Concerns over the overheated east coast property market began to ease as 2015 drew to a close, and macro prudential policy moves made by the banking regulator through the year continuing to take effect.
The auction clearance rate in Sydney tumbled from 76.30 per cent at the start of the quarter to 59.80 per cent by the end of December.
The RBA kept the cash rate on hold at a record low 2.00 per cent through the quarter as economic data released was broadly positive.
Consumer confidence and retail sales data was strong and reports from retailers point to strong sales over the crucial pre-Christmas and Boxing Day sales period. The unemployment rate in Australia fell to 5.80 per cent and labour force data released in the quarter was well ahead of market expectations. Business confidence and business conditions figures were also strong.
Despite the largely positive macro indicators, sentiment over the Australian economy remains lacklustre. Australia continues to transition from a commodity-driven economy towards a greater focus on service industries. Many of these industries, including education and tourism, are beginning to reap the bene ts of the decline in the Australian dollar over the past few years.
Recent trade data indicates that services exports now contribute more to domestic GDP growth than iron ore exports, for the first time in six years.
Slowing Chinese demand for resources will certainly impact Australian exports, however, other sectors benefiting from the changing economic landscape will increase their contribution to GDP growth and help to offset this.