Relying on the macro view of housing alone is misleading – RBA

Goldman Sach's released an interesting communication last Wednesday regarding a speech the RBA's Ms Luci Ellis (head of the Financial Stability Department) delivered at the Finsia Financial Services Conference in Sydney.

The main outakes from the note were that:

• Goldman believe the speech "reinforces further the RBA's strong view that the Australian housing market & household debit exposures are very manageable."
• Ms Ellis' stated that "assessments of financial stability require a focus on tail risks, and that it is not sufficient to look just at the data from the perspective of "averages".
• Ellis went on to highlight that "one area where this is particularly relevant is with respect to housing market dynamics, where a superficial macro-level approach to the key data sets paints a misleading picture of reality - in the case of Australia, presenting an apparent increase in the risk profile when a micro assessment of the data correctly speaks to the contrary."

The devil it seems, as always, is in the detail..!

It also supports what a number of commentators have been saying for a while now, that although house price growth at a macro level will be relatively flat in the short term, there are still capital growth opportunities to be had if you focus on the right locations and right segments of the market.

See my posts from 19 July, 31 July and 30 August for an overview of recent predictions from Residex, nab & RP Data on where future growth is most likely to come from...