The media continues to hold its focus on the market downturn, but CoreLogic’s Tim Lawless reminds us that the downtown is relatively mild, with a cumulative 1.9% fall in value since the September 2017 peak.
Indeed, things going right deserve a mention in the media too. Despite the market cooling, first-home buyers have been playing an important role in sustaining Sydney and Melbourne markets. And Adelaide is proving to be a standout, remaining buoyant and capturing the attention of buyers from eastern states.
Despite some urging the RBA board to issue a change to Australia’s official cash rate, it has been left on hold at just 1.5%. CoreLogic’s Tim Lawless indicates the slack labour market played a role in this decision, with the national unemployment rate now at 5.4%.
Moody’s Investors Service predicts mortgage delinquencies to increase within two years. The number of interest-only loans converting to principal and interest mortgages continues to rise, bringing about “payment shock” from higher monthly repayments.
Also, an analysis by Endeavour Equity Strategy determined more than 40% of mortgage debt in their sample was “non-prime” due to banks basing their lending decisions on the Household Expenditure Measure, which boosts serviceability by up to 20%.
Download and read the full Market Essentials – September 2018 Report.