Fixed income investors spooked by falling house prices

fixed-income/Australian-fixed-income/financial-planning/housing/unemployment/housing-market/

22 May 2019
| By Laura Dew |
image
image
expand image

Australian fixed income investors believe falling house prices pose the biggest risk to credit markets with 95 per cent expecting prices to fall further.

Responses to the 2Q19 Fitch Ratings KangaNews Australian Fixed Income Investors survey in mid-March found the property market was concerning the majority of fixed income investors. Some 70 per cent of respondents said a downturn in the domestic housing market was the top risk for local credit markets.

House prices have declined for several quarters in Australia due to an economic slowdown and the withdrawal of foreign buyers and are expected to fall further this year with particular sharp declines in Sydney and Melbourne.

Looking to labour, all of the respondents said they expected unemployment would stay at or below six per cent in 2019 and they did not foresee any significant deterioration in the job market until the end of 2020.

The softening of the jobs market led Reserve Bank of Australia governor Philip Lowe to hint this week at a possible rate cut from 1.5 per cent in June and survey respondents agreed, saying there was zero chance rates would rise in the next 12 months.

Within businesses, firms said capital expenditure was the least-likely use of cash over the next 12 months while shareholder-orientated activities were the most likely.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

1 month 3 weeks ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

2 weeks 6 days ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 5 days ago

TOP PERFORMING FUNDS