CBA Says Australian Property Market Is Back, but Who Will Reap the Reward?

The past year and a bit has been rocky for the Australian property market.

For the first time in a long time we finally saw a pullback in major markets. Both Sydney and Melbourne felt the brunt of a mild correction.

Now though, with interest rates falling, Aussie property is making a comeback. Optimism is returning, prices are steadily climbing, and a new boom may be coming.

CommBank’s household forecast

Today the CBA has released its latest Household Spending Intentions (HIS) report.

In it you’ll find the bank dissecting what everyday Aussies are thinking of doing with their money. And as they see it, things have ‘reached a gentle turning point’.

What this means is that spending may be on the cusp of an uptick. And for a number of industries — such as retail, travel, and health — that is good news.

The biggest winner by far though is property.

Take a look at the CBA’s findings:

Australian Property Market is Back

Source: Household Spending Intentions Report

The ‘intention’ to buy a home is now back at pre-correction levels. Meaning demand could reach frenzied levels once again. As the CBA bluntly put it:

The sharp upswing in the Home Buying intentions series continues and is now approaching the record highs seen in H1 2017.

In other words, prepare for another boom. Which for investors will be music to their ears.

No doubt the CBA and other banks will be licking their lips as well. More home sales should mean more lending.

But, nowadays the Big Four aren’t the only option for a mortgage…

Market share under siege

Currently the major banks still dominate the mortgage market. 81.2% of all residential home loans fall under their control.

They are still the kings of lending. But, they are also under siege.

It all started with the Banking Royal Commission. Now that the misdeeds of the past have come to light, we’ve seen a crackdown.

Regulators are now watching the banks’ every move. Restricting what they can and can’t get away with. Limiting the lending abilities of the Big Four.

At the same time, we’re seeing a slew of new competitors. Companies that are taking on the big banks and grabbing more market share. As a recent KPMG report notes:

The changing competitor landscape, including the rise of international banks, challenger banks and non-bank lenders, is continuing to take residential market share out of the majors.

So, even if the CBA is upbeat about the property market, they may not enjoy the spoils. These new and improved lenders could be the real winners.

For the CBA and all the major banks, this could severely hurt their bottom line. Once profits begin to fall, dividends will be next in line.

We’ve seen it coming for months now. That’s why we’ve been telling people to get out while they still can. Holding onto bank stocks right now could be a recipe for disaster. Read our full warning, right here, before it’s too late.

Regards,

Ryan Clarkson-Ledward,
For Money Morning


Ryan Clarkson-Ledward is one of Money Morning’s junior analysts. Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects. Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities. You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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