For the third successive week, home buyers have not only been out and about, they've splashed out.

Auction clearance rates in Sydney hit 80 per cent, making it three successive weeks where better than three-quarters of properties on the block sold.

In Melbourne it was a similar story, the strongest result since the market hit the skids two years ago.

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On ANZ's reckoning, clearance rates at that level have been consistent with annualised house price growth in the order of 15-to-20 per cent in both cities.

So, will historical precedent hold? Probably not this time around, according to ANZ's Head of Australian Economics, David Plank.

"Our 'this time is different' view stems from the expectation that conditions around credit supply will not support a rapid acceleration in house prices," Mr Plank said.

"While APRA's recent lowering of the interest rate floor eases credit constraints a bit, ongoing changes to the treatment of expenses and the implementation of full 'comprehensive credit reporting' from September this year are material offsets to this easing."

The ANZ house view is for house prices to edge up between 3 and 5 per cent next year — well short of the level implied by historical precedent.

"We think the lift in prices so far reflects a 'pop', as supressed demand hits the market following lower interest rates and more certainty around tax," Mr Plank said.

A mild "pop" in prices is better than another "bubble" forming from the Reserve Bank's perspective, given the recent rate cuts were delayed by fears of inflating the property market to bursting point.

Mr Plank said another big rally in dwelling prices would present a significant challenge to both the RBA and regulators.

"While it may delay a further rate cut, we don't think it will rule it out.

"We think regulators will react if a rapid jump in house prices occurs, and some combination of lower rates and tighter macro-prudential measures will be implemented.

Rising auction clearance rates tend to precede rising dwelling prices. ( Source: ANZ Research, CoreLogic )

House prices in the key Sydney and Melbourne markets appear to have stopped falling — at least for the time being.

However, Westpac, in its monthly Housing Pulse monitor, points out there are still some important caveats to the argument there's a sustainable lift in demand.

"The lift in buyer sentiment looks to be partly based on the expectation of a further improvement in affordability that may not materialise if prices start rising again or if the RBA disappoints on expected rate cuts," the bank said.

"Conditions continue to vary markedly by state. Whereas NSW and Victoria are showing a clear turn-around, Queensland still looks out of sorts, South Australia is drifting and Western Australia is struggling to establish a base despite renewed optimism."

Trade worries hit markets again

The latest salvo of @realDonaldTrump tweets aimed at China and US Federal reserve chair Jerome Powell on Friday had traders once again rushing for the exits.

The S&P500 shed 2.6 per cent, the tech-centric Nasdaq lost even more. The likes of Apple and Intel, with their close links to China, had particularly rough sessions.

The latest risk-off retreat looks like flowing through to the local markets. The ASX SPI futures point to another tumble of more than 1 per cent on Monday.

Markets on Friday's close: ASX SPI 200 futures -1.3pc at 6,400; ASX 200 (Friday's close) +0.3pc at 6,523

ASX SPI 200 futures -1.3pc at 6,400; ASX 200 (Friday's close) +0.3pc at 6,523 AUD: 67.5 US cents; 60.6 euro cents; 55.0 British pence; 71.2 Japanese yen; $NZ1.06

AUD: 67.5 US cents; 60.6 euro cents; 55.0 British pence; 71.2 Japanese yen; $NZ1.06 US: Dow Jones -2.4pc at 25,628; S&P500 -2.6pc at 2,847; NASDAQ -3pc at 7,752

US: Dow Jones -2.4pc at 25,628; S&P500 -2.6pc at 2,847; NASDAQ -3pc at 7,752 Europe: FTSE -0.5pc at 7,095; DAX -1.2pc at 11,612; EuroStoxx50 -1.2pc at 3,334

Europe: FTSE -0.5pc at 7,095; DAX -1.2pc at 11,612; EuroStoxx50 -1.2pc at 3,334 Commodities: Brent oil -1pc at $US59.34/barrel; Gold +1.8pc at $US1,526/ounce; Iron ore $US86.50/tonne

The August reporting season wraps up this week with the remaining 25 per cent or so of companies still to report unlikely to salvage what has been a not-too-great set of results.

"Only 37 per cent of results have surprised on the upside, which is below the long-term norm of 44 per cent and is the lowest since 2012, " was the take of AMP Capital strategist Shane Oliver on the season so far.

Increased earnings are also below trend, fewer companies have raised dividends compared to a year ago and earnings downgrades have dominated upgrades.

"Downgrades have been greatest amongst energy stocks, financials, telcos and industrials," Dr Oliver said.

"Some retailers surprised on the upside and were confident about rate cuts and tax cuts boosting spending but others still saw tough conditions and BHP saw falling commodity prices."

The bellwether companies reporting this week include building material suppliers Boral and Adelaide Brighton, retailers Wesfarmers and Woolworths and the big miner Fortescue.

The number of companies beating expectations this reporting season is lower than usual. ( Source: AMP Capital )

First look at GDP

The first bits of data that make up second-quarter GDP — construction work done and private sector capital expenditure — are printed this week, and neither are expected to make a compelling case for an economy regaining its mojo.

Construction work has declined in the previous three quarters. The consensus view is that Wednesday's release will make it four straight.

Government-financed construction is likely to be the only positive in the mix.

Engineering construction has been weak as the mining boom winds up, and may have even hit the bottom, but residential construction is likely to drag the overall result down.

The punditry has tipped capex (Thursday) to be either marginally negative, or marginally positive — so flat seems a fair call.

From a forward-looking perspective, the second estimate of the 2019/20 financial year investment plans will garner a fair bit of interest.

Plans for capex of around $114 billion is the benchmark. A higher number will see prospects upgraded, anything lower will be a disappointment.

Building approvals and private sector credit data (Friday) are likely to point to ongoing weakness in the residential property sector.

Australia

Date Event Comment/forecast Monday 26/8/2019 Company results Boral, Fortescue, IOOF, G8 Education, James Hardie Tuesday 27/8/2019 Company results Caltex, Reliance Worldwide, Wesfarmers RBA speech Deputy Governor Guy Debelle at an economics conference in Canberra Wednesday 28/8/2019 Company results Oz Minerals Construction work done Q2: One of the first GDP partials, expected to fall for the 4th consecutive quarter Thursday 29/8/2019 Company results Adelaide Brighton, Ausdrill, Independence Group, Link, NextDC, Ramsay Healthcare, Woolworths Private sector capex Q2: Another GDP partial, another fall but maybe more mild this time Friday 30/8/2019 Building approvals Jul: Always volatile, but trend is down with fall in apartment permits outpacing house approvals Private sector credit Jul: Another very flat month of lending in business and property

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