Finance trends in eye of beholder
THROUGH no fault of their own, investors are sometimes getting it wrong when reading the commentary about what’s happening in the property market within Australia.
And frankly, I’m not surprised if you too are unclear.
A client told me that after reading two different sources about housing finance data, he wondered what to make of it.
One report said the number of home loan approvals rose 1 per cent in August, higher than the 0.5 per cent rise expected by the market. He thought this was likely to be good for the property market.
But another report said the number of housing loan approvals for owner-occupiers fell by 3 per cent in the same month and is at a 15-month low. In addition, the overall value of housing finance approvals fell 1 cent compared to the prior month of July. Records show they are at their lowest level since April.
So you too may be thinking “what-the?”
It is best to go directly to the source. The Australian Bureau of Statistics research indicates that, in trend terms, the number of commitments for owner-occupied housing finance rose 1 per cent in August 2017. To understand the bigger picture, the graph on the ABS website displayed the total number of owner-occupied dwellings that were financed (in the summary of findings), which indicated that the trend continues to rise.
A graph of historical trends can reveal much more than one month’s data ever will.
What do we expect in the market?
The solid rise this week means we are now seeing some light at the end of the tunnel for Aussie shares. The All Ordinaries Index has traded up strongly off lows at around 5700 points and this week the market continued above the important 5836-point level I referred to in a previous report.
A further strong rise next week would suggest the market is likely to head towards 6070 points, towards our next target of between 6200 and 6400 points. Often the heavyweight companies take the market higher, but this time the smaller end and mid-caps made the first move. This is often followed by rises in stocks at the top end, therefore traders ought to be prepared for their buy rules to trigger.