COMMENT:

Anyone who attended a home auction in Sydney or Melbourne last weekend would have noticed a very different atmosphere from a few months ago.

The auctioneers still stood out the front of the properties, talking up the value of the house and trying to create a sense of urgency among the buyers. The estate agents - the men in their tight shirts and suits, the women tottering on high heels - still circulated among the crowd, zeroing in on bidders, trying to squeeze out a few more thousand dollars.

But the bidders' hands were rising more slowly and more reluctantly than a year ago.

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No longer were homebuyers pushing themselves above their limits. The fear that if they didn't get this property the others would be more expensive next week has disappeared.

In Sydney and Melbourne, a little more than half the homes put up for auction actually sold, compared with clearance rates above 90 per cent on some weekends during the boom.

Homebuyers know that if they miss out this week, there will be other properties and, if anything, they might be cheaper.

House prices have fallen 1.6 per cent over the past year in the largest decline since 2012, according to the latest data from analyst Corelogic.

In reality, the falls won't help make housing more affordable in Australia's big cities. They are minimal compared to the appreciation in dwelling values of nearly 70 per cent in the past five years for Sydney, and more than 50 per cent for Melbourne.

However, what the softening housing market might do is hit the economy.

Less housing market activity means less work and money for all those people involved in property sales and moving houses - estate agents, conveyancers, removalists, tradesmen and builders, and all the retailers selling homewares and the like.

But more significant is the effect it will have on how much homeowners spend, known as the wealth effect.

When house prices are rising, homeowners feel richer and so feel confident increasing their spending, even though there's not actually any extra money in their bank accounts.

The reverse is also true. As they see home prices fall - even though their home is probably still worth many hundreds of thousands of dollars more than it was five years ago - homeowners rein in their spending, particularly on discretionary items.

Compounding the problem is that banks are starting to put up their mortgage rates as the cost of borrowing from overseas rises.

All of this could create a broad slowdown in retail sales.

If this scenario plays out, it could hit Australia's economy hard.

It's a risk the Reserve Bank of Australia has warned about in the past.

But with official interest rates sitting at just 1.5 per cent, the central bank will have very little room to boost the economy by cutting rates if the economy softens.

Doing well overseas

CSL is quietly bucking the perception that Australian businesses can't do well overseas.

The blood products giant earns 90 per cent of its revenues overseas and is now the fifth largest company listed on the Australian share market, and the sixth largest biotech in the world, although its name is little known by the general public.

It's an impressive result for a company that was founded in 1916 as the government-owned Commonwealth Serum Laboratories. It was only privatised in 1994, when it was renamed CSL and its shares sold A$2.30 ($2.50) each in the initial public offering. The company's current share price at about A$215 is testament to its long-term success and growth.

Investors learned this week that the growth was continuing when CSL announced a 29 per cent increase in net profit to US$1.73 billion ($2.6b).

The result was driven by double-digit sales increases in immunoglobulin products used to treat patients with weak immune systems, a boom in speciality products and a fourfold increase in flu vaccines production to deal with a bad Northern Hemisphere flu season.

The profit from the flu vaccines business is particularly notable.

Seqirus, CSL's flu vaccines business, delivered on its promise to produce a profit three years after being formed. The business arose out the merger of CSL's own flu vaccines unit and a business purchased at a discount from Novartis that came with an underutilised state of the art plant in North Carolina.

CSL is clearly a very disciplined performer.

So often we see acquisitions fail to deliver any savings or synergies as companies fail to meld two different companies.

The company's success is based on investing for growth, achieving operational efficiencies and innovating in core products and that looks set to continue in the future.

It has a 10-year programme to create new markets for blood products in China, Russia and Latin America.

Annual capital investment will rise from about US$1b to US$1.2 to US$1.3b and research and development expenditure will go from US$150m to US$200m.