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Speaker 1: Now in a week where we have a number of

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Speaker 1: brighter economic reads, we can perhaps add another from the

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Speaker 1: housing market. So we've got housing affordability at its most

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Speaker 1: affordable level since twenty nineteen, almost seventeen percent better than

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Speaker 1: at the peak of COVID. Time required to save a deposit,

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Speaker 1: for example, is now down to ten years, whereas once

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Speaker 1: was fourteen. Kelvin Davidson is Chief Property Economistic Cutality is

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Speaker 1: back with's Calvin Morning to you go on it and

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Speaker 1: your reports. Is talks about steady income growth. See this

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Speaker 1: is the psychology of housing, isn't it. Because if I

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Speaker 1: round it up most people and goes, now, what about

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Speaker 1: your steady income growth? They go, what income growth? Wouldn't they?

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Speaker 2: Well, yeah, just right now they might be questioning that.

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Speaker 2: I guess what we're looking at here is over a

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Speaker 2: longer period of five or six years, where house prices

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Speaker 2: have fallen and comes have gone up over that period.

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Speaker 2: Might be slow now, but they have increased over that period,

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Speaker 2: and of course the house price is down. So yeah,

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Speaker 2: those things have certainly combined to improve housing affordability. Not cheap,

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Speaker 2: but it's a lot better than it was.

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Speaker 1: We should also remember the power of the lower interest rates,

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Speaker 1: because we forget that done. We sort of talk about

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Speaker 1: twenty five point. If you go back over several years,

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Speaker 1: it's come down exponentially, hasn't it.

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Speaker 2: Yeah? Oh yeah, And a lot of people, for whatever reason,

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Speaker 2: use their sole key house price or housing affordability measure

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Speaker 2: as the house price to income ratio. Now that's fine,

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Speaker 2: but what it ignores as lower mortgage rates. So yeah,

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Speaker 2: once you factor that and things starts looking a lot better. Actually,

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Speaker 2: on our measure, we're looking now forty four percent of

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Speaker 2: median household income goes to service a new mortgage. The

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Speaker 2: average there is forty three, So it's now pretty close

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Speaker 2: to normal. Now it's not below it. It's not necessarily cheap,

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Speaker 2: but it's back to some kind of normality.

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Speaker 1: But it was fifty seven, but I mean fifty seven

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Speaker 1: to forty three forty four. That's a material difference, isn't it.

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Speaker 2: Yeah? Yeah, And a lot of that you would put

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Speaker 2: Obviously house prices have fallen, but the sharp falls and

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Speaker 2: interest rates are part of that too, And I guess

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Speaker 2: now pretty clear indication that the interest rates are get lower.

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Speaker 2: So I think we're establishing some kind of foundation. I

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Speaker 2: think the house prices.

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Speaker 1: There's a window here though, because at some point if

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Speaker 1: Christian and is a gang of men and women are right,

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Speaker 1: the affordability window closes because an investor is going to

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Speaker 1: go right, I'm in, or people are going to start

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Speaker 1: getting a bit busy about the market, and your window's gone.

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Speaker 2: Yeah. Well, that's that's right. And that's what we've seen

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Speaker 2: in past cycle, is that there are reasons to think

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Speaker 2: that cycle might be a bit more muted this time.

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Speaker 2: We've got get two income ratio restrictions. Obviously, the government's

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Speaker 2: pushing incredibly hard on housing supply. But the thing that's

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Speaker 2: hard to account for, and whenever its shifts you never

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Speaker 2: quite know. But it's the psychology and the mindset. And

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Speaker 2: I'm always conscious of that. And if people think house

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Speaker 2: prices will go up, well they probably tend to so

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Speaker 2: conscious of that. But just right now, there are some

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Speaker 2: challenges in the form of unemployment. So let's keep me

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Speaker 2: a lot on things for now.

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Speaker 1: Yeah. In fact, funny you should say that, because we've

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Speaker 1: got it at Chris me and On Late who owns

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Speaker 1: Earburn and Winton. He said yesterday and his report that

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Speaker 1: until the job market turns, he doesn't think housing will

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Speaker 1: turn Is that fair?

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Speaker 2: Yeah, I agree with that. I mean, and it's not

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Speaker 2: just people who have lost their jobs, which of course

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Speaker 2: a lot lots of people have, but also it's the

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Speaker 2: wider spillover thing in a recession. Most people do actually

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Speaker 2: keep their jobs, but it's the widest spillover on psychology

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Speaker 2: and confidence. You're if you're not feeling quite as secure

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Speaker 2: in your job, and you're probably not going to rush

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Speaker 2: out and buy a big ticket item. But as soon

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Speaker 2: as that confidence starts turn around, maybe we see the

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Speaker 2: unemployment rate stones take down. Then I think that is

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Speaker 2: a takes away a little bit of a handbreak.

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Speaker 1: Grant Inside's always appreciate it. Kelvin Kelvin Davidson, who's the

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Speaker 1: chief property economistic Catality.

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