Business confidence and conditions might have come back a little in August, according to the latest national Australia Bank survey, but don’t tell property investors, they are still piling into housing, building up for what could be a nasty shake out down the track.
The survey results though show business conditions and confidence are still positive – just not as high in August as they were in July.
The NAB reports match the slightly upbeat tone of the ANZ job ads survey which hit a 17 month high in August, with July’s job ads being revised higher as well. The NAB said business confidence remained resilient in August, despite the small fall from July in conditions.
Conditions were "supported by positive forward orders, subdued cost pressures and more stable consumer confidence.
"Positive business conditions are also helping despite falling back in the month. Confidence varies significantly across industries, with construction firms the most optimistic by a large margin," the NAB said yesterday.
Business confidence was unchanged in the month, at around long run average levels.
"That result was surprising," the NAB said, given "firms (are) still discounting persistently soft levels of business conditions and the negative sentiment surrounding the Federal budget – including the post-budget collapse in consumer confidence.
"Against that business was relatively sheltered from the Budget. Some leading indicators from the survey improved (especially new orders), but generally remain soft.
"However capital spending plans remain subdued and capacity utilisation broadly unchanged at relatively low levels,” the NAB said.
The news had no impact on the value of the dollar which closed around 92.01 USc this morning, down more than a cent during the day.
It’s no wonder the construction sector remains strong – the June quarter national accounts and data on construction for the same period showed residential building was very strong and made a positive contribution to growth.
It’s responding to low interest rates and demand from home buyers and especially investors, as the July housing finance data revealed yesterday.
That report showed lending to property investors, rather than owner-occupiers, drove an overall 2.7% rise in new loans for housing in July.
Overall, there was $28.6 billion in new loans for the month, with loans to investors accounting for 49.7% of all new lending in the month, the highest proportion on record.
The value of fixed loans for investment housing climbed 6.8%, seasonally adjusted, to $11.5 billion in July.
By contrast, lending for owner-occupier purchases was flat month-on-month at $17.06 billion.
By volume, the number of loans committed to housing rose 0.3% in July, seasonally adjusted.
Lending for new home building fell 1.3%, while the purchase of new dwellings was up half a per cent. The number of loans committed to buying established dwellings rose 0.6% from June.
As upbeat as these figures are, they will raise eyebrows at the Reserve Bank which is becoming increasingly concerned at the high level of investor activity in housing, especially by self managed super funds.
