NSW's economic strength straining housing affordability: Westpac
The NSW economy has continued to outperform the rest of Australia by a wide margin, but the state’s economic strength is placing pressure on housing affordability, said Westpac’s Red Book January 2017 report.
The state recorded 3.5 percent growth for the 2015/16 financial year, the strongest result since the pre-Olympic boom in 1999/2000.
The more recent performance has been more mixed with state demand stalling in Q3 and consumers reining in spending growth in line with slow incomes.
The consumer mood has also been toned down a little but remains more upbeat than the rest of Australia.
At 102.8 the average NSW sentiment index read over the last 3 months is not particularly strong but is comfortably above the 98.5 reading for the rest of Australia.
The biggest wedge is around views on the economy which remain less pessimistic in NSW (i.e. above the rest of Australia but still sub-100).
Unemployment expectations are also materially better in NSW – the only state recording responses below its long run average.
The picture is less constructive around housing. Deteriorating affordability continues to weigh on assessments of ‘time to buy a dwelling’, the state index still 18 points below the rest of Australia and firmly in negative territory.
Notably, NSW consumers also appear to be becoming warier of risk, the state risk aversion index converging with the national measure in December.
