Aus macro


Two notes, house prices, and lending data, both clearly related, but tabled separately.

Note also we are almost 6% UW Australian shares, and will fade any market strength given this backdrop.

House prices

This continues to look worrisome. Aussie housing firmly rolled.

Here’s month on month changes.

And a cumulative version of the same data.

But I am sure the strong consumer discretionary / retailer +ve LFL sales will continue despite negative wealth effects. People don’t pay attention to house prices, in this country, that much….(!)

Housing finance

The issue I struggle with. I see this as pretty grim for the Aussie economy on the whole. A huge pull forward in demand, thanks to the pandemic, via cheap funding, now firmly in reverse. Bad for banks, yes? But banks “unambiguously” claim a higher share of wallet, through…

…higher mortgage rates and net interest margin expansion. “Everyone else” sees less left over, less for retail, less for travel, less for whatever. The banks are threatened via a rise in BDD’s, which should come only after the retailers are warning en masse.

Not a slam dunk, by any means, and we are in fact 2% underweight the banks, at the industry group level. But that NIM / share-of-wallet story is why we aren’t say 10% UW, and instead are choosing to stay away from the other domestic cyclicals (retail, travel, leisure, media).

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