Cross-posted from MARQ Services
Morgij Analytics has this morning released a survey of institutional investors and other financial market participants taken in the latter part of 2014 to gauge respondent’s views of the drivers for Australian housing and mortgage markets for 2015 and beyond.
Survey participants were asked to rate 20 drivers of Australian housing and mortgage markets and the overall index showed a mild negative bias coming in at -1.
A level below 0 reflects the likelihood of increased risks in Australian housing.
Graham Andersen, Chairman and Founder of Morgij Analytics, said:
“What’s clear from the survey is that in a status quo world Australia is at risk but should do okay.
But 2015 is not status quo with unprecedented central bank volatility, slowing global growth, and in the two months since the survey the fears of respondents about a rout in iron ore and LNG prices and the associated impact on growth are already coming true.
Risk in the Australian housing and financial system is growing – it’s just not yet apparent.”
Key takeaways from the survey are :
- At +1.66 respondents are putting a lot of stock in immigration providing assured increases in population and as a consequence housing demand. Thereby keeping prices up and reducing risk.
- At +1 respondents agree with Luci Ellis, the RBA’s Head of the Financial Stability Department, that it is Australia’s urbanization that drives more people to want to live in the big cities and so protects prices and reducing risk of a house price crash.
- -2.24 was the most negative response to any question in the survey and shows respondents were very concerned about the aftermath of the mining/gas investment boom and fall in prices and the impact this is going to have on government revenue, the budget deficit and unemployment. Since the survey iron ore and LNG prices have crashed and MYEFO has recast the deficit. We’d hypothesise that if the survey was taken again today this would be more deeply negative.
- Australia may have relatively low government debt but respondents were concerned about Australian household mortgage debt with -2.14 the response to the question on the vulnerability for the system arising from this debt needing to be continually passed down to new buyers and home owners.
Noting this fear Graham Andersen said:
“The absence of first home owners and owner occupiers relative to the growth in and over concentration of investors as the drivers of Australian house prices should be viewed as the canary in the coal mine for the sustainability of prices over the long run.”
For Reference: Respondents were asked to rate 20 drivers of the housing and mortgage markets on them having a positive (+1 to +5) or negative (-1 to -5) effect. All drivers and the survey can be accessed at http://www.morgij.com.au/cms/survey2014. It’s still not too late to provide your views. We intend to leave the survey open through out 2015.