Confidence and the housing market

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ScreenHunter_15 Mar. 18 16.24

By Leith van Onselen

A few weeks back, I illustrated how the recent slump in consumer sentiment is a bad omen for the housing market, with consumer sentiment displaying a sharp correlation with house prices:

ScreenHunter_3064 Jul. 01 14.44

Housing finance commitments:

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ScreenHunter_3065 Jul. 01 14.45

And dwelling approvals:

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Now RP Data has chimed in, producing two charts of their own showing the strong correlation between consumer sentiment and the volume of home sales:

ScreenHunter_3067 Jul. 01 14.47
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And the RP Data home values index:

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Definitely something to watch in the months ahead, for if consumer sentiment does not recover soon, then Australia’s housing bull run could finish sooner than most are expecting.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.