1. Hints of weakness for new listings
There have been signs in the past few weeks that new listings flows have fallen below what’s normal for the time of year. It could be the result of Omicron, as in vendors don’t want to list because they don’t want people coming to their home with Covid. The fall-off could also be the result of tougher lending conditions – i.e. people can’t get the finance to move house so aren’t listing - or perhaps homeowners are worried they won’t get the asking price they’d like, so aren’t listing in the first place. Whatever the reason, it’ll be an interesting aspect to keep an eye on.
2. Dwelling consents may have finally peaked
New dwelling consents have been on a long upswing, but as the months have gone by, I’ve been suggesting more loudly that the sharp increases in construction costs would soon deter some households from the new-build path. And this turning point may now finally be here, with new dwelling consents in January 6% lower than a year earlier, the first decline since February last year. To be fair, consents are still very high, and you don’t necessarily have a new trend in one month alone. In addition, the pipeline of consents already approved guarantees builders plenty of work for many months (years) yet. But it certainly puts a lot of interest on February’s data, due March 30.
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3. Stagflation?
The dreaded “s” word – an environment where you have a stagnant economy but high inflation – may start to be whispered a little more loudly over the coming months, off the back of last week’s ANZ business and consumer confidence measures. They both showed weak sentiment in February, which is surely a concern for near-term economic growth and employment prospects. It certainly won’t be welcome news for the Reserve Bank, as they look to curb inflation by raising the official cash rate, without causing an economic recession. Nor is it a great combination for property – higher mortgage costs at the same time as a growing risk of rising unemployment. One to watch for sure.
CoreLogic chief economist Kelvin Davidson says new listings have fallen below normal levels for this time of year. Photo / Peter Meecham
4. At least jobs growth is still solid for now
On a more positive note, at least the economy still created more employment in January. The filled jobs total was up by 0.5% (after we account for the normal seasonal change that’s due simply to it being January), the twelth monthly increase in a row and the strongest since August. If unemployment can stay more or less unchanged over 2022, this should be a reasonable support for the property market, limiting the scope for a significant downturn in prices.
5. More insight into effects of LVR and CCCFA
Later this week CoreLogic’s data on buying activity across the various key groups will be available for February, with my attention centred on first home buyers. Last month’s figures showed the first signs that first home buyers were starting to suffer from reduced availability of low-deposit finance and also tighter scrutiny of their spending patterns. I wouldn’t be surprised to see that their market share dropped even further in February (from 26% in Q4 2021, and 24% in January).
- Kelvin Davidson is chief economist at property insights firm CoreLogic
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