Auction clearance rates were down across all but two capital cities over the December quarter | http://bddy.me/2npoR2E

Auction clearance rates were down across all but two capital cities over the December quarter | http://bddy.me/2npoR2E

Housing’s puzzling strength

Australian housing finance approvals beat expectations again in November, the number of approvals for owner occupiers up 2.1% vs expectations of a flat result. Approvals ex refi rose 2.4%mth to be up 9.2%yr.

The value of housing finance approvals to investors also posted a rise, up 1.5% but is down –8.3%yr.

The Nov detail showed continued strength in first home buyer loans (+4.5%mth, 36%yr) concentrated in NSW and Vic where state government stamp duty concessions are giving a big boost and activity is coming from a very low starting point.

Construction-related approvals were up 2%mth, 7.6%yr.

By state, gains in NSW (+1.9%mth), Qld (+4.3%mth) and SA (+2.1%mth) offset falls in Vic (–0.3%mth) and WA (–2.7%mth). Annual growth remains strongest in Vic (+16.8%) and NSW (+10.9%) bearing in mind that this is owner occupier approvals only (ex refi) and that the slowdown in investor activity has had a more material impact in these two states, NSW in particular.

Overall, the total value of finance approvals ex owner occupier refi was up 2.1%mth, and 1.7%yr. That compares to turnover, down around 16%yr, auction clearance rates, down over 13ppts, and an abrupt slowdown in price growth, down from a double digit pace mid-year to a sub-5% annual pace currently.

While the pull back in investor finance approvals is broadly consistent with macro-prudential tightening measures impacting this segment, the continued strength in owner-occupier activity has been surprising, particularly given material slowdown in wider housing market activity evident in other measures. Overall, the total value of loan approvals including investor loans and ex refi has firmed over the last year, up 1.7%yr.

The comparison with the previous macro-prudential tightening episode in 2015 is also intriguing. This resulted in a similar slowdown in wider market measures and a sizeable 10%+ decline in the total value of finance approvals.

The differences are puzzling but may be an indication that weaker foreign buyer demand – evident in the wider housing market performance but not captured by finance approvals – may have had a greater hand in the 2017 slowdown.

Matthew Hassan is senior economist with westpac

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The problem with economic forecasting is that there are so many variables, not least of which is the unpredictable nature of human behaviour

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Warren Buffett has won his $US1 million bet he made against the hedge fund industry 10 years ago

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• In 2007, Warren Buffett entered a million-dollar bet with the fund manager Protégé Partners that the S&P 500 would beat a basket of hedge funds over the next decade.
• His S&P 500 index fund compounded a 7.1% annual gain over 10 years, beating an average increase of 2.2% by the basket of funds selected by Protégé Partners.
• Buffett’s prize money will go to Girls Inc. of Omaha, Nebraska.
• Buffett has taken issue with hedge funds’ high fees and their promise of outperforming the market.

With 2017 over, Warren Buffett has sealed his victory over hedge funds in a bet he made a decade ago.

The Berkshire Hathaway chairman in 2007 bet $US1 million that the S&P 500 would outperform a selection of hedge funds over 10 years.

As of Friday, his S&P 500 index fund had compounded a 7.1% annual gain over that period. The basket of funds selected by…

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Latest CoreLogic home value results set scene for softer housing conditions in 2018

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Latest CoreLogic home value results set scene for softer housing conditions in 2018 |

According to the CoreLogic December Hedonic Home Value Index results, national dwelling values slipped lower over the month, led by falls across Sydney, Darwin, Melbourne and Perth

The transition towards weaker housing market conditions has been clear but gradual and is likely to continue throughout 2018 according to CoreLogic head of research Tim Lawless.

Commenting on the results, Mr Lawless said, “From a macro perspective, late 2016 marked a peak in the pace of capital gains across Australia with national dwelling values rising at the rolling quarterly pace of 3.7% over the three months to November.”

“In 2017 we saw growth rates and transactional activity gradually lose steam, with national month-on-month capital gains slowing to 0% in October and November before turning negative in December.”

According to CoreLogic, the 0.3% fall in December was the catalyst…

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