Credit card giant predicts soft 2016 for Australian real estate

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Global credit card giant MasterCard believes a recent downturn in expenditure from Australians on household goods is a prime indicator of what will happen to the country’s real estate market in 2016.

According to report in the Fairfax Media outlets yesterday, MasterCard’s latest SpendPulse analysis claims a slowdown in expenditure on hardware, furnishings and appliances signifies further softening for the real estate market in Australia.

According to the analysis, household goods sales have dropped below the three month moving average for five out the last six months, with the slowdown predicted to increase.

“We are seeing a pronounced slowdown and it's deepening each month," MasterCard analyst Sarah Quinlan told Fairfax. 

"Therefore we fully expect real estate will weaken further," Quinlan told Fairfax.

While it may not be a traditional method of tracking the performance of real estate markets, Quinlan told Fairfax the data has been accurate in the past.

“It's the same correlation in the United States," she told Fairfax.

"We saw a drop in appliance sales for eight months and sure enough we saw the housing recovery basically slow to a crawl - it's a very correlative indicator."

MasterCard may not be a leading voice on the Australian real estate market, but its predictions aren’t dissimilar to those made recently by some who are.

Last week saw Moody’s Analytics and CoreLogic RP Data release new research that predicts house price growth will slow to 3.66% this year and fall below 3% in 2017.

“On the outlook for the housing market nationally, we expect house price appreciation to slow in 2016. Our forecast reflects lower income growth as the Australian economy transitions away from mining-related investment, as well as the strong build-up of housing supply over the past two years,” Moody’s Analytics economist Alistair Chan said.

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