Stateometer: softening momentum spreads through the east coast

The ongoing housing adjustment slowed down economic activity along Australia’s heavily populated east coast in the December quarter.

" Credit tightness, which was a catalyst for changing housing market sentiment in the larger states, has also affected the smaller states.”

The housing component of the ANZ Stateometer weakened in New South Wales, Victoria, Queensland and even in South Australia and Tasmania. In contrast to the three biggest states, house prices in South Australia and Tasmania continued to expand into year-end.

Consumer component deteriorated in all states and territories except Western Australia and Queensland compared with the September quarter.

Such a change suggests to us credit tightness – which was a catalyst for changing housing market sentiment in the larger states which have a high proportion of investors – has also affected the smaller states, which are dominated by owner-occupiers.

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Adjusting

 At a state level South Australia grew at an above-trend rate and accelerated. Tasmania grew at an above-trend rate but with slowing momentum and Western Australia grew at a below-trend rate but accelerated.

 New South Wales, Victoria, Queensland, the Australian Capital Territory and the Northern Territory all grew at a below-trend rates and decelerated.

 There was some good news in Victoria and South Australia’s labour markets, which continued to expand at an increased rate.

 Most of the Western Australia components (consumer, household, business and labour market) also found renewed momentum, suggesting the state is adjusting positively from the mining construction boom.

Cherelle Murphy is a Senior Economist & Jack Chambers is an Economist at ANZ.