The Six Conditions Behind the Score
Each condition is measured against its own history, and reported twice. The intensity reading says how far the condition sits from its own normal — near 100 is unusually high for that condition, near 50 is an ordinary quarter. The signed reading says which way it leans: above the midpoint the condition currently favours investment, below it the condition weighs against.
The two often disagree, and that is the point. A condition can be far from ordinary and unhelpful at the same time. Regulation is the clearest case below.
Dwelling prices, rents, and the total value of the national dwelling stock. Third of the six on intensity, behind the construction pipeline and regulation, and second on the signed frame — asset values sit well above their own norms, and on this index that counts as supportive of investment returns.
The cost and availability of credit, and how much rates, inflation and the exchange rate are moving. Near the middle on the signed frame and above it on intensity, and that conceals a split: borrowing costs are at the highest level in the record while their movement is unremarkable. Expensive and stable, rather than expensive and volatile.
Approvals, commencements, work under way, and how congested the pipeline has become. The highest of the six on intensity. Full at every stage — work in progress and congestion both sit at the top of their records, and approvals and commencements both sit high. A full pipeline means activity, but congestion counts against conditions rather than for them, which is why the signed reading sits well below the intensity one.
Population growth and net overseas migration. In the upper fifth of its own range at the March quarter 2026, the quarter in which both inputs peak each year. Against earlier March quarters it is the weakest reading since 2021. Both frames agree here, because stronger demand counts as supportive and weaker demand as the reverse.
Industry survey sentiment, investor participation in lending, and household spending patterns. The lowest of the six on intensity. Survey sentiment in particular sits close to the floor of its own recorded range.
Enforcement activity at ASIC and APRA, and where the prudential lending buffer sits. The sharpest divergence of the six: regulatory intensity sits at the top of its own record, and higher intensity is a constraint on investment conditions rather than a support. The lowest of the six on the signed frame. Unusual, and unhelpful.
The six disagree, and widely. Prices and rents sit near the top of their range while sentiment and behaviour sit near the bottom — a spread of more than eighty points inside one index. Two conditions of six currently sit clearly on the supportive side.
That is why the two headline figures diverge. Conditions are a long way from ordinary, and that distance runs in both directions, which is why the signed reading sits only a little above the middle. Construction and sources are set out on the Methodology & Ratification page; EL3 turns to using the reading in practice.
