Confidence and the housing market

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:

Housing finance commitments:

And dwelling approvals:

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:

And the RP Data home values index:

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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