That’s starting to change even though we haven’t seen up-to-date data I think as we see more interest only loans being paid down and we see some subtle rises in wages growth will start to see household debt coming down but it’s going to take a long time for household that to reduce materially and it really implies that households are very sensitive to the cost of debt so if we do start to see any further changes in mortgage rates which we’ve seen out of cycle the RBA or if we start to see some upwards pressure in the cash rate which isn’t likely until at least probably late if not later than.
That then we’re gonna see some effect in the household sector is they dedicate more their income to servicing the debt and less to buying stuff there’s a % of the economy’s consumption so going back to your most recent question what are the some of the benchmarks that I think are the most relevant the most important well I think that to understand the broad trends I’d certainly recommend looking at our hedonic index it’s it’s probably the the go-to measure for understanding how values are moving across a broad market what does that actually do that is good good question it’s a mouthful I know that and it’s quite a tactical sophisticated index so it’s not really easy to understand unless you’re a mathematician or a scientist in a research.
I think it’s more like once that they have a much better understanding to describe its hedonic index it’s simply a regression index and rather than valuing or trying to measure values based on say a really simplistic method method like a median price median prices are really easy to understand it’s just how many properties are for all the properties have transacted across a region over say a quarter or a year it’s the middle price right and but it’s very compositionally biased if you’re seeing a lot of properties selling at the lower end or the upper end of the market.
Your medians going to move around it’s not really a very good indicator for measuring change great indicator for understanding the typical price of a home. that’s selling but try to compare one period to another is fraught with with with issues move a step up from a median www.sydneypropertyvaluations.net.au price and you’ve got an index like say your repeat sales index just simply finding sale pairs and how much capital gain is there between the sale pairs that gives you a pretty good indication and it removes any of the issues around compositional.
Bias okay but you’re removing a massive amount of properties in the market place as simply haven’t transacted and you’re not counting the effect of a new stock because it needs a sales pair you were stratified median as well and that’s what the ABS use in in their series the ABS stratified median and our hedonic index move very very very closely with each other a stratified meeting Sibley tries to overcome some of the compositional bias in the marketplace by looking at the median pricing different different cohorts of the market and then averaging it up across the broad region