Credit growth weakens again
Only confirming what we already knew, of course, but the Reserve Bank's latest Financial Aggregates showed that the credit squeeze went too far in 2018, and continued well into 2019.
By the end of February 2019 personal credit growth had collapsed to -2.7 per cent year-on-year, a diabolical result reflecting a third consecutive quarter of lacklustre growth in the economy.
This is now the weakest result for personal credit since the global financial crisis.
This is now the weakest result for personal credit since the global financial crisis.
Remember this is in an economy where the population grew by about 400,000 or so heads, so in real terms and after accounting for population growth it's an epic fail.
Business credit growth was just 0.3 per cent in February, mirroring a similarly benign result in January, meaning that monthly business credit growth has also been in deceleration mode for the past six months.
Business credit growth was just 0.3 per cent in February, mirroring a similarly benign result in January, meaning that monthly business credit growth has also been in deceleration mode for the past six months.
And annual housing credit growth slowed further in February.
Investor credit growth slowed again, to the lowest level on record, while growth in credit for homebuyers is also decelerating.
Labor confirmed this morning it would introduce its new tax laws to level the playing field for first homebuyers and reduce demand for investment housing (thinking face emoji) from 1 January 2020.
And while I don't believe in the forward-looking power of the credit impulse as a predictor of dwelling prices, it remained flaccid up until February.
Monday's housing market release will confirm a deceleration in price declines for the major capital cities, which is welcome.
But there's no escaping the facts: some households that bought recently are now facing down negative equity - even before transaction costs - which in turn obviously increases financial stability risks.
The latest available figures will also show that the credit squeeze has decreased activity and housing market turnover in all markets across the country, while personal credit growth is at recessionary levels.
