Westpac April & ANZ June 2009 report

[coffee]

Some light reading for this long weekend..

WestPac April 2009 insight

http://www.westpac.com.au/manage/wrap.nsf/vPdfUrls/29038F3556ADBA95CA25759100267801/$File/MarketInsightsApril2009.pdf?OpenElement

ANZ June Report 209

http://www.anz.com/documents/economics/AEO June 2009.pdf

Geoff

 

[boz]

I've read the ANZ economy report and is not bad (far better then the property reports they do). I don't agree with some of their conclusion but the data is quite interesting and not the usual crap that keeps going around in the media.
I haven't read the westpac report jet.

 

[Ajax]

In the ANZ report it mentions

"Continued household and business balance sheet consolidation"

Why can't they say continued falling house and business prices/values?

 

[buzzlightyear]

In the ANZ report it mentions

"Continued household and business balance sheet consolidation"

Why can't they say continued falling house and business prices/values?

Ajax, not sure they are the same thing. One may contribute to the other however.

 

[DavidMc]

Looks alright to me.

This is what I got from the ANZ one. 2009 will be a bit crap, but then 2010 things will be good again.

 

[boz]

Looks alright to me.

This is what I got from the ANZ one. 2009 will be a bit crap, but then 2010 things will be good again.

They'll have to revise the 2010 forecast, for sure unemployment will not peak before 2010 (even the GOvernment point that out).
So I don't see how things can get better in 2010 with a still rising unemployment and probably huge budget deficit (public debt as well) and voters with markets not happy with government taking on more debt. Also you've got to remember that population increase in australia is around 1.5% in the last few years and a 1.5% increase in gdp for 2010 is still far from enough to bring unemployment down, even in the medium long term.
I read the first couple of pages of the westpac report and I am not very impressed and already spotted wrong and misleading data. For example they mention around 50% of net foreign liabilities, that is wrong and they stand at well over 60% of GDP. reference ABS, also they are probably getting wrong the USA position as a couple of years ago was at around 16% and I believe wouldn't get to 25% yet.
Just be carefull when you read those report as I believe they'll outsource research jobs to high school students...

 

[pommie]

"housing recovery will not be derailed by rising unemployment"

How can that be? The government stimulus only encourages people to take on more debt, when these people lose their jobs surely downsizing will be one of the first things they consider?

 

[MichaelW]

We expect the official cash rate will fall another 125bp to 2.0%, but believe that the reduction will occur in smaller increments of 25bp or 50bp, and that the low point may not be reached until the end of 2009. With any economic recovery likely to be subdued over 2010, we expect official rates will remain at these low levels for an extended period. At this stage we think it unlikely that official rates will rise before late 2010.

In terms of household delevering the RBA credit numbers confirm that most of the work is being done outside of housing. The chart below shows that personal credit growth (credit cards, unsecured lending and margin loans) is declining while mortgages growth is still growing, albeit at a slower pace.

Happy days!

Orderly balance sheet delevering but all on personal credit such as credit cards and margin loans and not on housing credit coupled with a low interest rate environment set to bottom out towards the end of 2009 at 2% and stay there until the end of 2010.

As a resi property investor, I could write a worse script than that...

I was concerned rates would be hiking before I finish my MUH development and lock them down with three cozy tennants in place. Looks less of a risk if ANZ is to be believed.

The housing recovery arguably is already on track and the last two recessions confirm that the housing recovery will not be derailed by rising unemployment. The first phase, a rebound in housing finance, began last September. New lending to owner–occupiers has surged 17% over the five months to January. Active government intervention, via cash incentives to first home buyers, has – in contrast to past cycles – added to the upswing. The investor segment is slower to respond, in part because tighter lending standards are delaying the recovery.

Somebody pinch me!

Cheers,
Michael

 

[boz]

Yes Michael, home lending is confirmed growing, here is the data released today from ABS

FEBRUARY KEY POINTS


FEBRUARY 2009 COMPARED WITH JANUARY 2009:

HOUSING FINANCE FOR OWNER OCCUPATION

* The total value of owner occupied housing commitments excluding alterations and additions increased 2.8% in trend terms and the seasonally adjusted series rose 2.7%.



PERSONAL FINANCE

* The trend series for the value of total personal finance increased 1.0%, with increases recorded in both revolving credit commitments (up 1.1%) and fixed lending commitments (up 0.9%).
* The seasonally adjusted series for the value of total personal finance commitments decreased 0.2%. Revolving credit commitments decreased 1.5%, while fixed lending commitments increased 1.5%.



COMMERCIAL FINANCE

* The trend series for the value of total commercial finance commitments decreased 2.6%, due to a fall in fixed lending commitments (down 3.2%). Revolving credit commitments fell 1.5%.
* The seasonally adjusted series for the value of total commercial finance commitments decreased 14.7%, due mainly to a fall in revolving credit commitments (down 25.6%). Fixed lending commitments fell 7.5%.



LEASE FINANCE

* Lease finance commitments decreased 2.4% in trend terms, while the seasonally adjusted series rose 1.7%.

At the moment to me is quite clear the housing finance is keeping a floor on home price (but I'll bet the rise won't last till next spring)
the commercial finance is very bad with a -14.7% seasonally adjusted drop in february

 

[MichaelW]

Yes Michael, home lending is confirmed growing, here is the data released today from ABS


At the moment to me is quite clear the housing finance is keeping a floor on home price (but I'll bet the rise won't last till next spring)
the commercial finance is very bad with a -14.7% seasonally adjusted drop in february

Thanks Boz!

So, housing finance is up 2.7% seasonally adjusted. Nice! I don't do Commercial so I'm only really interested in Resi. I actually think there is a floor under prices and we're seeing the beginning of the recovery phase in resi property. Provided our big 4 remain well capitalised, I can't see the lending environment getting much worse over here and as it progressively improves over the coming years the brakes will be taken off the resi housing market.

All just my personal conjecture.

Regards,
Michael

 

[murtagh]

Thanks Boz!

So, housing finance is up 2.7% seasonally adjusted. Nice! I don't do Commercial so I'm only really interested in Resi. I actually think there is a floor under prices and we're seeing the beginning of the recovery phase in resi property. Provided our big 4 remain well capitalised, I can't see the lending environment getting much worse over here and as it progressively improves over the coming years the brakes will be taken off the resi housing market.

All just my personal conjecture.

Regards,
Michael

Hi Michael,

I have noticed that you are bullish on property over the next year or two - I'm wondering if you can outline what you think will happen over the next year or two in the broader economy?

I have been reading too many bearish blogs, and I really can't see the end of the tunnel as yet. I have never been through a recession where I was old enough to pay attention, so I have nothing to look to for clues as to how far along we are.

According to the bearish outlooks I've been reading, the next two years on the American stock market may be repeated rally/fade/collapse events .. with lower and lower lows. What that means to Australian residential property .. I don't know - but it makes me want to hide my meager capital away for the moment.

Do you think the bad news will just slow down and eventually stop and we return to "business as normal", or will there be defining moments as we go?

How do you see the next little while unfolding?

Thanks.

 

[sparky23]

Thanks Boz!

So, housing finance is up 2.7% seasonally adjusted. Nice! I don't do Commercial so I'm only really interested in Resi. I actually think there is a floor under prices and we're seeing the beginning of the recovery phase in resi property. Provided our big 4 remain well capitalised, I can't see the lending environment getting much worse over here and as it progressively improves over the coming years the brakes will be taken off the resi housing market.

All just my personal conjecture.

Regards,
Michael

I am all for your personal conjecture, it sits very nicely with me!