home buyers - who have returned in greater strength to the property market this year to take advantage of decreasing prices and more attractive lending conditions. The SMH has run a piece today questioning the lack of detail in the incoming First Home Buyers Loan Scheme, due to be introduced from January 1 by the National Housing Finance and Investment Corp (NHFIC).


The government is limiting the scheme to 10,000 first home buyers a year, which according to the Herald accounts for a wee bit under 10 per cent of all first home buyers. With two months to go before the scheme is introduced, it'd be nice to see a little more meat on the bone from NHFIC.


Some good news from the economy


Back to NAB, which has released data showing business conditions for SMEs improved by 8 points in the September quarter, picking up more than it lost in the previous quarter. Expectations on business conditions, forward orders and capacity utilisation over the next three months also improved.


These improving conditions haven't flowed through to larger businesses, if this next piece is anything to go by. After surveying 1489 members, the Australian Institute of Company Directors has found 59 per cent of company directors expect the economy to worsen over the next 12 months. Only 8 per cent think the economy will be strong in 2020.




Check out JB Hi-Fi though. It's just seen same-store sales in Australia rise 3.7 per cent in the September quarter, its strongest growth for more than a year. Things have also improved at The Good Guys.


Australian Pharmaceutical Industries, owner of Priceline, also reported quarterly results yesterday. It's doing it tough, but saw an increase in same-store sales over the quarter, driven by exclusive brand lines and products such as Napoleon Perdis makeup (pictured).


The Opal Tower Effect


The introduction earlier this week of the NSW government's construction industry reforms has been met with skepticism. The ultimate arbiters of who's responsible for what within the current system - the lawyers - have said the standards don't go nearly far enough to protect consumers.


A key issue is the fact that people caught up in the last 12 months of building defect scandals are not helped in any way by the legislative changes, which cannot be applied retrospectively.


And so, the issue remains unchecked, which is terrible news for anyone building, selling, buying or owning apartments in Sydney right now. Knight Frank's latest Australian Residential Development Review has found sales of residential development sites dropped 38 per cent in FY 2019.


The disappearance of overseas investors have quite a bit to do with that - in Sydney, they only accounted for 11 per cent of sales - but a big factor is the impact of building issues like structural defects and flammable cladding. So much so, that The Opal Tower Effect on sales is a very real thing.