Fi­nance trends in eye of be­holder

Geelong Advertiser - - BUSINESS BEAT -

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.

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