Recent Australian Economic data shows a slowing down real estate market, as the demand hit a 6-year low. Other factors that are affecting the Australian Market is a lower lending level and a drop in the House Values.
Home prices have fallen 11% in Sidney and 15% in Melbourne from their highest level in 2017. Home Building Approvals hit their lowest levels since 2013 while Trade Hours workers fell 2.5% in May, the highest fall since 2015.
Some Market Actors don't think there is going to be a significant improvement soon, for example, the Satterley Property Group general manager Jack Hoffman (an Australian land developer) said that land sales have been "pretty slow" on the last 12 months and this implies that "home building will slow down as well,” while hoping for a pickup sometime next year.
It's not good news for the RBA
The Australian Central Bank has been trying to stimulate the economy through rate cuts while counting on a strong labor market to keep wages and inflation at an acceptable level. Since the construction sector hires a tenth of the Australian workforce, this may make the RBA policymakers work more difficult.
Financial Markets, on the other hand, are living their best moment since November 2007. On Wednesday, the ASX200 (which includes Australia's top 500 companies) grew up 0.8%, reaching 6,866.7 right after midday.
This is not surprising since the RBA has kept borrowing costs low which despite weakening the economy, drives a lot of cash to the stock markets.
“We are living in historic times,” said Michael McCarthy of CMC Markets in Sydney, “In the period since the central banks launched their response to the Global Financial Crisis, we have seen many occasions when good news has been bad news for the markets," he added.
Other analysts attribute this peak to other factors besides the global markets, as the mining and bank sectors have been benefitting from other situations.
“These are reasons not to do with the global economy,” said McCarthy “The two sectors together are close to 50% of the whole ASX so that explains the rise,” he added.