Winter

Super time of year (Sunny Coast).

Kouk on cost of living pressures

The cost of living...

Some good news out today was that in aggregate Australia's cost of living indexes are not rising sharply.

In fact, living cost indexes were stone dead flat for pensioner and beneficiary households in the June quarter, and government funded households also experienced no change.

Employee households saw a marginal 0.1 per cent increase, as did age pensioners. 

Overall, not too much sign of consumer price inflation here.

Despite this, household incomes growth has been weaker since the peak of the mining boom, and the costs of some services such as childcare have soared. 

Kouk discussed this on a short segment on Channel Ten's The Project last night (click image to view). 

To come and see Kouk present at the Money for Life workshop in Sydney, book your ticket here.

Building approvals holding up

Approvals solid

Private sector building approvals rebounded by +10.9 per cent in seasonally adjusted terms to a total of 18,453 in June, driven by a timely jump in attached dwellings. 

In trend terms total approvals have remained broadly unchanged since the end of 2016.

Despite the monthly rebound the annual number of building approvals continues to ease steadily, now trickling down towards ~219,000. 

Sydney powers on

House approvals have been fairly flat over the past year, although annual house approvals in Perth are now some 40 per cent below their 2014 peak. 

Apartment approvals have been trending down for some time in Melbourne, and have dropped by some 42 per cent from their peak in Brisbane, before now appearing to have found a plateau of sorts. 

High rise trends

Annual high rise approvals of four or more storeys continue to decline from ~78,000 in October 2015 to ~62,000.

And this downtrend is mirrored across each of the most populous states.

The wrap

Overall, this was quite an upbeat result which beat market expectations, built on the back of a boost in demand from owner-occupiers, and especially in the apparently evergreen Sydney market. 

Despite fears of a downturn in the building pipeline, after accounting for a strong lift in non-residential approvals the annual total value of building approved remains close to its highest ever level at more than $115 billion. 

Listings tank (Hobart boom)

Listings down

Something about the so-termed "no bids on property" meme is not quite stacking up here.

SQM Research reported that listings fell by -5.1 per cent in July to 316,748.

Melbourne was one of the two capital cities leading the charge, with yet another big drop.

Listings have declined massively again by-20.5 per cent in Melbourne over the past year from 36,688 to just 29,177, which is a seriously far cry from the peak. 

So someone must be bidding, 'cos all those properties aren't buying themselves. 

Asking prices for Melbourne house prices rose by a thunderous +21.6 per cent over the year to August 1, reported SQM's Louis Christopher. 

Sydney (-5.7 per cent), Perth (-6 per cent), Brisbane (-5.2 per cent), Canberra (-5.2 per cent), and Adelaide (-6.2 per cent) all recorded steep seasonal declines in the quieter winter month. 

More first homebuyers may also be expected to enter the New South Wales and Victoria markets now that we are well into the post July 1 period heralding fresh incentives. 

Listings having declined across the other capital cities in July left year-on-year stock levels relatively stable in most cases ex-Melbourne.

Except for one...step forward, Hobart!

Tight in Tassie

The Tasmanian capital is absolutely smashing it right now with listing levels dropping by an outlandish -23.3 per cent from a year ago to just 2,607.

It's getting extraordinarily tight down there on all metrics in Tassie.

Nationally listings were -9 per cent lower than a year ago. 

When you consider the potential level of Chinese interest in Hobart and, well, not even 2,700 listings...fair suck of the sauce bottle mate, it could all get a bit tasty down there on the Island of Inspiration...

APRA monthly banking update

Monthly banking update

APRA released its latest Monthly Banking Statistics for June 2017 yesterday, detailing information on the banking business of individual banks within the domestic market.

Further strong mortgage growth of +0.63 per cent was reported taking the total for outstanding housing loans to a fresh high of $1.57 trillion.

The figures officially reported were $1,107,754 million (+0.73 per cent) for owner-occupier mortgages and $552,270 million (+0.44 per cent) for investment mortgages outstanding.

Thus investment mortgages now officially account for 35.2 per cent of banking loan books, classification issues notwithstanding. 

Investor loan books

Looking specifically at investor loans, it's clear that none of the major banks is close to the arbitrary 10 per cent 'speed limit' or annual growth cap imposed by the regulator.

As you can see, of the major lenders Westpac Banking Corporation (WBC) is ramping up its investment loan exposure at the present time. 

Indeed, Westpac (WBC) is presently expanding both sectors of its mortgage book, and has the largest exposure to investment loans overall at $146.8 billion, although Commonwealth Bank of Australia (CBA) has a more substantial loan book in aggregate.

Although the majors have wound back growth in investment loans, some other lenders continue to exceed the 10 per cent growth cap comfortably.

Additionally certain lenders have loan books that are exposed to markets at risk of mortgage arrears, including regional Queensland.

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Rental growth returns

Rents rising

CoreLogic reported in its Quarterly Housing & Economic Review that capital city rents are rising again following the crackdown on investor lending. 

The annual increase was mainly driven by the most populous capital cities of Sydney (+4.5 per cent) and Melbourne (+4.1 per cent).

There were also increases in Hobart (+6.2 per cent), Canberra (+8.4 per cent), and Adelaide (+1.1 per cent). 

Source: CoreLogic

At this stage the national result is not strong enough to pull inflation much higher.

The headline figure continues to be pulled down by negative growth in rents in Perth (-8.3 per cent) and Darwin (-5.4 per cent).

New home sales at the lowest level since 2013

Crunch time

More signs that the peak of the residential construction cycle has been and gone.

There was a 5.8 per cent drop in new house sales in June, and a 10.7 per cent drop in multi-units. 

Considerable variation around the traps, with substantial monthly drops in New South Wales, Queensland, and South Australia.

Source: HIA

The Housing Industry Association expects dwelling starts to decline for next 18 months. 

Housing credit ploughs ahead

Credit picks up

The Reserve Bank of Australia (RBA) released its Financial Aggregates figures for the month of June 2017, which showed annual credit growth picking up to +5.4 per cent. 

There was a welcome +0.9 boost in the month of June for business lending, taking annual business credit growth back up to +4.4 per cent. 

This mirrored findings by Equifax that business credit demand was on the rise in the June quarter.

Growth in personal credit remains negative. 

Although credit growth relating to investment property remained elevated in annual terms at +7.4 per cent, the monthly figures did indicate that a slowdown in this segment is underway. 

In truth, a great deal of misplaced energy could be spent analysing the split between outstanding owner-occupier loans - which, incidentally, have now blazed past $1.1 trillion - and investment mortgages. 

The big picture is that housing credit growth has actually picked up a bit from +6.3 per cent at the end of 2016 to +6.6 per cent at the end of the second quarter of calendar year 2017. 

If you like your financial aggregates served nominal, total housing credit increased by $113 billion to a total of $1.69 trillion over the year to June, which is the biggest year-on-year increase in the history of the data series. 

Arguably non-bank lending may have picked up following APRA's measures, although this hasn't shown up too much in other housing finance data to date.

Overall, APRA's cooling measures haven't got in all the cracks yet, and housing credit is still growing at a sprightly lick.