by Marshall Cobb - Principal
First home buyers are the biggest holder of home loans in almost six years. The seasonally adjusted figures for June show an overall drop in new lending of 1.6% from the previous month with falls from both investors and owner-occupiers. However first home buyers have capitalised on a less-crowded market, recording 18.1% of new home loans in June, which is the highest proportion since October 2012. Full story.
In an article this week Cameron Cusher asks "can the housing market and the broader economy cope with higher mortgage rates?" He writes...
"Given the RBA’s Charter is to contribute to the economic welfare and prosperity of the people of Australia, I find it difficult to believe that there is a strong likelihood of any near-term cash rate increases. In fact, a stable interest rate environment, or a potential interest rate cut seems to be a more appropriate course of action at this time, especially where property value declines accelerate - " Full Story.
One of the knock-on effects of a slowing real estate market is that people will reduce their normal consumer spending if they don't feel wealthy. Then businesses slow down and that stymie’s wage growth and inflation which are already too low. The “RBA and friends” have succeeded in cooling the market, and now they need to re-focus and ensure that they don’t over-cool it. Luckily we live in a country where certain levers such as interest rates, migration, infrastructure spending etc. are available to manage and manipulate the economy, or at least give it a push in the right direction and put a floor under any potential property market over correction.