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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
AUSTRALIA
Moody’s has reported that in February new mortgage holders needed an average 30.9% of monthly income to pay their loans up from 26.4% in May 2022 when rates first rose this cycle, according to The Australian. It expects housing affordability to continue to deteriorate over 2023 with Sydney to be the least affordable city, as the RBA indicated this week that rates need to rise further.
- Our housing affordability index (HAI) was around 28% below trend in Q4 and Q1 to date is implying that it could go to 30% below, assuming disposable income is flat. However, Q4 house prices-to-disposable income was 1% below trend, as house prices are now almost 10% off of their peak but remain above trend. This is a slight increase in affordability relative to income. Thus, the recent deterioration in the HAI has been due to rising rates but a further correction in house prices, which has been orderly to date, would help to at least partially offset higher rates in terms of affordability.
- The housing valuation index (HVI), calculated as house prices over CPI rents, is suggesting that the house price correction has further to go. While it is off of its peak, it remains elevated and 6.5% above trend. Rents are rising strongly due to very low vacancy rates but house prices need to fall further to bring the market back into balance.
- Sales transactions usually lead prices and in January new home sales fell 12.8% m/m to be down 51.1% y/y.
Australia CoreLogic house prices y/y% vs HAI deviation from trend %
Source: MNI - Market News/Refinitiv
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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