In this week’s Monday Market Recap we track the latest data on consumer sentiment, business conditions and confidence, total value of dwellings, rental vacancy rates, ADI property exposures, overseas arrivals and departures and preliminary auction clearance rates.
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Westpac-Melbourne Institute Consumer Sentiment Index June 2025
Key insights
The Consumer Sentiment Index was +0.5% in Jun 25 to reach 92.6 points which still means pessimism outweighs optimism (below 100 points means respondents are more pessimistic than optimistic).
Housing related sentiment shifted following the recent cut to interest rates with the Time to Buy a Dwelling Index +3.6% to 93.3 points and although it remains more pessimistic than optimistic it was the highest read since Sep 21, but still well below the long-term average (120 points).
The House Price Expectations Index was +7% to 165.5 points which was the highest level since 2013 with respondents most bullish in Qld followed by NSW and respondents are still bullish but less so in Vic.
What does it mean?
Westpac described the overall mood as one of cautious pessimism which seems a good description. Further interest rate cuts will likely further increase optimism which could see the Index rise above 100 points for the first time in several years. People think conditions to buy properties are improving, albeit they still aren’t great however, most respondents expect property prices will now rise with lower interest rates. To me that seems a reasonable response housing affordability is stretched but lower interest rates boost borrowing capacities and are likely to send property prices higher.
NAB Monthly Business Survey May 2025
Key insights
Business conditions were recorded at 0 index points down, from +2 in Apr 25 with conditions experiencing an ongoing decline since late last year.
Business confidence lifted from -1 points in Apr 25 to +2 points in May 25 but as NAB notes, it will be hard for any significant improvement in confidence if conditions continue to deteriorate.
The release reveals that business profitability (which is one of 3 components of business conditions) (-4 index points) and forward orders (-2 index points) are particularly weak while trading (another component of business conditions) (+5 index points) and CAPEX (+6 index points) are the bright spots.
What does it mean?
These results very much reflect what we’ve seen in the recent national accounts data, a weak economy in which businesses are finding conditions tough and they have little confidence with both measures well below their long-term average. The results from this survey support cutting interest rates sooner rather than later with a weak business sector struggling due to weak consumer spending.
ABS Total Value of Dwellings March 2025 quarter
Key insights
The total value of dwellings stock reached $11.366 trillion in Mar 25, +1.2% over the quarter and +5.9% over the year, with the value owned by households reaching $10.919 trillion and +1.2% over the quarter and +5.8% over the year.
The average price of residential dwellings national has eclipsed $1 million for the first time ($1,002,500) and was +0.7% over the quarter and +4.2% over the year.
The estimated number of residential dwellings reached 11,338,500 over the quarter and was +0.5% over the quarter and +1.6% over the year, an increase of 179,900. It should be noted these are estimates and the latest quarterly estimate has a long history of being revised much lower.
What does it mean?
Depending on your perspective you either rejoice or despair at the average residential dwelling price of more than $1 million however, only NSW has an average price at that level. The increase in the value of dwelling stock continues on its upward march and with two interest rate cuts so far this year an more to come don’t be surprised if we see the growth accelerate. Meanwhile the growth in new dwelling stock remains well below the Housing Accord target, new housing supply should start to lift but we’re a long way from where we need to be. With lower interest rates lifting demand for housing this could lead to even stronger property price growth than many are anticipating.
SQM Research Rental Vacancy Rates May 2025
Key insights
The national rental vacancy rate fell from 1.3% in Apr 25 to 1.2% in May 25 which was unchanged from a year earlier.
Rental vacancy rates were unchanged or lower over the month in all capital cities while only Sydney, Melbourne, Adelaide and Perth recorded increases over the year.
Sydney’s rental vacancy rate was 1.5% in May 25 (1.4% May 24 and 1.5% Apr 25), Melbourne was 1.7% (1.3% May 24 and 1.8% Apr 25), Brisbane was 0.9% (1% May 24 and 1% Apr 25), Adelaide was 0.8% (0.6% May 24 and 0.8% Apr 25), Perth was 0.7% (0.6% May 24 and 0.7% Apr 25), Hobart was 0.6% (1.4% May 24 and 0.6% Apr 25), Darwin was 0.5% (0.9% May 24 and 0.7% Apr 25) and Canberra was 1.5% (1.8% May 24 and 1.6% Apr 25).
What does it mean?
National rental vacancy rates remain very low on an historic basis although we are seeing relatively higher vacancy rates in Sydney, Melbourne and Canberra which should see rental growth moderate. Elsewhere, rental conditions remain extremely tight which reflects the very strong demand and low levels of new rental supply. Although conditions remain generally tight, landlords will have to be cautious about how much they increase rents because after several years of strong rental growth renter capacity to pay higher prices for rentals is stretched.
APRA Quarterly ADI Property Exposures Data March 2025
Key insights
The total value of outstanding credit to ADI for mortgages was +1.2% over the quarter and +5.5% over the year to Mar 25 with owner occupier credit +1.2% over the quarter and +5.3% over the year and investor credit +1.3% over the quarter and +5.9% over the year while the value of balances in offset accounts was +13.2% over the year and an historic high 11.8% of the total value of credit.
0.6% of all outstanding loans were 30-89 days past due which was steady over the quarter while 1.1% of loans were non-performing split between 1.1% of owner-occupied loans and 0.9% if investment loans.
69.7% of new loans over the quarter had an LVR of less than 80%, the highest share since Sep 23.
Only 3% of new loans over the quarter has a loan to income ratio of more than 6 times, and only 5.3% of new loans over the quarter had a debt to income ratio of more than 6 times.
What does it mean?
The share of loans behind payment or in arrears remains steady despite interest rates being higher for longer. We’re seeing balances in offset accounts continuing to grow which also suggests that a significant majority of borrowers are continuing to handle their repayments (and then some). We’re also seeing that activity is being dominated by borrowers who are using significant equity to purchase although this may also reflect tighter lending conditions which also reflects the low share of high loan to income ratio and debt to income ratio lending. Overall, these figures indicate that loan quality remains strong as well as indicating we’re likely to see more borrowing as interest rates fall.
ABS Overseas Arrivals and Departures April 2025
Key insights
In Apr 25 there were 24,660 net permanent and long-term arrivals which was -25.3% over the month and +13.3% over the year.
Annual net permanent and long-term arrivals remain very elevated but have moderated from their highs and at 440,330 were +0.7% over the month, -9.7% over the year and -11.6% from their peak.
Most of the major sources of arrivals have recorded a fall in their annual number of net arrivals with net temporary visa arrivals (117,190) -28.4% over the year, temporary students (84,350) -54.7% over the year and special category visa arrivals which are for NZ (36,390) -4.3% over the year.
What does it mean?
Although there has been a slowing of net permanent and long-term arrivals, the volume remains historically very high. The federal government is aiming to slow migration this year but it appears they are not going to successful in doing that. These extra people place additional demand on infrastructure and housing, particularly rental housing. As a result we are likely to continue to see strong demand for housing which is problematic given we’re currently not building a sufficient volume of new housing. Hopefully as interest rates continue to fall we see a further uplift in construction to support this strong population growth.
Cotality Preliminary Auction Clearance Rates week ending 15 June 2025
Key insights
There was a significant increase in auction volumes over the week from 1,373 to 2,216 which was in line with the 2,278 auctions the same week last year.
With an increase in stock going to auction, preliminary clearance rates rose from 63.8% over the previous week to 70.1% this week which was also higher than the 65.5% preliminary rate the same time a year ago.
Each of the major auction markets recorded an increase in their preliminary auction clearance rates the results were: Sydney (70.5% vs 59.9%), Melbourne (72.2% vs 71.5%), Brisbane (61.4% vs 58.3%), Adelaide (67.1% vs 60.3%) and Canberra (60.7% vs 54.5%).
What does it mean
There is a strong level of demand for housing currently with high volumes of properties going to auction and most weeks clearance rates sitting at around 70%. I would expect these preliminary clearance rates to persist over the coming weeks as confidence in housing is maintained. If interest rates are reduced in early July we may see a further increase in clearance rates over the coming months.