warnie...we all gave links to the articles from rba that housing declined less than 1%...some states were up others down...some by less than 3% and others half or 1.5..to reach an overall decline... then this article 2-3%.....whats the difference between 3 - 10%...about 7% hehehehehehe
“Meanwhile it's clear that the Australian property market is holding up pretty well: the Reserve Bank's Monetary Policy Statement on Friday set out the various measures that it watches - the ABS, RP Data-Rismark and Australian Property Monitors - and they all agree that values fell between 2 and 3 per cent in 2008.”
Are they slow, heavy paw-steps that I hear? No, surely not…
Incroyable, mais vrai!
Could it be that our perma-housing bear, Alan Kohler, is emerging from what he expected to be a long and bitterly cold hibernation?
Or perhaps he is just sneaking a quick peak outside the cave to catch summer’s last rays?
To quote Alan (who is a regular pin-up boy for doomsayers predicting precipitous house price falls) in his inaugural weekend briefing:
“Meanwhile it's clear that the Australian property market is holding up pretty well: the Reserve Bank's Monetary Policy Statement on Friday set out the various measures that it watches - the ABS, RP Data-Rismark and Australian Property Monitors - and they all agree that values fell between 2 and 3 per cent in 2008.”
And then in his latest chart pack Alan added:
“Lower interest rates are bringing new home buyers into the market, with the number of first home-buyers purchasing property over December jumping to their best levels in 7 years.” Posted 2 Feb 2009 1:09 PM 2008: Capital Values Down, Rents Up After much anticipation all of the Australian house price data for 2008 has finally arrived. This includes results from the ABS’s stratified median price index, the RP Data-Rismark hedonic regression method, and other providers, such as Australian Property Monitors (APM). With this information in hand, we can take an objective look at exactly what occurred during 2008…
another article same link
As I anticipated in my preview of this subject, the decline in national dwelling values in Australia during 2008 was very similar to what happened in 1994-95 when mortgage rates rose by a similar margin. In fact, according to the RP Data-Rismark Index measure the depreciation in 2008 was actually identical to what transpired in 1994-95: on both occasions dwelling values fell by 2.6 per cent.
In short, the substantial increase in variable home loan rates from 8 per cent in July 2007 to 9.6 per cent by August 2008 put the skids on house prices (just as it did in 1994-95). This is borne out in the fact that the biggest house price falls in 2008 occurred during Q2 according to RP Data-Rismark and Q3 based on the ABS information. So let us turn to the RP Data-Rismark summary:
2008: Capital Values Down, Rents Up After much anticipation all of the Australian house price data for 2008 has finally arrived. This includes results from the ABS’s stratified median price index, the RP Data-Rismark hedonic regression method, and other providers, such as Australian Property Monitors (APM). With this information in hand, we can take an objective look at exactly what occurred during 2008…
As I anticipated in my preview of this subject, the decline in national dwelling values in Australia during 2008 was very similar to what happened in 1994-95 when mortgage rates rose by a similar margin. In fact, according to the RP Data-Rismark Index measure the depreciation in 2008 was actually identical to what transpired in 1994-95: on both occasions dwelling values fell by 2.6 per cent.
In short, the substantial increase in variable home loan rates from 8 per cent in July 2007 to 9.6 per cent by August 2008 put the skids on house prices (just as it did in 1994-95). This is borne out in the fact that the biggest house price falls in 2008 occurred during Q2 according to RP Data-Rismark and Q3 based on the ABS information.
So let us turn to the RP Data-Rismark summary:
• National dwelling values fell by 1.1 per cent in the December quarter (compared with the ABS, which estimated a smaller 0.8 per cent fall); • National dwelling values fell by 2.6 per cent in the 2008 calendar year (cf. the ABS, which estimated a 3.3 per cent fall). More specifically, nationally houses were off 2.9 per cent while apartments declined in value by 1.8 per cent over the year; • National dwelling value changes plus rents (ie, capital growth plus the explicit or implicit rents that investors and owner-occupiers receive) increased by 1.9 per cent in the 2008 calendar year. So net-net, home owners and investors would have been economically flat-to-positive.
As discussed previously, a 2.6 per cent capital value decline is pretty small beer particularly when rents are sitting at about 5 per cent.
The national median house price in capital cities at December was $451,088.
Gross national rental yields have been rising consistently throughout 2008 (and Q4) and were 5.4 per cent for apartments and 4.5 per cent for houses.
If, as expected, the RBA cuts the cash rate by 100bps (plus?) this week and the banks pass on at least 80bps, we should see the headline mortgage rate fall below 6 per cent for the first time since 1970. Combined with the fact that house prices have not risen in the last 12 months this should have delivered existing mortgagors and prospective home owners a massive affordability dividend.
One interesting new development is the advent of “positive gearing”. Assuming home loan rates fall below 5 per cent to 5.5 per cent by mid 2009, gross rents, which are currently around 5 per cent (and rising steadily) will exceed mortgage costs for the first time in decades…
This should be in place next week in Sydney, Canberra and Darwin given their respective apartment rental rates of 5.7 per cent, 6.3 per cent, and 6.8 per cent as at December 2008 (based on the RP Data-Rismark Indices).
Brisbane (5.3 per cent), Melbourne (4.9 per cent), Adelaide (4.7 per cent) and Perth (4.6 per cent) will offer “positive carry” trades by the middle of 2009 if the futures market pricing is correct.
Interestingly, another index provider, Australian Property Monitors (APM), published much more positive data for Q4. The APM data appeared to imply that property prices were actually flat on a weighted national basis. This very much contrasted their press release, which started off with the headline “Property values fall almost 8 per cent in a year, in parts of the Australian residential real estate market”.
How APM could make this statement given its data implied a flat Q4 is quite beyond me. I guess they were talking about some suburbs in Perth. Of course, lay media outlets like AAP completely misinterpreted this to mean that national house prices had fallen by 8 per cent and ran incorrect coverage as a result.
I don’t suppose the media release has anything to do with the fact that APM’s key frontman has been running around the market telling people that he is forecasting house price falls of 15 per cent.
The APM index data also had lots of other odd results for Q4. For instance, they claimed that Brisbane houses increased in value by an incredible 3.3 per cent over the quarter alone. At the same time, their data suggests Canberra house prices fell by 3.8 per cent over the same period. (Those results imply wild annualised swings.)
By way of comparison, both RP Data-Rismark and the ABS found that Brisbane house values had fallen over the quarter. links http://www.businessspectator.com.au/bs.nsf/fmISBlogHome?OpenForm&is=Property&blog=Concrete%20Detail
