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Housing
Pulse
May 2019
Westpac Institutional Bank
2
Contents
The Housing Pulse report is produced by Westpac Economics
Editor: Matthew Hassan
Internet: www.westpac.com.au
E...
3Housing pulse May 2019
Executive summary
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‘Macro’ prudential ‘Micro’ prudential
2015 10% limit on investor loan
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Victoria: overhang of unsold units a concern
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Queensland: south-east slips into price correction
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Western Australia: no let up to bleak market
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South Australia: stable and still looking resilient
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Additional material: charts and tables
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Additional material: charts and tables, continued
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Additional material: charts and tables , continued
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Economic and financial forecasts
Interest rate forecasts
Latest (24 May) Jun–19 Sep–19 Dec–19 Mar–20 Jun–20 Sep-20 Dec–2...
33Housing pulse May 2019
Economic and financial forecasts
Australian economic growth forecasts
2018 2019
Q2 Q3 Q4 Q1f Q2f Q...
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Housing market data
Consumer sentiment – housing–related measures
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index* avg Sep Dec Mar Jun Sep Dec Mar...
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Housing market data
Consumer sentiment – other components
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Housing market data
Dwelling prices and turnover
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Housing market data
Residential property listings
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Westpac Economics directory
Westpac Economics
Sydney
Level 2, 275 Kent Street
Sydney NSW 2000
Telephone (61–2) 8254 872...
40
Disclaimer
© Copyright 2019 Westpac Banking Corporation
Things you should know.
Westpac Institutional Bank is a divisio...
41
Disclaimer
China, Hong Kong, Singapore and India: This material has been prepared and issued for distribution in Singap...
42
Disclaimer
Westpac does not have any proprietary positions in equity shares of issuers that are the subject of an inves...
© Copyright 2019 Westpac Banking Corporation
Westpac Institutional Bank is a division of Westpac Banking Corporation ABN 3...
Westpac #Housing pulse #May #2019
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Westpac #Housing pulse #May #2019

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The response was more muted in the national results, and in Victoria, Queensland, the ACT and the remaining states and territory, Westpac’s Housing Pulse report, released on Tuesday, shows.

“Prices have continued to decline but at a slower pace. Turnover remains very low but auction markets and listings are showing an improved tone,” the report states.

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Westpac #Housing pulse #May #2019

  1. 1. Housing Pulse May 2019 Westpac Institutional Bank
  2. 2. 2 Contents The Housing Pulse report is produced by Westpac Economics Editor: Matthew Hassan Internet: www.westpac.com.au Email: economics@westpac.com.au This issue was finalised on 27 May 2019. The next issue will be published on 23 August 2019. Executive summary 3 Overview: bottoming out? 4 Special topics: Budget reaction 6 Prudential policy update 8 Rate cuts and housing sentiment 10 State by state New South Wales: pace of price declines slows 12 Victoria: overhang of unsold units a concern 14 Queensland: south-east slips into price correction 16 Western Australia: no let up to bleak market 18 South Australia: stable and still looking resilient 20 Tasmania: boom over but supply still tight 22 Territories: NT overhang lingers; ACT gains slow 24 Additional material: charts & tables 26 Summary & forecast tables Economic & financial forecasts 28 Housing market data 30 Appendix 40
  3. 3. 3Housing pulse May 2019 Executive summary -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac Consumer Housing Sentiment Index* turnover^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *adv. 3mths; ^% stock seas. adj’d by Westpac, smoothed latest month 1. Australia: national housing conditions Much has changed since our Feb Housing Pulse. Our call that the RBA would move to deliver rate cuts later in the year, a minority view at the time, has been franked by markets, other forecasters and the RBA Governor himself with a first move in June now all but certain. Meanwhile, the Coalition win at this month’s Federal election has restored some certainty to the political backdrop and removed significant tax policy risks hanging over the housing sector. Other developments around first home buyer policy and potential changes to ‘micro prudential’ lending guidelines may also play positively for housing. The latest updates around buyer sentiment continue to point to some improvement albeit with ongoing tensions between improving assessments of ‘time to buy’ and a negative outlook for prices. The market itself remains weak but with the pace of declines moderating and a better tone around listings and auctions. The latest signal from the Westpac Housing Consumer Sentiment Index* shows a further inching towards stabilisation but pre-dates the firmer view on rate cuts and the election result. Needless to say, next month’s sentiment results, due out Jun 12 and surveyed in a week that is expected to see the RBA’s first 25bp rate move, will be of intense interest. Note that Westpac now expects the RBA to make two further 25bp cuts in Aug and Nov (see here for more). Looking across the various states, this month’s report finds moderating corrections in NSW, Vic and WA, but softening conditions in Qld, SA and the previously booming Tas. We have again included extra material on the major state markets, the smaller territories and listings. The special topics in this month’s issue look at consumer reactions to the Federal Budget, latest developments around prudential policy and how housing-related sentiment has reacted to rate cuts in the past. “... the Westpac Consumer Housing Sentiment Index* shows a further inching towards stabilisation but pre-dates the shifting view on rate cut expectations and the election result” *The Westpac Consumer Housing Sentiment Index is a composite measure based on four housing–related components of the Westpac Consumer Sentiment survey. See Appendix on p38 for more details.
  4. 4. 4 60 80 100 120 140 160 180 200 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly avg *seasonally adjusted series is 3mth avg time to buy* price expectations^ 0 10 20 30 40 50 60 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual ^qtly avg *seasonally adjusted series is 3mth avg Source: Melbourne Institute, Westpac Economics unemp. expectations (lhs) risk aversion (rhs)^ unemp. to rise unemp. to fall more risk averse less risk averse ― Data since our last report show a modest improvement in Australia’s housing markets but coming off an extremely weak finish to 2018. Prices have continued to decline but at a slower pace. Turnover remains very low but auction markets and listings are showing an improved tone. Against this, price weakness has broadened – what was a Sydney-Melbourne led correction with a longer running adjustment in Perth is now one that is also seeing prices slip lower in Brisbane and virtually stalling flat in Adelaide and Hobart. ― Housing related sentiment has firmed slightly since Feb but with mixed shifts: views around ‘time to buy’ showing a further lift but price expectations sagging further into ‘net negative’ territory. Unemployment expectations have been a touch softer but volatile, while risk aversion remains near record highs. ― Turnover looks to have lifted slightly over the last 3mths having plumbed extreme lows in late 2018/early 2019. Even with that, just 3.4% of the dwelling stock changed hand in the March quarter, a new low since Jun 1987. ― Despite the extremely thin market, auction results have looked a little better, clearance rates lifting from the lows seen late last year to be back in or slightly above the 50-55% range consistent with stabilising prices. Importantly, pre-auction withdrawals have also returned to more normal levels after surging late last year. ― Prices nationally are now down 10.7% from their 2017 peak but are down 12.7% across the Sydney and Melbourne markets on a combined basis. Perth prices are down 8.6%yr. Prices are down 1.9%yr in Brisbane, up just 0.1%yr in Adelaide and 3.8%yr in Hobart. 3. Consumer sentiment: jobs & risk 2. Consumer sentiment: housing Overview: bottoming out?
  5. 5. 5Housing pulse May 2019 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 0.7 0.8 0.9 1.0 1.1 1.2 1.3 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 monthsratio 6mth avg mthly (adv'd 3mths) Source: CoreLogic, Westpac Economics ^shown as months of sales avg *ratio > 1 means sales outstripping new listings sales to new listings (lhs)* total listings (rhs)^ ― Nationally, the Westpac Melbourne Institute ‘time to buy a dwelling’ index has risen 1.9% since Feb to be up 13.6%yr. Improving affordability continues to see a sustained lift in NSW and Vic. ― The Westpac–MI Consumer House Price Expectations Index remains at weak levels. While the raw index has seen a 1.8% rise since Feb this looks to be mostly due to seasonal effects – stripping this out, the ‘underlying’ series looks to be about 3% lower, putting it at a new historical low since we began compiling the index in May 2009. Weakness remains more pronounced in NSW and Vic but the more notable movers over the last 6mths have been big declines in price expectations in Qld and Tas. ― The Westpac Melbourne Institute Unemployment Expectations Index edged 0.7% higher over the 3mths to Feb reversing a similar sized decline over the previous 3mths (recall that higher reads mean more consumers expect unemployment to rise in the year ahead). The index has been choppy in 2019 suggesting increased uncertainty about the outlook for jobs. ― The lift in consumer risk aversion late last year has carried into 2019, the Westpac Consumer Risk Aversion Index posting a 50 reading in Mar on par with the record high 51 in Dec. The ‘wisest place for savings’ question that the index is based on shows only 8.8% of consumers favour ‘real estate’, a 45yr low. ― Listings are showing a more balance picture in recent months, primarily on a sharp pull back in new listings that have brought them more into line with weak sales and look to have stopped the rise in unsold inventory. 5. Residential property listings 35 45 55 65 75 85 95 35 45 55 65 75 85 95 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 %% weekly monthly Sources: APM, CoreLogic, Westpac Economics*all figures seasonally adjusted by Westpac avg Sydney Melbourne 4. Auction clearance rates
  6. 6. 6 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 net%net% Source: Newspoll, The Australian, Westpac-Melbourne Institute net percent expecting positive impact on finances next 12mths *Westpac survey from 2010; earlier estimates based on a similar survey question by Newspoll avg -70 -60 -50 -40 -30 -20 -10 0 10 20 30 -70 -60 -50 -40 -30 -20 -10 0 10 20 30 11 15 19 11 15 19 11 15 19 11 15 19 11 15 19 11 15 19 11 15 19 %% Sources: Melbourne Institute, Westpac Economics avg *net % expecting positive impact on finances state income NSW Vic Qld low med highWA ― The April survey included our annual question on the expected impact of the Federal Budget on family finances. Responses show it was well-received. ― Around 15% of consumers expect the Budget to improve their finances; 51% expect no impact; 22% expect it to worsen their finances; and 13% ‘don’t know’. The ‘net percent’ summary reading (positive minus negative as a share of all those with a clear view) was –8.5%. While negative, this is better than last year’s –10.4% and markedly better than previous years. ― Previous responses going back to 2010 and from a similar question in the annual Newspoll Budget survey going back to 1988 point to a long run average read of –28.5%. Judged against this, the –8.5% this year is a very good result – the best since 2007 and the best seen outside of the 2004-07 period that saw a series of tax cuts and budget surpluses. ― The personal income tax relief announced in the last two Budgets has clearly been a significant positive. The state and sub-category detail shows the Budget was particularly well-received in NSW (net –0.3%), and Vic (–6%) and by both middle and higher income earners (–1.3% and –3% respectively). Consumers in NSW and middle income earners showed the biggest improvement vs a year ago – the latter clearly reflecting both the targeting of tax measures and the delayed nature of those announced last year. Note that the near term boost from tax relief is still relatively small (+0.56% of annual income) with the bulk of the planned relief coming beyond 2022-23. 7. Consumers: expected Budget impact by state, income 6. Consumers: expected Budget impact on family finances Special topic: Budget reaction
  7. 7. 7Housing pulse May 2019 -15 -10 -5 0 5 10 15 -15 -10 -5 0 5 10 15 -16 -12 -8 -4 0 4 8 12 Source: Westpac-Melbourne Institute expected Budget impact^ *pre vs post Budget sentiment move, deviation from Aus-wide increase; ^expected impact on finances next 12mths; deviation from Aus-wide assessment consumer sentiment boost* WA renters NSW low income SA mortgage belt med income 25-54yo’s >55yo’s high income -16 -12 -8 -4 0 4 8 12 16 -16 -12 -8 -4 0 4 8 12 16 11 13 15 17 1911 13 15 17 1911 13 15 17 1911 13 15 17 1911 13 15 17 1911 13 15 17 19 Westpac-MI CSI finances economy next 12mths time to buy dwelling house price expectations unemp expectations^ %chg%chg Sources: Melbourne Institute, Westpac Economics 2011-19 avg *2011-18, Budget month surveys; % difference between pre and post Budget responses ^inverted, i.e. positive indicates fall in unemployment expectations n.a. ― Chart 8 shows a scatter plot of how assessments of the Budget impact on finances compare to the ‘post Budget’ boost to wider sentiment across different sub-groups – each in terms of the variation from the result seen nationally. For the most part these are closely correlated. However, there are a few notable exceptions. The mortgage belt saw a much bigger sentiment boost, perhaps on the view that the budget did not alter prospects for rate cuts later in the year. Conversely, renters and 25-54 year old’s saw a much weaker sentiment boost, possibly reflecting the absence of housing affordability measures in the budget. ― Wider consumer sentiment also got a significant boost from the Budget with sentiment amongst those surveyed after the event 7.7pts higher than sentiment amongst those surveyed prior, with a particularly big lift in expectations for the economy. Turning more specifically to housing-related components, post budget survey responses were more positive on ‘time to buy a dwelling’ and ‘unemployment expectations’, both showing moves of 5-6pts. However, house price expectations were unmoved. Given that the Budget had few measures directly relating to housing, the mix suggests the main effect came via stronger expectations for the economy and a further consolidation of expectations for interest rate cuts. ― In terms of the Westpac Housing Sentiment Index composite used in this report, the net impact of these post-Budget moves is a small positive that would have tipped the annual change of the index in Apr from –0.1 to flat. 9. Consumer sentiment: pre and post Budget 8. Sentiment boost, Budget impact by sub-group
  8. 8. 8 ‘Macro’ prudential ‘Micro’ prudential 2015 10% limit on investor loan growth Tightened serviceability assessments and improved consistency across lenders, including minimum assessment ‘floor’ interest rates >7%; serviceability assessment buffers >2% and applied to both new and existing debt. 2016 – Tightened serviceability assessments including estimates of credit card repayments; scaling of benchmark measures of minimum expenses; discounts to estimates of uncertain/variable income 2017 30% limit on share of ‘interest only’ loans Restrictions on high LVR interest only and investor loans and continue to restrain lending to high risk segments 2018 10% limit on investor loan growth removed Lenders to develop limits on share of new loans with debt to income ratios above 6, improve collection of information on expenses, and strengthen controls on verifying income and existing debt 2019 30% limit on share of ‘interest only’ loans removed Further update of benchmark measures of minimum expenses; likely change to minimum ‘floor rates’ and buffers used on serviceability assessments. Source: APRA, Westpac Economics 10 15 20 25 30 35 40 45 50 0 2 4 6 8 10 12 Dec-09 Dec-12 Dec-15 Dec-18 Dec-09 Dec-12 Dec-15 Dec-18 %ann% Sources: ABS, APRA, Westpac Economics ‘interest only’ loans (rhs) *thin line shows 6mth annualised growth rate ‘10% limit’ interest-only 30%cap investor housing credit (lhs) ― Policy developments over the last three months have clearly been positive for housing market prospects, most clearly around interest rate and government policy but also in the prudential policy space. In particular, APRA has flagged a likely change to key guidelines around interest rates and rate buffers to be used in loan serviceability assessments. ― At this stage the regulator is seeking industry feedback but it is likely that the current guidance – applying the highest of a ‘floor’ rate minimum of 7% or a current rate with a step up of at least 2ppts – being replaced with a simpler 2.5ppt step up on current rates. If applied, this would mark a significant easing in regulatory guidelines, particularly for loans with rates that are markedly below the 7% floor (noting that serviceability assessments for ‘interest only’ loans are required to be on the basis of a ‘principal and interest’ loan covering the remainder of the loan terms once the interest only period has expired). ― Recall that all macro prudential restrictions – the 10% investor credit growth ‘speed limit’ and the 30% cap on the share of interest only loans – have now been removed for lenders that have complied with these and ‘micro-prudential’ measures implemented in recent years (recall that we use the term ‘macro-prudential’ to refer to aggregate guidelines such as those affecting the pace and mix of loan growth, and ‘micro-prudential’ to refer to the more detailed guidelines affecting individual loan assessments). The latest system-wide data shows investor credit growth barely growing over the 6mths to Mar (an annualised pace of just 0.5%) and ‘interest only’ loans accounting for just 16% of new housing loans. 11. Macro–prudential targets 10. Summary of prudential policy measures Special topic: prudential policy update
  9. 9. 9Housing pulse May 2019 3.5 4.5 5.5 6.5 7.5 8.5 9.5 3.5 4.5 5.5 6.5 7.5 8.5 9.5 Apr-07 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 Apr-21 %% owner occupier - P&I investor - P&I Sources: RBA, APRA, Westpac Economics * benchmark rates are ‘standard’ discounted rates; ^ based on APRA surveys in 2014 and 2015, indicative estimates thereafter range of minimum rates applied by ADIs^ step up of from ‘standard’ discounted rate of 175-230bps; additional discounts adding ~another 50-80bps 7% minimum 0 2 4 6 8 10 12 14 0 5 10 15 20 25 Dec-07 Dec-11 Dec-15 Dec-19 Dec-07 Dec-11 Dec-15 Dec-19 %% 90%+ 80-90% 'low doc' other Sources: APRA, Westpac Economics ‘non standard’ (rhs) *% of all new ADI loans by value high LVRs (lhs) ― Chart 12 shows average ‘carded’ mortgage rates, including typical discounts, compared to the regulated 7% minimum ‘floor’ to be used in serviceability tests. The shaded area shows the range of minimums lenders have actually applied (2014 and 2015 based on APRA surveys, and indicative estimates thereafter). The ‘big 4’ banks all apply a slightly more conservative 7.25%/+2.25ppt rule. In most cases the 7.25% rate will be applied in loan serviceability assessments. ― For owner occupier loans at the standard discount rate, that constitutes a 2.30ppt step up. However, as highlighted in previous reports, the RBA’s analysis of average rates on new loans from its securitisation dataset points to average additional discounts of 0.6- 0.8ppts. This suggests that for many borrowers the test is an effective step up over 3ppts. As such, moving to a standard 2.5ppt minimum step up would constitute a significant easing in borrowing conditions. ― Note that some of this easing may be offset by other developments including ongoing changes to expense assessments; proposed changes to the capital treatment of residential loans; and possible additional capital requirements APRA is considering imposing on some lenders due to weak non financial risk management. ― On wider policy, the Federal Government has also announced a new scheme for first home buyers that would allow those meeting specified criteria to use a government guarantee to borrow additional funds to meet the 20% deposit requirement for a loan. While this will likely boost activity in the segment, the effect may be muted if these are treated as ‘high risk’ 90%+ LVR loans. 13. High risk loan categories 12. Mortgage rates vs serviceability test minimums
  10. 10. 10 60 80 100 120 140 160 180 60 80 100 120 140 160 180 Apr-96Apr-98Apr-00Apr-02Apr-04Apr-06Apr-08Apr-10Apr-12Apr-14Apr-16Apr-18 indexindex Source: RBA, Westpac – Melbourne Institute *markers indicate rate cuts; quarterly observations prior to 2007 90 95 100 105 110 115 120 90 95 100 105 110 115 120 -3 -2 -1 0 1 2 3 4 5 6 -3 -2 -1 0 1 2 3 4 5 6 indexindex Source: RBA, NAB, Melbourne Institute, Westpac Economics *indexed to 100 in month prior to cut ^months before/after cut #obs from 2008 only month^ consumer sentiment business confidence +0.1 +2.1 shaded area shows range between lowest quartile and highest quartile response ― With the RBA now all but certain to deliver a 25bp rate cut on June 4 – the first since August 2016 – consumer confidence looks set to get a ‘shot in the arm’ next month. In this special topic we look at how past moves have impacted sentiment and housing-related confidence in particular. ― Our analysis covers the thirty rate cuts the RBA has made since the move to low inflation in the early 1990s. Chart 14 shows the ‘time to buy a dwelling’ index over this period with official rate cuts marked. It highlights what is usually a positive response but also that the reaction depends on a range of other factors, most importantly: the degree to which rate cuts (and at times the size of rate moves) come as a surprise; the degree to which they affect expectations for follow on moves; and whether policy easing coincides with other events, particularly negative shocks to wider sentiment. ― Chart 15 underscores these issues in the context of wider measures of consumer and business confidence. Whereas rate hikes have an unambiguous negative impact, rate cuts elicit more varied responses. Incredibly, the average sentiment boost over the two months following a cut is just +0.1pt. That compares to an average boost to business confidence of +2.1pts. Importantly, the near neutral average conceals a wide range of both positive and negative responses, reflecting the context of the move vs expectations and within an easing cycle whether they coincide with a significant negative shock. For example, views on ‘time to buy’ surged strongly in response to the GFC rate cut but wider sentiment fell sharply. 15. Rate cut responses: consumer sent.; business conf. 14. Consumer sentiment: ‘time to buy dwelling’ Special topic: rate cuts and housing-related sentiment
  11. 11. 11Housing pulse May 2019 90 95 100 105 110 115 120 90 95 100 105 110 115 120 -3 -2 -1 0 1 2 3 4 5 6 -3 -2 -1 0 1 2 3 4 5 6 indexindex Source: RBA, Melbourne Institute, Westpac Economics *indexed to 100 in month prior to cut ^months before/after cut #obs from 2008 only month^ ‘time to buy dwelling’ house price expectations# +6.2 +2.0 shaded area shows range between lowest quartile and highest quartile response 90 95 100 105 110 115 120 90 95 100 105 110 115 120 -3 -2 -1 0 1 2 3 4 5 6 -3 -2 -1 0 1 2 3 4 5 6 indexindex Source: RBA, Melbourne Institute, Westpac Economics *indexed to 100 in month prior to cut ^months before/after cut #both series inverted (higher reads indicate improvement) month^ unemployment expectations risk aversion +2.5 +2.5 shaded area shows range between lowest quartile and highest quartile response ― Charts 16 and 17 show historical reactions to rate cuts across the housing-related components that feed into our Westpac Housing Sentiment Index. Here reactions look a little less ambiguous. The initial boost to the ‘time to buy a dwelling’ index in particular is a clear positive over the first two months, averaging +6.2pts with most responses in the +2 to +9pt range. Notably, while sustained, this boost does not tend to build much over following months. ― House price expectations, unemployment expectations and risk aversion tend to show more muted and/or delayed positive responses. In index terms, rate cuts add an average 2pts to house price expectations and are worth 2.5pts for unemployment expectations and risk aversion (i.e. lowering expectations for unemployment and reducing risk aversion). However, for each component, the initial impact can often be negative. Notably, the impact on house price expectations and risk aversion tends to build and become less ambiguous beyond the second month but the boost to unemployment expectations tends to fade. ― What might this mean for the June sentiment update? The context looks reasonably positive: the cut is likely to come as a bit of a surprise for consumers, is likely to be the first of several – we expect follow on cuts in Aug and Nov – and is in the absence of other events shocking sentiment. If each of the expected moves from the RBA results in the ‘average’ sentiment reactions seen historically, the combined effect will lift the signal from our Westpac Housing Sentiment Index into positive territory. However, the ‘if’, in our view, remains a big one. 17. Rate cut responses: unemp. expns; risk aversion 16. Rate cut responses: ‘time to buy’; price expectations
  12. 12. 12 60 80 100 120 140 160 180 200 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly avg *seasonally adjusted series is 3mth avg time to buy* price expectations^ -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac Consumer Housing Sentiment Index* turnover^ Source: CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock, seas. adj’d by Westpac, smoothed latest month ― The price correction has moderated a little in NSW. Sydney prices are now down 15% from their 2017 peak, the correction now having run for close to two years. The pace of price monthly declines has halved from a –1.4%mth average pace over Nov-Feb to a 0.7%mth pace over Mar-May, a shift that has coincided with a firmer tone from auction markets. ― The price detail continues to show more material falls for houses and properties in the top and middle tiers. The more recent improved tone has centred on houses across all price tiers. Both listings and rental vacancy rates suggest units are facing more difficult selling conditions. Across sub-regions, the pace of price adjustment has eased notably for the Eastern Suburbs and (somewhat surprisingly) Parramatta but has accelerated for Ryde and for units in outer suburbs. All regional markets are now seeing price declines (see p26 for more). ― The NSW Consumer Housing Sentiment index has continued to firm over the last 3mths, the signal nudging into positive for the first time since 2017, but still only consistent with stabilisation rather than an upturn (note that in chart 19 and similar charts for other states both the index and turnover are shown in annual change terms rather than levels). The main driver continues to be ‘time to buy’ with the lift from improving affordability marginally offsetting continued weakness around price expectations with small shifts in risk aversion and unemployment expectations. ― On supply, rental vacancy rates have continued to lift and are now over 3% across all Sydney rings. 19. NSW housing composite vs turnover 18. NSW consumers: housing–related sentiment New South Wales: pace of price declines slows
  13. 13. 13Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 May-09 May-11 May-13 May-15 May-17 May-19 ann%ann% Sources: CoreLogic, Westpac Economics * all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Mar-09 Mar-12 Mar-15 Mar-18 Mar-09 Mar-12 Mar-15 Mar-18 %% 3mth avg mthly Source: ABS, REIA, Westpac Economics ^Sydney, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 21. NSW: dwelling approvals, vacancy rates 20. Sydney dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 2.8 4.0 3.1 2.6 n.a. State final demand, ann% 3.3 3.9 3.4 3.4 3.5 Employment, ann% 1.8 3.5 1.1 3.7 3.3 Unemployment rate, %# 5.9 5.2 4.7 4.8 4.4 Population, ann% 1.2 1.5 1.7 1.5 n.a. Dwelling prices, ann% 5.4 2.4 16.1 -5.5 -11.0 Rental yield, %# 4.6 3.8 3.7 3.9 3.9 Sales/new listings, ratio 1.12 1.14 1.01 0.91 1.02 Total listings, mths sales 3.3 2.8 3.0 4.4 5.4 * avg last 25yrs; ^ latest available estimate, GSP is Westpac forecast; # June qtr readings Sources: ABS, CoreLogic, APM, Residex, Westpac Economics Population: 8.0mn Net migration: 67k pa GSP: $593bn (33% Aus) Dwellings: 3.2mn, $2.6trn Capital: Sydney NSW
  14. 14. 14 Victoria: overhang of unsold units a concern 60 80 100 120 140 160 180 200 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly*seasonally adjusted series is 3mth avg avg time to buy* price expectations^ -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac Consumer Housing Sentiment Index* turnover^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock, seas. adj’d by Westpac, smoothed latest month ― Vic’s price correction has also moderated in recent months. With Melbourne’s market peaking later in the piece, prices have shown a smaller cumulative decline of 11.2%. After averaging 1.3%mth in Nov-Feb, prices have been tracking lower at just 0.6%mth in Mar-May. ― The differences between houses and units and across tiers continues to be more pronounced in Melbourne than in Sydney – houses and top and middle tier segments weaker and units and bottom tier areas holding up better. By sub-region, Melbourne’s Inner East and Inner South saw more pronounced falls late last year but have moderated notably in 2019. Prices in the the Inner City and West continue to hold up better. Prices are also performing better across the regions. ― Buyer sentiment has been mixed over the last 3mths, the Vic Consumer Housing Sentiment index deteriorating slightly since Feb. Assessments of ‘time to buy’ have stalled after rallying strongly over the six months to Feb when it touched a 5yr high. Price expectations, risk aversion and unemployment expectations have all deteriorated slightly as well. ― Turnover is showing tentative signs of stabilising, albeit at extremely weak levels. Listing metrics are also showing tentative signs of improving but again at weak levels, with a worrying overhang of unsold units (running at nearly 12mths of sales, see p31 for more detail). Even if sales recover, this inventory will take a long time to clear. That said, Melbourne’s rental market remains tight with vacancy rates still around 2%. Given the surge in inner city apartment completions, this suggests supply elsewhere is very tight. 23. Vic housing composite vs turnover 22. Vic consumers: housing–related sentiment
  15. 15. 15Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 May-09 May-11 May-13 May-15 May-17 May-19 ann%ann% Sources: CoreLogic, Westpac Economics * all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 3mth avg mthly Source: ABS, REIA, Westpac Economics ^Melbourne, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 25. Vic: dwelling approvals, vacancy rates 24. Melbourne dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 3.2 3.5 4.0 3.5 n.a. State final demand, ann% 3.9 4.5 4.2 4.7 5.0 Employment, ann% 2.1 3.1 3.9 2.0 3.9 Unemployment rate, %# 6.3 5.7 6.0 5.3 4.8 Population, ann% 1.5 2.5 2.4 2.2 n.a. Dwelling prices, ann% 6.2 5.7 14.3 0.7 -9.9 Rental yield, %# 4.7 3.9 4.0 4.0 4.3 Sales/new listings, ratio 1.00 1.10 1.03 0.85 0.95 Total listings, mths sales 4.0 3.3 3.4 4.7 6.2 * avg last 25yrs; ^ latest available estimate, GSP is Westpac forecast; # June qtr readings Sources: ABS, CoreLogic, APM, Residex, Westpac Economics Population: 6.5mn Net migration: 99k pa GSP: $424bn (23% Aus) Dwellings: 2.7mn, $1.8trn Capital: Melbourne Vic
  16. 16. 16 Queensland: south-east slips into price correction 60 80 100 120 140 160 180 200 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly avg *seasonally adjusted series is 3mth avg time to buy* price expectations^ -4.5 -3.5 -2.5 -1.5 -0.5 0.5 1.5 2.5 3.5 4.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac consumer housing sentiment (lhs)* turnover (rhs)^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock, seas. adj’d by Westpac, smoothed latest month ― After resisting valiantly through 2018, Qld’s housing market has succumbed to downward pressure in 2019, slipping into a modest price correction. Turnover has been declining consistently for some time, with softening sentiment clearly weighing on conditions. Affordability remains much more constructive in the state, Qld’s markets having largely missed out on the 2013-17 boom that has stretched affordability in the other major eastern states. ― The dwelling type, tier and sub-regional detail show a surprisingly uniform correction with almost no variation in recent months. Across Brisbane and the South East corner, only Logan stands out as a touch weaker. Notably, the underpreformance of Brisbane units through 2014-17 has disappeared. Regionally, mining areas continue to stage a bit of a turnaround led by Mackay, Rockhampton and Gladstone. ― The Qld Consumer Housing Sentiment index has slipped a touch over the last 3mths, a sharp fall in price expectations and rising risk aversion partially offset by gains in ‘time to buy’ and a marginal improvement in unemployment expectations. The Index suggests turnover will remain weak near term. ― Residential property listing metrics have looked a little more balanced in recent months with sales in line with new listings and the supply of unsold stock stabilising. Brisbane rental vacancy rates have continued to tighten suggesting supply is not an overarching problem although the stock of unsold units is still elevated. With the city’s apartment building boom long over and approvals sliding, risks of a supply surge look low. 27. Qld housing composite vs turnover 26. Qld consumers: housing–related sentiment
  17. 17. 17Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 May-09 May-11 May-13 May-15 May-17 May-19 ann%ann% Sources: CoreLogic, Westpac Economics * all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 3mth avg mthly Source: ABS, REIA, Westpac Economics ^Brisbane, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 29. Qld: dwelling approvals, vacancy rates 28. Brisbane dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 3.9 2.5 2.0 3.4 n.a. State final demand, ann% 4.2 -1.2 2.8 3.5 2.9 Employment, ann% 2.4 0.8 2.0 3.1 1.5 Unemployment rate, %# 6.6 6.3 6.2 6.2 5.8 Population, ann% 1.9 1.4 1.7 1.7 n.a. Dwelling prices, ann% 4.2 3.7 1.9 1.2 -1.8 Rental yield, %# 4.9 4.7 4.9 4.9 5.1 Sales/new listings, ratio 1.01 1.06 0.98 0.96 1.04 Total listings, mths sales 4.7 4.0 4.6 4.8 5.8 * avg last 25yrs; ^ latest available estimate, GSP is Westpac forecast; # June qtr readings Sources: ABS, CoreLogic, APM, Residex, Westpac Economics Population: 5.0mn Net migration: 56k pa GSP: $340bn (19% Aus) Dwellings: 2.1mn, $1.0trn Capital: BrisbaneQld
  18. 18. 18 Western Australia: no let up to bleak market 60 80 100 120 140 160 180 200 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly avg *seasonally adjusted series is 3mth avg time to buy* price expectations^ -4.5 -3.5 -2.5 -1.5 -0.5 0.5 1.5 2.5 3.5 4.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac consumer housing sentiment (lhs)* turnover (rhs)^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock, seas. adj’d by Westpac, smoothed latest month ― Conditions remain bleak across the WA housing market, Perth’s five year price correction re-acclerating in 2018 and buyer sentiment still not gaining traction. There are positives: as with Sydney and Melbourne, the pace of monthly price declines is moderating, the glut in rental markets looks to have disappeared, and mining regions have seen a lift. However, with the economy still looking soft, mortgage arrears rising and the clear threat of ‘negative equity’ problems highlighted in our last report, downside risks are likely to persist. ― Prices across the Perth market are down 8.7%yr, the fastest pace of decline since the GFC. Following an extended correction, prices are now at a 13yr low. ― The price detail shows the latest turn has been broad based across houses, units, price tiers and sub-regions. As with Qld, the shift is notable for the lack of variation across segments. As noted, the monthly pace of declines in Perth has moderated a touch since Feb, with declines tracking 0.5%mth in Mar-May vs 1.1%mth through Nov-Feb. The detail shows improvements in the North East and South East of the city but some deterioration in inner areas. As in Qld, WA’s mining areas are seeing some lift in prices. ― The WA Consumer Housing Sentiment index has firmed slightly since Feb but is largely unchanged on a year ago and unlikely to be sufficient to lift the market out of its slump. ― Around supply, Perth’s vacancy rate is now back to ‘normal’ levels but listings of both houses and units remain elevated and will continue to accumulate at the currently very weak pace of sales. 31. WA housing composite vs turnover 30. WA consumers: housing–related sentiment
  19. 19. 19Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 May-09 May-11 May-13 May-15 May-17 May-19 ann%ann% Sources: CoreLogic, Westpac Economics * all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting 0 1 2 3 4 5 6 7 8 0 1 2 3 4 5 6 7 8 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 3mth avg mthly Source: ABS, REIA, Westpac Economics ^Perth, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 33. WA: dwelling approvals, vacancy rates 32. Perth dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 4.4 1.1 -1.8 1.9 n.a. State final demand, ann% 4.0 -4.7 -7.1 1.0 -0.5 Employment, ann% 2.3 -1.0 0.8 1.6 0.6 Unemployment rate, %# 5.6 5.8 5.7 6.3 6.0 Population, ann% 1.8 0.6 0.7 0.8 n.a. Dwelling prices, ann% 3.9 -4.6 -2.6 -1.5 -8.1 Rental yield, %# 4.8 4.4 4.0 4.0 4.1 Sales/new listings, ratio 0.82 0.73 0.78 0.73 0.88 Total listings, mths sales 5.8 7.7 7.6 7.8 7.6 * avg last 25yrs; ^ latest available estimate, GSP is Westpac forecast; # June qtr readings Sources: ABS, CoreLogic, APM, Residex, Westpac Economics Population: 2.6mn Net migration: 3k pa GSP: $256bn (14% Aus) Dwellings: 1.1mn, $0.6trn Capital: PerthWA
  20. 20. 20 South Australia: stable and still looking resilient 60 80 100 120 140 160 180 200 60 80 100 120 140 160 180 200 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly avg *seasonally adjusted series is 3mth avg time to buy* price expectations^ -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac consumer housing sentiment (lhs)* turnover (rhs)^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock, seas. adj’d by Westpac, smoothed avg last 2mths ― The SA housing market is the ‘last man standing’ out of the major mainland states – the only one to still have positive annual price growth, albeit only just. Price momentum has faded since mid-2018, essentially stalling flat over the year to Apr (+0.2%yr). However, turnover has performed better than in most other states and both sentiment and listings suggests the market has some near term momentum. ― Turnover was soft over the second half of 2018 but has lifted in early 2019 to be up on a year ago, a notable contrast to the other major eastern states. ― The price detail for Adelaide shows a similar pattern to Brisbane and Perth with little variation by dwelling type or sub-region. Growth rates in most segments have converged to be around the sluggish 0-0.5% pace seen citywide. The only slight outperformer is the city’s North and the bottom 25% of properties by value. The state’s regional areas are also seeing gains, Barossa outperforming. ― Listings data offers another notable contrast – sales outpacing new listings and supply relatively tight (some excess stock for units but these make up a tiny portion of the Adelaide market). ― The SA Consumer Housing Sentiment index has recovered over the last 3mths after a sharp drop over the 3mths to Feb. Assessments of ‘time to buy’ have posted a solid gain, more than offsetting weaker updates on other components. The state’s labour market remains a touch point – unemployment improved over 2017 and 2018 but has shown signs of softening again in 2019. 35. SA housing composite vs turnover 34. SA consumers: housing–related sentiment
  21. 21. 21Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 May-09 May-11 May-13 May-15 May-17 May-19 ann%ann% Sources: CoreLogic, Westpac Economics * all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 3mth avg mthly Source: ABS, REIA, CoreLogic, SQM Research Westpac Economics ^Adelaide, qtly, seasonally adjusted by Westpac (estimates based on CoreLogic and SQM Research data from 2015 on) 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 37. SA: dwelling approvals, vacancy rates 36. Adelaide dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 2.3 0.2 2.4 2.0 n.a. State final demand, ann% 3.0 1.2 3.6 3.3 2.6 Employment, ann% 1.2 0.7 1.1 2.9 1.2 Unemployment rate, %# 6.9 6.9 6.9 5.6 5.9 Population, ann% 0.7 0.7 0.6 0.7 n.a. Dwelling prices, ann% 4.5 3.2 3.9 1.6 0.2 Rental yield, %# 5.2 4.1 4.6 5.4 5.3 Sales/new listings, ratio 0.99 1.06 1.05 1.04 1.16 Total listings, mths sales 4.0 3.6 4.0 3.9 4.0 * avg last 25yrs; ^ latest available estimate, GSP is Westpac forecast; # June qtr readings Sources: ABS, CoreLogic, APM, Residex, Westpac Economics Population: 1.7mn Net migration: 9k pa GSP: $106bn (6% Aus) Dwellings: 0.8mn, $0.4trn Capital: Adelaide SA
  22. 22. 22 Tasmania: boom over but supply still tight 40 60 80 100 120 140 160 180 200 220 60 80 100 120 140 160 180 May-09 May-12 May-15 May-18 May-09 May-12 May-15 May-18 indexindex seasonally adjusted actual Source: Melbourne Institute, Westpac Economics ^seasonally adjusted series is qtly avg *seasonally adjusted series is 6mth avg, actual is 3mth avg time to buy (lhs)* price expectations (rhs)^ -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 -2.5 -2.0 -1.5 -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann chann ch Westpac consumer housing sentiment (lhs)* turnover (rhs)^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock, seas. adj’d by Westpac, smoothed avg last 2 mths ― The cycle has turned quickly in Tas, prices almost stalling flat over the last 6mths after surging 22.7% over the previous 2yrs. Turnover has dropped sharply (–16%yr) and sentiment has soured, particularly around prices. Despite this, sales have continued to run ahead of supply suggesting that credit constraints are a key factor weighing on the market. ― The Tas market is considerably smaller than the ‘mainland’ states – about a third of the size of the next smallest state, SA and about a tenth of the major states. It also tends to see slower, more volatile growth in economic activity and population. Historically, the state’s housing market has tended to underperform but over the last few years has outperformed by a wide margin with acute shortages of supply a key feature. ― That outperformance is all but gone with annual price growth in the Hobart market dipping to 3.8% in Apr. The detail shows the slowdown is across all dwelling types and segments but is more pronounced for the top tier. The detail shows prices in the South & West of Hobart have dipped in annual terms but other parts of the city and wider state have held up better. ― The Tas Consumer Housing Sentiment index has improved since Feb but looks vulnerable. The state measure is smoothed due to the smaller sample size that means underlying data is more volatile. However, the sharp pull back in house price expectations in the latest monthly read looks likely to be sustained. ― The main positive continues to be around tight supply with rental vacancy rates extremely low, sales outpacing new listings and the stock of listings at extreme lows. 39. Tas housing composite vs turnover 38. Tas consumers: housing–related sentiment
  23. 23. 23Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-11 Apr-13 Apr-15 Apr-17 Apr-19 ann%ann% Sources: CoreLogic, Westpac Economics * all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting 0 1 2 3 4 5 0 1 2 3 4 5 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 3mth avg mthly Source: ABS, REIA, Westpac Economics ^Hobart, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 41. Tas: dwelling approvals, vacancy rates 40. Hobart dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 2.0 1.7 1.5 3.3 n.a. State final demand, ann% 2.6 2.4 1.7 4.5 5.0 Employment, ann% 1.1 -1.0 4.0 1.1 -0.2 Unemployment rate, %# 7.5 6.4 5.8 6.1 6.7 Population, ann% 0.5 0.5 0.9 1.1 n.a. Dwelling prices, ann% 4.8 4.4 12.2 11.8 3.8 Rental yield, %# 5.8 4.7 5.4 5.1 5.1 Sales/new listings, ratio 1.01 1.19 1.21 1.18 1.18 Total listings, mths sales 5.6 4.1 2.7 2.1 2.8 * avg last 25yrs (12yrs for listings metrics); ^ latest estimate; # June qtr readings Sources: ABS, CoreLogic, APM, Residex, Westpac Economics Population: 0.5mn Net migration: 5k pa GSP: $30bn (2% Aus) Dwellings: 0.2mn, $101bn Capital: Hobart Tas
  24. 24. 24 Territories: NT overhang lingers; ACT gains slow -15 -10 -5 0 5 10 15 20 25 30 35 -3 -2 -1 0 1 2 3 4 Apr-09 Apr-12 Apr-15 Apr-18 Apr-21 Apr-09 Apr-12 Apr-15 Apr-18 ann%ann ch Sources: CoreLogic, Westpac Economics % stock, seas. adj’d by Westpac, smoothed all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting turnover (lhs) prices (rhs)^ 0 1 2 3 4 5 6 7 8 9 10 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 6mth avg 3mth avg Source: ABS, REIA, Westpac Economics ^Darwin, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals (lhs)* vacancy rate (rhs)^ 43. NT: dwelling approvals, vacancy rates 42. NT: turnover, Darwin dwelling prices NT Population: 0.2mn Net migration: –3k pa GSP: $26bn (1% Aus) Dwellings: 0.1mn, $35.3bn Capital: Darwin June years avg* 2016 2017 2018 2019^ GSP, ann% 3.9 2.0 2.7 1.7 n.a. State final demand, ann% 4.8 -6.3 8.9 -2.8 -12.4 Employment, ann% 1.4 -0.5 2.4 1.8 -4.8 Unemployment rate, %# 6.6 5.4 5.1 5.5 5.9 Population, ann% 1.5 0.4 0.7 -0.1 n.a. Dwelling prices, ann% 3.4 -9.0 -5.1 -6.6 -7.2 Sales/new listings, ratio 1.05 0.75 0.81 1.02 1.41 Total listings, mths sales 5.8 12.0 10.8 9.2 7.2 * avg last 25yrs (last 10yrs for listings); ^ latest available estimate; # June qtr readings Sources: ABS, CoreLogic, Westpac Economics
  25. 25. 25Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -3 -2 -1 0 1 2 3 4 Apr-09 Apr-12 Apr-15 Apr-18 Apr-21 Apr-09 Apr-12 Apr-15 Apr-18 ann%ann ch Sources: CoreLogic, Westpac Economics % stock, seas. adj’d by Westpac, smoothed all dwellings, seasonally adjusted 3mthly ann’d, adv. 6mths boom robust stable correcting turnover (lhs) prices (rhs)^ 0 1 2 3 4 5 6 0 1 2 3 4 5 6 Mar-07 Mar-11 Mar-15 Mar-19 Mar-07 Mar-11 Mar-15 Mar-19 %% 6mth avg 3mth avg Source: ABS, REIA, Westpac Economics ^Canberra, qtly, seasonally adjusted by Westpac 30yr avg *%existing stock of dwellings dwelling approvals* vacancy rate^ 45. ACT: dwelling approvals, vacancy rates 44. ACT: turnover, Canberra dwelling prices June years avg* 2016 2017 2018 2019^ GSP, ann% 3.3 4.0 3.6 4.0 n.a. State final demand, ann% 3.9 1.6 3.2 3.6 4.1 Employment, ann% 1.3 0.5 2.7 2.3 -0.2 Unemployment rate, %# 6.6 5.4 5.2 5.4 5.7 Population, ann% 1.4 1.8 2.2 2.2 n.a. Dwelling prices, ann% 4.7 2.4 6.3 4.8 2.6 Sales/new listings, ratio 1.25 1.14 1.03 1.06 1.33 Total listings, mths sales 2.8 2.9 3.1 2.9 3.2 * avg last 25yrs (last 10yrs for listings); ^ latest available estimate; # June qtr readings Sources: ABS, CoreLogic, Westpac Economics Population: 0.4mn Net migration: 5k pa GSP: $39bn (2% Aus) Dwellings: 0.2mn, $114.7bn Capital: Canberra ACT
  26. 26. 26 Additional material: charts and tables -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 Apr-21 ann%ann% houses units top 25% middle 50% bottom 25% *6mth annualised, all dwellings, seas. adjusted Sources: CoreLogic, Westpac Economics boom robust stable correcting type tier -24 -12 0 12 24 36 -24 -12 0 12 24 36 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 %% Inner South West Eastern subs Newcastle Ryde Central coast Illawarra Tweed Sydney rest of NSW *6mth annualised, all dwellings Sources: CoreLogic, Westpac Economics 47. NSW dwelling prices: selected sub-regions 46. NSW: Sydney dwelling prices: by type, tier NSW Sydney rest of NSW Population: 5.2mn 2.8mn Net migration*: 50k pa 18k pa Employ (%state): 68% 32% Dwellings, no.: 1.9mn 1.2mn Dwellings, value: $2.1trn $0.6trn June years avg^ 2016 2017 2018 2019# Sydney Employment, ann% 2.0 2.9 2.2 4.1 3.7 Unemployment rate, % 5.3 5.0 4.5 4.3 4.1 Houses – prices, ann% 5.8 2.2 17.9 -6.1 -11.8 – sales/new listings, ratio 0.99 1.07 0.97 0.92 0.93 – total listings, mths sales 3.7 2.9 2.8 3.9 4.7 Units – prices, ann% 5.1 3.0 12.0 -4.1 -9.1 – sales/new listings, ratio 1.35 1.24 1.06 0.90 0.86 – total listings, mths sales 2.8 2.7 3.2 5.0 6.5 rest of NSW Employment, ann% 1.5 4.9 -1.2 3.0 3.3 Unemployment rate, % 7.1 5.6 5.1 5.9 4.3 Dwelling prices, ann% 4.5 7.0 11.1 3.4 -4.5 * incl. flows within state; ^avg last 25yrs (last 10yrs for listings); #latest available estimates; Sources: ABS, CoreLogic, Westpac Economics
  27. 27. 27Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 Apr-21 %% houses units top 25% middle 50% bottom 25% boom robust stable correcting type tier *all dwellings, seasonally adjusted Sources: CoreLogic, Westpac Economics -24 -14 -4 6 16 26 36 -24 -12 0 12 24 36 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 %% Inner East Inner South Mornington Pen. Inner West Geelong Ballarat Melbourne rest of Vic *6mth annualised, all dwellings Sources: CoreLogic, Westpac Economics 49. Vic dwelling prices: selected sub-regions 48. Vic: Melbourne dwelling prices: by type, tier Vic Melbourne rest of Vic Population: 5.0mn 1.5mn Net migration*: 84k pa 16k pa Employ (%state): 79% 21% Dwellings, no.: 1.8mn 0.7mn Dwellings, value: $1.5trn $0.3trn June years avg^ 2016 2017 2018 2019# Melbourne Employment, ann% 2.5 3.6 4.1 3.1 4.0 Unemployment rate, % 6.2 5.8 6.3 5.3 4.7 Houses – prices, ann% 6.6 7.3 16.8 0.3 -12.6 – sales/new listings, ratio 0.99 1.07 1.09 0.95 0.90 – total listings, mths sales 3.7 2.8 2.5 3.3 4.2 Units – prices, ann% 5.6 2.3 8.7 1.8 -4.1 – sales/new listings, ratio 1.03 1.14 0.92 0.66 0.47 – total listings, mths sales 4.3 4.4 5.4 8.1 11.8 rest of Vic Employment, ann% 1.5 1.5 3.6 -1.8 3.5 Unemployment rate, % 6.7 5.6 5.2 5.1 4.2 Dwelling prices, ann% 4.2 2.9 6.2 8.8 2.2 * incl. flows within state; ^avg last 25yrs (last 10yrs for listings); #latest available estimates; Sources: ABS, CoreLogic, Westpac Economics
  28. 28. 28 Additional material: charts and tables, continued -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 Apr-21 %% houses units top 25% middle 50% bottom 25% boom robust stable correcting type tier *all dwellings, seasonally adjusted Sources: CoreLogic, Westpac Economics -24 -12 0 12 24 36 -24 -12 0 12 24 36 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 %% Inner city West Gold Coast Logan Moreton south Sunshine Coast Mackay Brisbane rest of Qld *6mth annualised, all dwellings Sources: CoreLogic, Westpac Economics 51. Qld dwelling prices: selected sub-regions 50. Qld: Brisbane dwelling prices: by type, tier Qld Brisbane rest of Qld Population: 2.5mn 2.5mn Net migration*: 33k pa 21k pa Employ (%state): 50% 50% Dwellings, no.: 0.9mn 1.1mn Dwellings, value: $0.5trn $0.5trn June years avg^ 2016 2017 2018 2019# Brisbane Employment, ann% 2.5 2.7 1.5 2.9 0.5 Unemployment rate, % 6.2 5.7 6.5 6.2 6.0 Houses – prices, ann% 4.6 4.4 3.2 1.6 -1.8 – sales/new listings, ratio 0.89 0.95 1.00 0.97 0.89 – total listings, mths sales 5.3 4.2 4.2 4.4 5.2 Units – prices, ann% 2.7 0.5 -3.9 -0.8 -2.4 – sales/new listings, ratio 1.50 1.47 0.93 0.92 0.95 – total listings, mths sales 3.5 3.2 6.4 6.5 7.0 rest of Qld Employment, ann% 2.2 -0.9 2.6 3.3 1.5 Unemployment rate, % 6.9 7.0 5.9 6.2 5.6 Dwelling prices, ann% 3.3 1.7 2.2 1.3 -2.1 * incl. flows within state; ^avg last 25yrs (last 10yrs for listings); #latest available estimates; Sources: ABS, CoreLogic, Westpac Economics
  29. 29. 29Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 Apr-21 %% houses units top 25% middle 50% bottom 25% boom robust stable correcting type tier *all dwellings, seasonally adjusted Sources: CoreLogic, Westpac Economics -40 -30 -20 -10 0 10 20 30 40 -40 -30 -20 -10 0 10 20 30 40 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 %% inner North East Mandurah North West South East Bunbury Outback (North) Perth rest of WA *6mth annualised, all dwellings Sources: CoreLogic, Westpac Economics 53. WA dwelling prices: selected sub-regions 52. WA: Perth dwelling prices: by type, tier WA Perth rest of WA Population: 2.1mn 0.5mn Net migration*: 6k pa –4k pa Employ (%state): 79% 21% Dwellings, no.: 0.8mn 0.3mn Dwellings, value: $0.5trn $0.1trn June years avg^ 2016 2017 2018 2019# Perth Employment, ann% 2.4 0.2 -0.4 1.8 1.8 Unemployment rate, % 5.8 5.8 6.1 6.4 6.4 Houses – prices, ann% 4.1 -4.2 -2.1 -1.0 -8.3 – sales/new listings, ratio 0.83 0.74 0.79 0.74 0.75 – total listings, mths sales 5.6 7.1 6.9 7.1 7.2 Units – prices, ann% 3.2 -6.3 -4.5 -3.7 -8.4 – sales/new listings, ratio 0.76 0.66 0.73 0.68 0.70 – total listings, mths sales 6.7 10.5 9.9 10.8 10.9 rest of WA Employment, ann% 1.3 -5.7 5.4 0.8 -4.3 Unemployment rate, % 5.2 5.8 4.3 5.8 5.5 Dwelling prices, ann% 2.9 -7.3 -2.0 -4.0 -9.1 * incl. flows within state; ^avg last 25yrs (last 10yrs for listings); #latest available estimates; Sources: ABS, CoreLogic, Westpac Economics
  30. 30. 30 Additional material: charts and tables , continued -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 Apr-21 %% houses units top 25% middle 50% bottom 25% boom robust stable correcting type tier *all dwellings, seasonally adjusted Sources: CoreLogic, Westpac Economics -24 -12 0 12 24 36 -24 -12 0 12 24 36 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 %% Central & Hills North Barossa South West South East SA Adelaide rest of SA *6mth annualised, all dwellings Sources: CoreLogic, Westpac Economics 55. SA dwelling prices: selected sub-regions 54. SA: Adelaide dwelling prices: by type, tier SA Adelaide rest of SA Population: 1.3mn 0.4mn Net migration*: 7k pa 1k pa Employ (%state): 79% 21% Dwellings, no.: 0.6mn 0.2mn Dwellings, value: $0.3trn $0.1trn June years avg^ 2016 2017 2018 2019# Adelaide Employment, ann% 1.4 0.6 2.3 1.9 1.8 Unemployment rate, % 7.1 7.0 7.0 5.9 5.7 Houses – prices, ann% 4.6 3.3 4.5 1.7 0.3 – sales/new listings, ratio 0.99 1.00 1.11 1.13 1.15 – total listings, mths sales 3.9 3.6 3.4 3.2 3.5 Units – prices, ann% 4.6 2.7 1.3 1.1 0.3 – sales/new listings, ratio 1.00 1.42 0.88 0.79 0.87 – total listings, mths sales 4.8 3.5 6.6 7.5 7.8 rest of SA Employment, ann% 0.6 1.2 -3.0 6.8 -2.9 Unemployment rate, % 6.3 6.0 6.2 4.3 6.6 Dwelling prices, ann% 3.7 -1.6 0.1 -0.6 -0.3 * incl. flows within state; ^avg last 25yrs (last 10yrs for listings); #latest available estimates; Sources: ABS, CoreLogic, Westpac Economics
  31. 31. 31Housing pulse May 2019 -15 -10 -5 0 5 10 15 20 25 30 35 -15 -10 -5 0 5 10 15 20 25 30 35 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 Apr-21 %% houses units top 25% middle 50% bottom 25% boom robust stable correcting type tier *all dwellings, seasonally adjusted Sources: CoreLogic, Westpac Economics -24 -12 0 12 24 36 -24 -12 0 12 24 36 Apr-09 Apr-13 Apr-17 Apr-09 Apr-13 Apr-17 %% Inner North East Launceston South & West West & North West Hobart rest of Tas *6mth annualised, all dwellings Sources: CoreLogic, Westpac Economics 57. Tas dwelling prices: selected sub-regions 56. Tas: Hobart dwelling prices: by type, tier Tas Hobart rest of Tas Population: 233k 296k Net migration*: 3k pa 2k pa Employ (%state): 46% 54% Dwellings, no.: 99k 143k Dwellings, value: $47bn $45bn June years avg^ 2016 2017 2018 2019# Hobart Employment, ann% 1.3 -3.9 7.7 1.3 0.7 Unemployment rate, % 6.9 6.0 5.7 6.6 6.5 Houses – prices, ann% 4.9 4.8 12.5 11.4 3.4 – sales/new listings, ratio 0.97 1.12 1.14 1.17 1.12 – total listings, mths sales 6.0 4.2 2.6 2.1 2.7 Units – prices, ann% 4.3 3.2 11.0 13.4 5.4 – sales/new listings, ratio 1.18 1.66 1.47 1.29 1.25 – total listings, mths sales 4.6 2.8 2.3 2.0 2.3 rest of Tas Employment, ann% 0.7 1.4 1.1 1.0 -1.6 Unemployment rate, % 8.0 6.7 6.0 5.9 7.0 Dwelling prices, ann% 4.0 2.7 4.4 7.6 7.0 * incl. flows within state; ^avg last 25yrs (last 10yrs for listings); #latest available estimates; Sources: ABS, CoreLogic, Westpac Economics
  32. 32. 32 Economic and financial forecasts Interest rate forecasts Latest (24 May) Jun–19 Sep–19 Dec–19 Mar–20 Jun–20 Sep-20 Dec–20 Cash 1.50 1.25 1.00 0.75 0.75 0.75 0.75 0.75 90 Day BBSW 1.44 1.45 1.25 1.00 1.00 1.00 1.00 1.00 3 Year Swap 1.20 1.20 1.15 1.10 1.15 1.20 1.25 1.30 10 Year Bond 1.54 1.60 1.65 1.70 1.75 1.80 1.85 1.90 10 Year Spread to US (bps) –79 –80 –85 –90 –85 –80 –70 –60 International Fed Funds 2.375 2.375 2.375 2.375 2.375 2.375 2.375 2.375 US 10 Year Bond 2.33 2.40 2.50 2.60 2.60 2.60 2.55 2.50 US Fed balance sheet USDtrn 3.86 3.80 3.75 3.75 3.75 3.75 3.77 3.79 ECB Repo Rate –0.40 –0.40 –0.40 –0.40 –0.40 –0.30 –0.20 –0.10 Exchange rate forecasts Latest (24 May) Jun–19 Sep–19 Dec–19 Mar–20 Jun–20 Sep-20 Dec–20 AUD/USD 0.6886 0.69 0.68 0.66 0.66 0.67 0.67 0.68 NZD/USD 0.6516 0.65 0.64 0.65 0.65 0.66 0.66 0.67 USD/JPY 109.61 110 111 112 112 112 111 110 EUR/USD 1.1181 1.11 1.10 1.10 1.11 1.12 1.13 1.14 GBP/USD 1.2659 1.27 1.28 1.28 1.28 1.29 1.29 1.30 AUD/NZD 1.0569 1.06 1.06 1.02 1.02 1.02 1.02 1.01 Sources: Bloomberg, Westpac Economics.
  33. 33. 33Housing pulse May 2019 Economic and financial forecasts Australian economic growth forecasts 2018 2019 Q2 Q3 Q4 Q1f Q2f Q3f Q4f GDP % qtr 0.8 0.3 0.2 0.6 0.4 0.5 0.7 Annual change 3.1 2.7 2.3 1.9 1.5 1.7 2.2 Unemployment rate % 5.4 5.2 5.0 5.0 5.2 5.3 5.4 CPI % qtr 0.4 0.4 0.5 0.0 0.6 0.5 0.6 Annual change 2.1 1.9 1.8 1.3 1.6 1.7 1.8 CPI underlying % qtr 0.5 0.3 0.4 0.2 0.4 0.3 0.4 ann change 1.7 1.7 1.7 1.4 1.4 1.3 1.3 Calendar years 2017 2018 2019f 2020f GDP % qtr/yr avg 2.4 2.3 2.2 2.5 Unemployment rate % 5.5 5.0 5.4 5.6 CPI % yr end 1.9 1.8 1.8 1.6 CPI underlying % yr 1.9 1.7 1.3 1.7 Calendar year changes are (1) period average for GDP, employment and unemployment, terms of trade (2) through the year for inflation and wages. * GDP & component forecasts are reviewed following the release of quarterly national accounts. ** Business investment and government spending adjusted to exclude the effect of private sector purchases of public sector assets.
  34. 34. 34 Housing market data Consumer sentiment – housing–related measures 2017 2018 2019 index* avg Sep Dec Mar Jun Sep Dec Mar Apr May %mth %yr ‘Time to buy a dwelling’ Australia 122.4 95.2 100.6 104.5 105.7 103.5 110.3 116.6 119.4 114.9 –3.8 13.6 – New South Wales 120.2 81.3 90.1 104.6 99.7 104.5 106.9 117.4 114.1 111.1 –2.7 19.2 – Victoria 118.6 94.7 88.3 100.3 102.8 100.4 112.9 115.5 122.1 120.1 –1.6 18.5 – Queensland 130.3 104.4 121.0 104.7 119.3 102.9 105.2 116.9 118.3 110.0 –7.1 0.7 – Western Australia 128.9 130.4 122.2 123.5 108.3 110.4 132.2 135.0 146.6 128.6 –12.3 8.4 – South Australia 130.5 85.0 102.8 96.7 113.3 104.6 111.2 99.0 107.7 112.7 4.6 12.8 – Tasmania 124.2 97.0 131.3 94.5 77.7 93.6 87.6 87.0 92.1 86.9 –5.6 15.9 House price expectations Australia 126.5 141.9 135.0 129.6 119.9 109.4 100.0 85.4 95.6 89.4 –6.5 –31.0 – New South Wales 128.4 144.5 118.2 115.8 103.9 85.8 81.1 68.7 89.5 80.0 –10.6 –33.7 – Victoria 128.0 154.6 146.9 141.1 123.9 110.4 84.3 80.5 81.5 82.9 1.8 –41.0 – Queensland 125.2 137.2 145.5 136.2 133.0 131.0 125.3 101.6 101.4 105.4 3.9 –19.5 – Western Australia 117.8 113.8 124.3 113.7 110.4 112.7 122.6 89.7 106.1 89.3 –15.8 –23.5 – South Australia 128.9 138.6 145.4 141.4 139.9 130.7 128.6 111.4 129.0 111.3 –13.7 –16.1 – Tasmania 128.9 137.1 163.5 166.4 167.6 155.1 148.8 138.0 141.2 81.1 –42.6 –46.9 *indexes based on net balance of % assessing ‘good time to buy’/’house prices to rise’ and % assessing ‘bad time to buy’/’house prices to decline’ Sources: Melbourne Institute, Westpac Economics
  35. 35. 35Housing pulse May 2019 Housing market data Consumer sentiment – other components 2017 2018 2019 index* avg Sep Dec Mar Jun Sep Dec Mar Apr May %mth %yr Unemp. expectations Australia 129.8 133.6 127.6 121.8 126.9 120.7 121.0 130.6 127.4 120.9 –5.1 0.7 – New South Wales 129.5 127.2 124.9 124.5 123.3 122.6 122.7 130.8 126.0 117.1 –7.0 –3.4 – Victoria 130.9 137.0 127.8 118.4 122.6 124.4 121.1 128.7 123.6 119.8 –3.1 3.8 – Queensland 133.0 135.3 123.6 119.2 137.0 122.4 125.9 136.0 129.2 128.0 –1.0 1.8 – Western Australia 127.6 128.0 127.6 117.7 132.8 96.4 98.3 121.3 137.7 117.6 –14.6 5.3 – South Australia 134.0 155.2 145.1 135.4 122.5 129.3 130.6 136.7 127.4 127.3 –0.1 0.7 – Tasmania 138.7 117.9 136.2 116.8 127.5 119.8 122.3 116.3 126.6 119.8 –5.4 15.4 Risk aversion qtr ch ann ch Australia 12.1 47.3 44.5 41.0 44.5 45.7 50.8 49.5 n.a. n.a. –1.3 6.2 – New South Wales 8.3 38.7 38.3 36.4 39.9 41.9 46.6 42.6 n.a. n.a. –4.0 3.8 – Victoria 6.8 43.9 49.7 35.0 38.3 44.8 49.5 53.4 n.a. n.a. 3.9 16.2 – Queensland 8.1 53.5 41.5 44.1 46.5 45.3 63.6 53.6 n.a. n.a. –10.0 7.9 – Western Australia 0.9 62.6 56.0 61.6 62.0 60.2 55.4 54.0 n.a. n.a. –1.3 –7.8 – South Australia 9.9 60.0 55.0 46.7 57.0 48.6 42.6 49.5 n.a. n.a. 7.0 –4.0 – Tasmania 13.4 30.6 25.9 33.4 28.0 29.9 43.8 37.6 n.a. n.a. –6.2 7.7 *indexes based on net balance of % assessing ‘unemployment to rise’ and % assessing ‘unemployment to fall’; ^measure based on responses to ‘wisest place for savings’ question. Sources: Melbourne Institute, Westpac Economics
  36. 36. 36 Housing market data Dwelling prices and turnover 2017 2018 2019 avg Feb May Aug Nov Feb May Aug Nov Feb Mar Apr Dwelling prices, ann%* Australia 5.3 8.3 11.3 9.6 5.6 2.3 –1.3 –3.6 –5.3 –7.6 –8.2 –8.4 – Sydney 5.4 12.8 16.8 12.6 5.2 0.1 –4.5 –6.7 –8.1 –10.4 –10.9 –10.9 – Melbourne 6.2 10.0 14.1 14.2 11.3 7.6 2.4 –2.3 –5.8 –9.1 –9.8 –10.0 – Brisbane 4.2 1.8 1.9 2.2 2.1 1.7 1.6 0.7 0.3 –0.5 –1.3 –1.9 – Perth 3.9 –3.9 –2.8 –2.1 –1.7 –1.8 –1.3 –2.2 –4.2 –6.9 –7.7 –8.3 – Adelaide 4.5 3.1 4.2 3.8 2.7 2.4 1.2 1.5 1.4 1.0 0.8 0.3 – Hobart 4.8 10.5 12.0 12.6 11.7 12.4 11.8 11.1 9.3 7.2 6.0 n.a. Turnover, %stock^ Australia 5.6 4.7 4.5 4.5 4.4 4.3 4.0 3.8 3.6 3.3 3.4 3.5 – New South Wales 5.8 5.0 4.8 4.8 4.5 4.3 4.0 3.8 3.5 3.2 3.3 3.3 – Victoria 4.8 4.9 4.7 4.9 4.7 4.5 4.2 3.8 3.4 3.0 3.1 3.2 – Queensland 6.8 5.3 5.0 4.9 4.9 4.8 4.7 4.5 4.2 3.7 3.8 3.9 – Western Australia 6.5 3.6 3.5 3.6 3.6 3.6 3.4 3.3 3.4 3.2 3.2 3.3 – South Australia 4.7 3.9 3.8 3.7 3.8 3.7 3.8 3.7 3.6 3.6 3.7 3.9 – Tasmania 5.5 5.6 5.6 5.5 5.5 5.3 5.4 5.1 4.9 4.4 4.5 4.5 * ’all dwellings’ measures, ann% ch, latest is month to date ^ % dwelling stock; most recent months are estimates modeled on preliminary data Sources: CoreLogic, ABS, Westpac Economics
  37. 37. 37 Housing market data Residential property listings 2017 2018 2019 avg Feb May Aug Nov Feb May Aug Nov Feb Mar Apr Sales/new listings ratio* Australia^ 0.99 1.00 0.98 0.97 0.96 0.99 0.86 0.86 0.81 0.86 0.88 0.95 – Sydney 1.12 1.11 1.04 1.07 1.02 0.99 0.87 0.91 0.87 0.88 0.90 0.98 – Melbourne 1.00 1.07 1.03 1.06 1.02 1.05 0.87 0.84 0.75 0.80 0.84 0.93 – Brisbane 1.01 1.02 1.01 0.98 0.99 1.05 0.96 0.93 0.88 0.93 0.93 0.99 – Perth 0.82 0.72 0.77 0.79 0.77 0.78 0.72 0.77 0.73 0.80 0.81 0.87 – Adelaide 0.99 1.01 1.03 1.02 1.03 1.12 1.04 1.08 1.02 1.13 1.08 1.14 – Hobart 1.01 1.18 1.27 1.35 1.36 1.34 1.15 1.15 1.09 1.12 1.12 1.15 Total listings, months of sales* Australia^ 4.2 3.8 4.0 4.1 4.2 4.3 4.9 5.4 5.9 6.3 6.2 6.0 – Sydney 3.3 2.5 2.8 3.0 3.4 3.6 4.3 4.8 5.5 5.8 5.7 5.6 – Melbourne 4.0 3.2 3.4 3.4 3.6 3.6 4.4 5.2 6.1 6.9 6.6 6.3 – Brisbane 4.7 4.2 4.5 4.6 4.8 4.6 4.8 5.1 5.6 6.2 6.0 5.9 – Perth 5.8 7.6 7.8 7.2 7.1 7.2 7.7 7.9 7.8 8.1 7.9 7.7 – Adelaide 4.0 3.7 3.9 4.0 4.0 3.9 3.9 3.9 4.0 4.0 4.0 3.9 – Hobart 5.6 2.9 2.6 2.3 2.2 2.0 2.1 2.2 2.6 2.8 2.8 2.8 * figures show 3mth avg, readings for most recent months based on sales estimates modeled on preliminary data ^ avg since 2007 Sources: CoreLogic, Westpac Economics
  38. 38. 38Housing pulse May 2019 1 2 3 4 5 6 7 8 9 10 60 70 80 90 100 110 120 130 Nov-77 Nov-82 Nov-87 Nov-92 Nov-97 Nov-02 Nov-07 Nov-12 Nov-17 %index Westpac Consumer Housing Sentiment Index* turnover^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *adv. 3mths; ^% stock seas. adj’d by Westpac, smoothed -3 -2 -1 0 1 2 3 -3 -2 -1 0 1 2 3 Oct-78 Oct-83 Oct-88 Oct-93 Oct-98 Oct-03 Oct-08 Oct-13 Oct-18 ann chann ch Westpac consumer housing sentiment* turnover^ Source: ABS, CoreLogic, Westpac – Melbourne Institute *advanced 3mths; ^% stock seas. adj’d by Westpac, smoothed The Westpac Consumer Housing Sentiment Indexes presented in this report are composite measures based on a weighted combination of four indexes from the Westpac–Melbourne Institute Consumer Sentiment survey. Two of these are ‘primary’ components with a higher weight that relate directly to consumer perceptions of housing market conditions: the Westpac–Melbourne Institute ‘time to buy a dwelling’ index and the Westpac–Melbourne Institute House Price Expectations Index. The remaining ‘supplementary’ components, with lower weights, relate to consumer assessments of job security – the Westpac–Melbourne Institute Unemployment Expectations Index – and risk appetite – the Westpac Risk Aversion Index. Each of these components is seasonally adjusted, converted to a consistent base and combined using fixed weights determined by historical regression analysis. Note that the house price expectations component is only available from 2009 on – a re–weighted composite based on the remaining measures is used for earlier periods. The resulting composite measures provide significant insight into housing market conditions both nationally and at the individual state level. The national index has over 40yrs of history and a clear lead indicator relationship with a variety of housing market metrics. The index is particularly good at picking turning points in housing market turnover – correctly anticipating every major upswing and downturn since 1980 with a lead of around three months (four once the timeliness of sentiment updates is included). Westpac Consumer Housing Sentiment Index: cycles Westpac Consumer Housing Sentiment Index: full series Appendix
  39. 39. 39 Westpac Economics directory Westpac Economics Sydney Level 2, 275 Kent Street Sydney NSW 2000 Telephone (61–2) 8254 8720 Facsimile (61–2) 8254 6907 Bill Evans Chief Economist Global Head of Economics & Research Andrew Hanlan Senior Economist Matthew Hassan Senior Economist Justin Smirk Senior Economist Elliot Clarke Senior Economist Simon Murray Research Economist Auckland Takutai on the Square Level 8, 16 Takutai Square Auckland, New Zealand Telephone (64–9) 336 5671 Facsimile (64–9) 336 5672 Dominick Stephens Chief Economist, New Zealand Michael Gordon Senior Economist Satish Ranchhod Senior Economist Anne Boniface Senior Economist Paul Clark Industry Economist London Camomile Court, 23 Camomile St, London EC3A 7LL United Kingdom Singapore 12 Marina View #27–00, Asia Square Tower 2 Singapore, 018961 New York 39th Floor 575 Fifth Avenue New York, 10017 USA Publication enquiries, Westpac Economics, Telephone (61–2) 8254 8720, economics@westpac.com.au
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