Peak rates
As the global economy softens, oil prices have dropped 20 per cent, and other parts of the developed world are beginning to factor in interest rate cuts for 2024, in Australia financial markets are toying with the idea that we're finally at the peak of the cycle.
For now at least, markets are looking for interest rates to be on hold in December.
Source: ASX
In other news, CoreLogic released its monthly housing market chart pack, with all the usual excellent insights.
Lending standards continue to tighten.
Westpac and NAB reported results this week which showed the impact of the 300 basis points lending assessment buffer, which almost certainly means that more investors will be leaving the housing market than joining it.
Building approvals have dropped further, and the dwelling stock looks set to increase by a woefully inadequate 150k or so next year, far below what is required versus all-time high population growth.
These settings are all wrong for capital city rental market dynamics, and although Aussies are increasingly cramming into share housing, granny flats, and even tents, rents continue to increase, up by 9.7 per cent over the past year across the capital cities.
New listings have picked up as expected through the spring selling season, but the stock is generally being well absorbed, and total listings remain 19 per cent below their 5-year average.
It's going to be a challenging few months for the housing market with another interest rate hike pulling down sentiment.
With at least 4 more building companies over the past week that I can think of off-hand, the dwelling shortage is set to become more acute into 2024.
At some point the assessment buffer and/or interest rates will need to be dropped, or else nothing at the affordable end of the new dwelling market is going to get up.
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