October 18, 2023 by Dymphna

Foreign buying lifts as borrowers go underwater: the economy in pictures

See the world through the eyes of an economist: prices, foreign buying, rates and underwater households.

Here are the charts that caught my eye this week.

First up, Corelogic Data show that the recovery in property prices has established clear direction, with capital city prices up 5.1%. Expect to see this move higher in the months ahead.

Second, data from NAB bank shows a growing share of property sales going to foreign buyers. Word on the street is that there’s renewed buying interest from Chinese buyers, as political tensions start to thaw a little.

Third, data from the RBA compares interest rates across different countries. The left panel is the change in the official cash rate, while the right hand panel is the effective change in mortgage rates.

Because we have a lot of variable rates in Australia, a change in the official cash rate feeds very directly into mortgage rates. As a result, outside of Norway, Australia has had the most aggressive rate hike cycle in the world.

Finally, the RBA also reckon that the number of borrowers with expenses exceeding benchmark cost-of-living estimates is rising relatively quickly. It’s still a small number for now, but it will be interesting to watch this trend now that rates have stabilised.

And that’s how the world looks through the eyes of an economist this week.