While vendors feast, builders experiencing famine
Sydney's preliminary auction clearance rate reached a mammoth 84.7 per cent off 500 properties hitting the block over the weekend, up three points from the previous week.
CoreLogic reported Melbourne's prelim figure nearly hit 80 per cent, and 73 per cent nationally - which represents a two-and-a-half year high. Realestate.com.au is reporting that based on data over this period, auctions have delivered better prices compared to private sales during the downturn.
The word of the day from CoreLogic, however, is pragmatism. This from CoreLogic's Kevin Brogan: "What we haven’t seen yet, which is going to be a test, is a significant increase in listings."
Analysis from ANZ says the current auction boom will not translate into another rapid escalation of prices. It cites current credit conditions - namely, still-tightening restrictions around credit availability as banks meet conditions handed down by APRA and the royal commission - as one of the main reasons why house prices should only rise between 3 and 5 per cent in 2020.
The Housing Industry Association, on the other hand, is hoping moves toward more stringent lending criteria will have a limited impact on the new-build sector. It's tipping that we're closer to a plateau in residential building than previously thought, with a peak-to-trough of 20 per cent. “If economic activity improves, the credit squeeze dissipates, home prices stabilise and the recent stimulus measures take hold, the supply of new work into the pipeline will soon reach its low point,"
According to the HIA, detached home building is going to improve faster than apartment developments - but that the sector as a whole will be reliant on state and federal investment in new infrastructure projects.
NSW housing developer Landcom is doing its bit. It has announced its first major metro station housing project, a $700m, 1,100 unit develop at Tallawong on the north-west link of the Sydney metro system. It intends to deliver 11,000 homes at housing hubs across all eight stations between Epping and Tallawong over the next 10 years.
Global about to hit local a bit harder
The RBA's Dr Philip Lowe was at a pow-wow of international monetary policy heavyweights in Jackson Hole, Wyoming yesterday. He used the opportunity to warn that the geopolitical shocks we're experiencing - the US / China trade war, Brexit and Hong Kong, for example - are making the job of central banks harder. "Political shocks are now becoming economic shocks."
In simple terms, this has a flow-on impact for jobs, wage growth and business prosperity - all the things needed to improve Australia's economic prospects.
It's no accident Treasurer Josh Frydenberg was asking those assembled at a Business Council of Australia breakfast this morning to invest, despite any misgivings they may have around the shaky nature of local and global economies at the moment. This follows commentary over the weekend encouraging Australia's CEOs to toughen up and stop waiting for conditions to improve.
At the same time, JoFry is moving rapidly on legislation responding to the Hayne Royal Commission's recommendations on mortgage broking through Parliament. Best-interest duties and bonus commissions are the subject of the new legislation; we'll be watching for public responses from the industry this week.