About the Spectrum Property Pulse
Like it or not, Australia’s economic health is highly dependent on the strength of its residential property market. It is not just property developers and property trusts that are impacted by property prices and volumes. The financial health of property service providers – such as banks – could also swing from large moves in Australian property prices.
To help keep our finger on the pulse of this pivotal sector, Spectrum has developed the Spectrum Property Pulse. The aim of this indicator is to anticipate large shifts in demand for Australian residential property. In turn, this will help us best position our portfolios to maintain attractive and steady returns for our investors.
The Property Pulse process has its limitations. For example, changes in supply are not taken account. This is not to say we ignore supply and its potential impact on prices. Supply, however, tends to be highly volatile and its key drivers cannot be easily incorporated into a dynamic model. Therefore, we actively use demand drivers within the Spectrum Property Pulse while monitoring supply as data become available.
How it works
Spectrum looks at key demand drivers for Australian residential property: employment, mortgage rates and population growth. We take these three factors, weight them, adjust the timing impact and map the result against national changes in residential property prices. More importantly, we look forward and map out where the Property Pulse is heading. This may indicate how residential property prices in Australia are going to move. In turn, we believe this could serve as a valuable tool to foresee key shifts in Australia’s credit markets.