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Housing finance sentiment ‘worst on record’: ANZ

Outlook on the availability of credit is the lowest on record and is driving a weakness in the housing market that could “increase the economy’s vulnerability to shocks”, according to ANZ.

The latest joint ANZ-Property Council survey has revealed that sentiment among respondents regarding debt finance availability has dropped by 16 basis points from -11.3 points to -34.2 points over the September quarter, the “worst in the history of the survey”.

The survey also revealed that general confidence in the Australian property market declined from 142.2 to 137.9, with sentiment regarding economic expectations also dropping from 27 to 20.3.

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Residential price sentiment slipped into negative territory from 17.7 to -9.0, with sentiment regarding interest rate expectations also falling from 34.1 to 31.2.

According to ANZ’s head of Australian economics, David Plank, the negative outlook for credit availability is “driving the recent weakness” in the housing market.

Mr Plank noted that a similar result recorded in the same survey in 2015 proved to be a “leading indicator in the subsequent fall in building approvals”, and he claimed that a “steep fall” in building approvals is likely over the next six to 12 months.

The economist claimed that ongoing weakness in the housing market, driven by tighter credit conditions, could stunt growth in the Australian economy.

“Easing dwelling investment will be a drag on Australia’s economy later this year,” Mr Plank said.

“Falling housing prices and the absence of a wealth effect will weigh on household spending, at least to some extent.”

Mr Plank remained optimistic about the Australian economy’s ability to “come through the tightening in credit availability relatively well”, and pointed to improvements in employment conditions, income tax reductions and “above average” results from ANZ and Roy Morgan’s latest Consumer Confidence Index.

However, the consumer confidence survey reported a fourth consecutive fall in the headline index, down by 0.2 of a point to 120.1, and a 2.7 point drop in consumers’ views towards current financial conditions.

The latest Housing Finance data from the Australian Bureau of Statistics (ABS) has also shown a continued fall in finance for investment property (0.1 of a percentage point), following on from a 0.9 of a percentage point drop in April

Despite pointing to signs of growth in the domestic market, Mr Plank warned that slowed credit growth and a subdued housing market could expose the economy to “shocks”.

“The tightening in credit availability and the associated weakening of the residential housing market do increase the economy’s vulnerability to additional shocks,” the economist continued.

“The combination of a global slowdown triggered by trade and tighter credit domestically could be particularly damaging for Australia’s economic prospects.

“This suggests that policymakers should be especially careful about adding to the downside risks.”

Moreover, the ANZ-Property Council survey revealed that sentiment regarding residential construction declined from 19.9 points to 8.2 points.  

ANZ also noted that it expects construction activity to fall by 10 per cent in the coming year, but this would be offset by a strong pipeline of construction activity.

[Related: Banks ‘slow to respond’ to weak credit growth: APRA]

Housing finance sentiment ‘worst on record’: ANZ
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Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

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