Tuesday's Reserve Bank meeting will be the pivot point, say economists
Next week is a big one for the property sector. On Monday, Corelogic is releasing its monthly home price index, which is expected to show further easing of price drops. The Reserve Bank meets the following day to deliver the rate cut everyone's talking about.
HSBC economist Paul Bloxham is predicting house price falls will stop within the second half of this year. It's turning into a pretty common point of view among his peers, although economist Stephen Koukoulas reckons while house prices will start picking up in Q4, he says we're going to see further drops in construction.
The AFR's Su-Lin Tan is reporting a sales bounce in eastern seaboard housing markets since the election and last week's APRA and RBA announcements. On the auction front, Westpac senior economist Matthew Hassan is expecting last weekend's figures to come in at the highest clearance rate since April 2018.
The Victorian government, which released its latest state budget yesterday, is hoping that positivity will be sustained. Its coffers have suffered due to the property slump; it is banking on the combination of a new tax on foreign investors in property in VIC and a return to strength in the market overall in order to bring the state the surpluses it needs over the next three years.
It needs it. Victoria's debt is set to more than double and the property buyers are among the groups being tasked with footing the bill.
Victoria is not alone in suffering from a drop in stamp duty revenues; NSW, Queensland and South Australia are all releasing their budgets next month, and will be dealing with the same problems.
Not everyone is thrilled with the way Victoria is tackling the problem. Once vocal critic of adding new taxes to a sector already under immense pressure is Melbourne Lord Mayor and former head of the Victorian branch of the Property Council, Sally Capp. Her argument is that foreign buyers are a big part of both resi and commercial buyer mixes in Melbourne, and increasing taxes could have the opposite intended effect.
Meanwhile, yesterday unveiled a rare sight these days: a publicly happy bank CEO. Macquarie had upgraded NAB from "neutral" to "outperform" on Friday as a result of (for example) the more relaxed lending environment resulting from the election result and APRA's intention to remove the serviceability buffer. Most banking analysts have taken Macquarie's lead; it's now holds a "buy" recommendation from most investment houses. As you'd expect, NAB CEO Philip Chronican is beaming today in the AFR.