The RBA review of financial stability, main Headlines via Reuters

  • Banking system performing well, resilient to possible shocks
  • Says rising bad debt levels seen in mining areas, New Zealand dairy
  • Risks around large supply increase of inner-city apartments coming to the fore
  • Risks from apartment oversupply greatest in Brisbane and Melbourne
  • Risks hard to judge due to paucity of financial data on unlisted, offshore property developers
  • Banks have tightened lending standards on apartment projects, buyers which could limit oversupply
  • Lending by Asian banks for Australian commercial property continues to grow rapidly
  • Household financial risk have lessened, lending standards have strengthened
  • Cautions that household debt-to-income ratio drifting up from already high levels
  • Housing price growth has slowed overall, picked up a little in Sydney and Melbourne
  • Says share of high LVR lending has fallen, lowest in almost a decade
  • Businesses overall remain in good financial health, but mining sector under pressure
  • China a key focus of risk, rising debt could cause widespread loan defaults, economic disruption

OK ... so that is a very mixed bag, plenty of warnings in there, and plenty of areas where risks have fallen. Depending on your view, you can take pretty much whatever headline you like and blow it up.

A level-headed approach is that, well ... it's a 'mixed bag'. No need to panic, and no need to be complacent either.

That would seem to be the message the currency is giving too, its barely changed:

A lot of the headlines (above) are not saying anything new. The 'apartment glut' for example is something that was flagged more than a year ago here on this very site ... it was clear from the pattern of building approvals and indeed flagged in the popular press. Not new, but it is gaining more attention in the media. Something not be complacent about, but not be all headless chook about either.

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