Australian home values staunch losses in July...KEEN wrong again.
"RP Data research director Tim Lawless said the July result showed Australia’s housing market was experiencing a controlled soft landing after a resounding recovery during 2009."
(whole blog long and worth a read...extract below)
"So it would appear that my old sparring partner, Associate Professor Steve Keen, has once again got his calls wrong. Following the release of RP Data-Rismark’s June house price index results, which recorded the first fall in Australian home values in 17 months, Steve wrote with glee that he expected to see "an accelerating rate of decline in [Australian] house prices now, as they did in the USA when “Flip That House” ceased being a winning trade." That’s right—it was a bold bet: an “accelerating rate of decline”.
Now remember that this came from the same man who during the GFC told us that the price of Australian housing was going to “fall by 40 per cent or so in the next few years”, that a depression in Australia was “almost a certainty…best case scenario is a recession more severe than 1990 lasting one and a half times as long”, that Australia’s unemployment rate would rise to “double digits”, that we would have “the most severe downturn we’ve ever had”, and that his forecasting track-record was “pretty close to 100 per cent.” You get the drift. Of course, it makes for terrific media fodder.
Sadly for Dr Keen, RP Data-Rismark’s July house price index results have proven him wrong yet again. After a large 1.0 per cent seasonally-adjusted fall in the month of June, Australian home values were little changed in July, recording a raw increase of 0.1 per cent (+0.4 per cent seasonally-adjusted). The previously-reported June quarter result was revised down slightly to -0.1 per cent (was +0.1 per cent). Put more bluntly, there is no acceleration in house price losses to be seen here."
After six interest rate hikes by the RBA, the July index results afford further evidence that Australia’s housing market is experiencing a very controlled, soft-landing from the one per cent per month growth rates witnessed earlier in the year. We have been forecasting just such an outcome since late 2009.
In the period between end 2008 and March 2010, Australian home values rose by 16.3 per cent, which preserved their one-for-one relationship with disposable household incomes since 2003 (see chart). In 2010, disposable household incomes are projected to rise by around 4-5 per cent. Unsurprisingly, dwelling prices have only accreted by 4.2 per cent (seasonally-adjusted) in the year-to-date. In the second half of the year Rismark expects to see the housing market track sideways with the possibility of modest gains if rates remain in check and economic conditions continue to improve."
