Each month I analyse the Reserve Bank's Financial Aggregates data in order to understand to the best of my ability the latest trends in lending for business, personal lending, home ownership and property investment.
On the flip side, rising dwelling prices in Sydney (and I assume here that we are talking largely about Sydney house prices as dwelling price growth elsewhere has been much weaker) might conversely make one become more aligned to the salaried pay cheque since entry prices on family homes do not come cheap, and lenders do typically like to see a reliable income stream.
Traditionally is is said that small businesses are financed by "friends, fools and family" as I analysed previously here.
This might, noted the study, in part be due to a lack of knowledge or awareness of small business lending products and the tax benefits they can provide.
Property loans are cheaper
In the draft paper's own words, it found :
“...a clear and robust positive correlation between the level of housing prices and the share of new companies measured across postcodes”.
The correlation was only apparent for small firms, and it was found to be broad-based across industries.
Naturally, I've already had several dozen snarky Tweets about this mightily unpopular conclusion this morning.
Lest it is not blindingly obvious from the title of the draft paper, I didn't actually carry out the research - it was carried out by the Deputy Head of the Economic Analysis Department at the Reserve with two other henchmen!
Therefore, please direct further zings accordingly.