CKC expects 16,300 apartment completions in Melbourne 2017, well down from the 23,200 they had forecast for the 2016 calendar year.
Cognitive dissonance is the state of having inconsistent thoughts where we 'spin' or reframe evidence to fit our beliefs, rather than updating our beliefs in light of the new evidence.
We like to believe that we mould our beliefs to fit the evidence, as this would obviously be the rational thing to do - but human nature often simply does not allow us to do it. Why? Largely because we don't like to be proven wrong, for it challenges us too much!
Market sentiment proxy
There is no simple way to measure exactly what financial markets think about the new apartment markets and any related systemic risk.
Genworth Mortgage Insurance Australia (ASX: GMA) is a monoline mortgage insurer operating in Australia and its share price action might possibly be the best proxy we have for monitoring mortgage arrears and default risk.
The GMA share price is up by a whopping +29.1 per cent year-on-year despite a huge drop in gross written premium (stock levels have been well down this year, and macroprudential measures curbed the investor market in 4Q15).
Clearly the market doesn't appear to be too perturbed about default risk, although the recent surge may in part reflect good cheer for the company's renewal of its contract with CBA.