The latest housing finance data in Australia for January were weak at a headline level, with the number of new loans for owner-occupied home owners slipping 1.5%MoM. Some of the nominal aggregates weren't quite as bad, with some investor activity and a pick up in loans for construction of new homes.
The big question is remains whether this is enough to offset potential weakness elsewhere. Many seem to believe it will be, mostly because they believe the latest capex data wasn't so bad and that the investment cycle won't be overly severe. Rising consumer confidence suggests consumption might be ok and exports should continue to pick up.
This kind of outlook seems too benign for my liking. I think the investment outlook is a lot more concerning than seems to be consensus. Hanging my hat on a bit of a rise in consumer confidence to underpin growth in the face of loosing ~2ppt or more out of growth in the near future seems to be too much of a stretch.
The spillover into better housing markets into other activity also seems likely to be much more muted this time around than in the last 10 years or so. While people may feel a little more confident, it would still appear many are looking to pay off debt much faster rather than spend at the shops. Housing credit growth continues to slow, which is a good development for the sustainability of household balance sheets, but not good news for growth.
