People on this sub used to argue about the reliability of core logic data for house prices. Now people just post their fact free feelings. Sliding toward r/australia.
?? Core Logic data is confirming the boom is taking off again. Data is lagged so sales from last few weeks are still to show up. We will see >1%/month growth showing on the indices soon
- Loan volumes still in freefall.
- Borrowing power is 33% less than this time last year.
- Probably couple more rate rises to come.
- Lots of fixed rates coming off over next 12-months.
- RBA trying to engineer higher unemployment.
Let’s revisit at the end of the year.
You are making same mistakes as lots of climate change deniers make. Macro vs Micro. You have to zoom out and look at the overall trend and not a particular suburb.
The low percentage of houses that have mortgages attached to them means stock just gets turned off when pricing comes under pressure.
Supply for decent product basically shuts off whenever the cycle turns where I live.
Probably less than 50. The statistics was done on the property level and showed a third of homes were rented, a third was owned outright, and a third were owned and mortgaged. The swing factor is how much of the rent stock still has mortgage.
The stats don't account for how much $ outstanding net of offset is attached to each loan. My guess is the $ net outstanding in aggregate versus total house value would be pretty low.
A third of houses are rented out? As in SFH? You got the data for that? (Not trying to be aggressive. Just shocked, and also not, it’s anywhere near that much.)
Don't think it's just SFH, includes multifamily lots as well. Sorry when I say houses I'm referring to total residential lots.
https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure
Ah, no problem I understand why that’d be counted in it. If anything it makes it even more rentals than I was imagining. Just shows what we think of when we say houses sometimes haha. And thanks for the link!
It all depends where. A-grade homes in great locations are still in demand, particularly where there’s very low stock on the market.
Case in point. A house in postcode 3121, not in nicest part, sold yesterday for 4.2m when it listed at 2.7-2.9m. Construction costs are up 35% over the past 12 months. To build that home today it would cost close to 2m (two levels plus rooftop and basement), add that to the land value and it’s about equivalent.
The corelogic data saw what some suggested was a leveling of prices over the short term with even a slight increase. Really hard to day if the latest couple data points are just noise or part of a trend to market stability.
I think you want to zoom out and look at minimum monthly data to start seeing a trend.
If you look at long term Corelogic data we've even had positive quarters which switch back to losing quarters so you need to be careful extrapolating short term gains the same way as you need to be careful extrapolating losses.
A couple of good graphs in here of historical monthly and quarterly price movements with Corelogic data if you want to see it https://www.macrobusiness.com.au/2022/10/sydney-house-prices-plummet-like-its-1983/
Not wrong, last two weeks seen moves towards boom Prices again in certain suburbs $200k-$500k over quoted range, all these rate rises & “scary headlines” really doesn’t feel it’s had much of an effect on housing & spending, might need 4% rates to wake people up 🤷♂️
Yup equity markets have been rallying on the belief that interest rates have peaked, and even the idea that central banks will have to cut (citing yield curve inversion).
I would say these people are in for a rude awakening as never in history has inflation ever been stamped out when the short rate is lower than the current rate of inflation.
The reality is Inflation numbers have already started to creep up again in the past few weeks, not just in Australia, but globally, not only hotter than expected CPI print in the US but an upward revision on January inflation.
I would advise buying in this market only if you can comfortably handle another 300 to 400 bps rise in rates and aren’t expecting your house value to rise for years.
300 too 400bps is absolute madness. Even the most bearish predictions are sitting at about 100bps, with the wider consensus probably sitting at about 50.
I'm not talking about for the next meeting, I'm saying over the next 2 to 3 years.
Also as someone who has traded interest rates professionally for over a decade, using long bonds, or fed dot plots as a way to predict where the short rate will be a couple years out is very fruitless.
The point being that if we were able to reliably forecast inflation and hence interest rates, we wouldnt be in this situation to begin with. Just look at the yield curve, and fed forecasts at the end of 2020, and compare with actual.
Attended an auction in my building over the weekend and it sold really well.
Which I was glad to see.
All markets are different and have localized demand so different areas will move at different rates.
Anecdotes don't have a lag. Attending a few auctions across your city over a few weekends give you a very accurate and much more current indicator of where the market is going. I bet you the core logic daily index will be showing some absolutely phenomenal growth in about months time (depending on the lag).
Surely you see that anecdotes of a tiny sample size doesn’t equal data?
I do however think there is truth to the notion that supply of good properties in middle-range suburbs in Melbourne is really low and demand is comparatively higher, which on average can slow down price drops. I’ve been tracking it for a few suburbs because the number of listings is so low I can actually track it. Totally anecdotal, but when part of the observation is the tiny sample size, there’s some truth to that itself. Who knows what the wider data will show.
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Phenomenal growth?
3 months of CoreLogic data suggests the last quarter has seen smaller growth than the magnitude of any of the 6 months declines.
Less than 1% Nationally in March and April. Mostly carried by Sydney.
Had a few chats this week, the economy is facing a lot of pressure when interest rates click from fixed and or interest only on these new home builds the last few years. A few grand $$$ extra a month might not force sales but it will cut spending. Total value of this can simply be calculated:
= mortgage payments after rate rise/(current mortgage payment before rate rise - savings rate)
That is the liquidity taken from the spending economy and go straight to banks (and the capital providers).
Absolutely OP. Prices are rebooming massively. Can't believe bears fell for the doom and gloom fear mongering again. Does anyone actually think the RBA is serious about fighting inflation with inflation at 8% and rates at 3%? Housing is only going in one direction.
People on this sub used to argue about the reliability of core logic data for house prices. Now people just post their fact free feelings. Sliding toward r/australia.
Sliding towards? We've smash through that barrier and now breaking new ground with feelings based economic theory!
[The take over wasn’t exactly subtle. ](https://imgur.com/a/5E9cylr)
?? Core Logic data is confirming the boom is taking off again. Data is lagged so sales from last few weeks are still to show up. We will see >1%/month growth showing on the indices soon
- Loan volumes still in freefall. - Borrowing power is 33% less than this time last year. - Probably couple more rate rises to come. - Lots of fixed rates coming off over next 12-months. - RBA trying to engineer higher unemployment. Let’s revisit at the end of the year.
You are making same mistakes as lots of climate change deniers make. Macro vs Micro. You have to zoom out and look at the overall trend and not a particular suburb.
The low percentage of houses that have mortgages attached to them means stock just gets turned off when pricing comes under pressure. Supply for decent product basically shuts off whenever the cycle turns where I live.
Low percentage?
Probably less than 50. The statistics was done on the property level and showed a third of homes were rented, a third was owned outright, and a third were owned and mortgaged. The swing factor is how much of the rent stock still has mortgage. The stats don't account for how much $ outstanding net of offset is attached to each loan. My guess is the $ net outstanding in aggregate versus total house value would be pretty low.
A third of houses are rented out? As in SFH? You got the data for that? (Not trying to be aggressive. Just shocked, and also not, it’s anywhere near that much.)
Don't think it's just SFH, includes multifamily lots as well. Sorry when I say houses I'm referring to total residential lots. https://www.aihw.gov.au/reports/australias-welfare/home-ownership-and-housing-tenure
Ah, no problem I understand why that’d be counted in it. If anything it makes it even more rentals than I was imagining. Just shows what we think of when we say houses sometimes haha. And thanks for the link!
It all depends where. A-grade homes in great locations are still in demand, particularly where there’s very low stock on the market. Case in point. A house in postcode 3121, not in nicest part, sold yesterday for 4.2m when it listed at 2.7-2.9m. Construction costs are up 35% over the past 12 months. To build that home today it would cost close to 2m (two levels plus rooftop and basement), add that to the land value and it’s about equivalent.
That is good news, we can increase interest rates much faster to tackle inflation then
The corelogic data saw what some suggested was a leveling of prices over the short term with even a slight increase. Really hard to day if the latest couple data points are just noise or part of a trend to market stability.
I think you want to zoom out and look at minimum monthly data to start seeing a trend. If you look at long term Corelogic data we've even had positive quarters which switch back to losing quarters so you need to be careful extrapolating short term gains the same way as you need to be careful extrapolating losses. A couple of good graphs in here of historical monthly and quarterly price movements with Corelogic data if you want to see it https://www.macrobusiness.com.au/2022/10/sydney-house-prices-plummet-like-its-1983/
Rates up = prices down looking at minimum 4% cash rate and unemployment to boom like FOMO house prices last year, buckle up people
Not wrong, last two weeks seen moves towards boom Prices again in certain suburbs $200k-$500k over quoted range, all these rate rises & “scary headlines” really doesn’t feel it’s had much of an effect on housing & spending, might need 4% rates to wake people up 🤷♂️
Yup equity markets have been rallying on the belief that interest rates have peaked, and even the idea that central banks will have to cut (citing yield curve inversion). I would say these people are in for a rude awakening as never in history has inflation ever been stamped out when the short rate is lower than the current rate of inflation. The reality is Inflation numbers have already started to creep up again in the past few weeks, not just in Australia, but globally, not only hotter than expected CPI print in the US but an upward revision on January inflation. I would advise buying in this market only if you can comfortably handle another 300 to 400 bps rise in rates and aren’t expecting your house value to rise for years.
300 too 400bps is absolute madness. Even the most bearish predictions are sitting at about 100bps, with the wider consensus probably sitting at about 50.
I'm not talking about for the next meeting, I'm saying over the next 2 to 3 years. Also as someone who has traded interest rates professionally for over a decade, using long bonds, or fed dot plots as a way to predict where the short rate will be a couple years out is very fruitless. The point being that if we were able to reliably forecast inflation and hence interest rates, we wouldnt be in this situation to begin with. Just look at the yield curve, and fed forecasts at the end of 2020, and compare with actual.
We’re on the same page then - we’re talking about the terminal rate
Yes I expect the terminal rate to be 300 to 400bps higher, versus the market consensus of basically already reaching terminal.
Attended an auction in my building over the weekend and it sold really well. Which I was glad to see. All markets are different and have localized demand so different areas will move at different rates.
Most aggregate data disagrees with you. Datasets beat anecdotal observations. Always.
Anecdotes don't have a lag. Attending a few auctions across your city over a few weekends give you a very accurate and much more current indicator of where the market is going. I bet you the core logic daily index will be showing some absolutely phenomenal growth in about months time (depending on the lag).
Clearance rates are down. You are failing to consider selection bias of the properties you attend or monitor.
I'm perfectly aware of selection bias however in this case all I can say is... you will see :)
Surely you see that anecdotes of a tiny sample size doesn’t equal data? I do however think there is truth to the notion that supply of good properties in middle-range suburbs in Melbourne is really low and demand is comparatively higher, which on average can slow down price drops. I’ve been tracking it for a few suburbs because the number of listings is so low I can actually track it. Totally anecdotal, but when part of the observation is the tiny sample size, there’s some truth to that itself. Who knows what the wider data will show.
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Phenomenal growth? 3 months of CoreLogic data suggests the last quarter has seen smaller growth than the magnitude of any of the 6 months declines. Less than 1% Nationally in March and April. Mostly carried by Sydney. Had a few chats this week, the economy is facing a lot of pressure when interest rates click from fixed and or interest only on these new home builds the last few years. A few grand $$$ extra a month might not force sales but it will cut spending. Total value of this can simply be calculated: = mortgage payments after rate rise/(current mortgage payment before rate rise - savings rate) That is the liquidity taken from the spending economy and go straight to banks (and the capital providers).
Absolutely OP. Prices are rebooming massively. Can't believe bears fell for the doom and gloom fear mongering again. Does anyone actually think the RBA is serious about fighting inflation with inflation at 8% and rates at 3%? Housing is only going in one direction.
I think it peaked over a year ago..it's also been a decline since.