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Q3 2019 Key Market Indicators

August 28 2019

Consumer confidence holds nationally despite rocky footing

January 2019 saw Australian consumer sentiment at 99.6 index points, just below the positive line of 100.0 index points. Since then, consumer sentiment has remained on a relatively stable trend, reaching a high of 103.8 index points in February 2019, and averaging at 100.2 index points over the past 8 months (to August 2019). This shows that Australia is positive and resilient, particularly in the face of a roller coaster year that included: political uncertainty and a Federal Government election, the Financial Services Royal Commission, two consecutive Reserve Bank of Australia (RBA) cash rate cuts, fears of a potential economic recession, the China-USA trade tensions, dips in both overseas and Australia stock markets, and changes in income taxation policy.

First home buyer activity declined by -11.6% in the past 12 months (to the March quarter of 2019), which is a bigger dip than the -5.8% decline witnessed over the 12 months to December 2018. This is unsurprising, given that many first home buyers postponed their purchasing decisions due to political and taxation policy uncertainties prior to the Federal Election in May 2019, as well as tight home loan lending policies exercised by many banks. Interestingly, Australia’s home loan affordability index increased by an average of 3.4% in the past 12 months (to the March quarter of 2019) - led by Victoria (5.1%), Western Australia (4.5%), and New South Wales (3.3%). This confirms that ‘cheap money’ and lower property prices are no longer enough to entice first home buyers.

Australia being a positive and resilient society is key as we enter the last quarter of 2019, as it suggests stability in consumer spending. This keeps the commercial industry alive, providing employment and income stability. Many changes have unfolded over the past three months, such as: the Federal Government announcing its new income taxation policy and first home buyer targeted scheme, banks passing on the RBA’s cash rate cuts and the typical standard variable loan declining (by -5.4% in the 12 months to July 2019), Australian Prudential Regulation Authority loosening investor lending policies, and many capital city and metro areas experiencing softening in property prices – altogether resulting in an increase in the home loan affordability index. It will be interesting to observe how first home buyers respond to these changes throughout the rest of 2019.

The PRD Q3 2019 Key Market Indicators provide a quick snapshot of the current state of the market in Australia from both an economic and property perspective. The Indicators cover both national and state level data, comprising of: