Australian Property Monitors (APM) today released their December 2012 home price results, which registered a solid 1.9%/1.6% (houses/units) rise in values over the quarter and 2.1%/2.4% growth over the year (see below tables).
Hobart, Darwin and Perth recorded the highest house price growth over the quarter, with values jumping by 4.7%, 2.7% and 2.5% respectively. The results would have been an even stronger 5.4% (Hobart), 3.2% (Darwin) and 4.4% (Perth) had the previous quarter’s results not been revised upwards by 0.6% (Hobart), 0.5% (Darwin) and 1.8% (Perth) respectively. By contrast, Melbourne recorded the fourth strongest quarterly rise in house values (2.4%), but the result was heavily affected by a -1.9% downward revision to the previous quarter, without which Melbourne house values would have risen by only 0.5%.
The APM release highlights the two speed nature of the Australian housing market, whereby Darwin and Perth recorded strong annual house price growth on the back of the ongoing mining investment boom and tightening supply. Solid annual growth was also recorded in Sydney, where prices outpaced inflation. Elsewhere, however, house price growth remained fairly weak, with values either falling over the year, or growing at rates below inflation.
Another interesting aspect of the APM release is the wide divergence with the RP Data-Rismark daily hedonic index, which recorded a -1.2% fall in dwelling values nationally over the December quarter, with falls recorded in every capital city market except Perth and Darwin (see next table). APM uses a similar stratified median methodology to the Australian Bureau of Statistics (ABS), suggesting that the ABS will also record some growth nationally when its house price index is released next week.
According to APM, house prices nationally remain -3.1% below their peak in nominal terms and -9.0% below peak in real (inflation-adjusted terms), with Sydney the only capital to have exceeded its 2010 peak in nominal terms (although it remains -6.0% lower in real terms). By contrast, losses in Brisbane and Melbourne remain high, with Brisbane down -7.8%/-13.7% (nominal/real) and Melbourne down -7.1%/-12.7% (nominal/real) since peak (see next chart).
Unit prices have performed better than houses, with national values hitting an all-time high in nominal terms in the latest quarter, although they remain -5.1% below their peak in real terms. There is wide divergence across capital city markets, however, with Sydney and Hobart hitting all-time highs in the latest quarter, whereas values are down significantly in Melbourne, Brisbane, Perth and Adelaide (see next chart).
unconventionaleconomist@hotmail.com
The real terms price slow melt is under threat from the stupidly low interest rates required by overdone total (state and federal) government austerity. We have had a 30% fall in the 10 year bond rate over the last few years, let alone the large cuts in the cash rate over the past 12 months.
But these figures are from APM, Fairfax’s house spruiker outfit, formed to serve their biggest advertising client, the RE industry.
Can I get the graphs on paper, you know, so I can put them on the nail in the outdoor khazi?
You have to wonder about this idea of a legal challenge later on down the line from people who have been conned into a life time of debt from scare mongering and MSM.
What happens when the Oz dollar sinks, inflation picks up etc…
The greatest threat for many will now be the low interest rate, it could stay low forever.
opps, I mean it won’t stay low forever
“You have to wonder about this idea of a legal challenge later on down the line from people who have been conned into a life time of debt from scare mongering and MSM.”
.
I would imagine that large groups will react violently towards those that have stolen their future!
Although im sure Peter Fraser has an escape route planned for when the pitchfork carrying peasants come knocking!
“Although im sure Peter Fraser has an escape route planned for when the pitchfork carrying peasants come knocking!”
Yeah, blame Denise Brailey. Apparently it’s her fault.
Legal challenge? – what on earth are you talking about Christiaan – the people that you call peasants are happy safe and warm in their own homes enjoying generational low interest rates.
They complain about their lot in life far less than you do.
They don’t know that they’re holding the bag – yet.
of course you know better, you re so smart.
property isn’t a financial product, hence the normal set of regulations that licensed advisers must adhere to (designed to enforce honesty, consumer-protection) don’t come into the picture. Property spruiking is one of the last domains of slick, but morally corrupt, salesmen
…point being that if you get bad financial advice you can sue, and the adviser must (by law) have Professional Indemnity cover in place to cover your loss (this can extend beyond the limits of purely financial damage)
In my experience most financial advisers do very little “advising”, just lots of presenting of options. I kind of struggle to see how you could ever sue one for anything.
All-time low interest rates continue to drive up demand and house prices.
Time to take your foot off the accelerator, Glenn, and put on your seat belt.
It seems there are a lot of folks looking to over analyze this whole debacle.
From where I’m sitting it’s clear the wheels have fallen off, we are being played for fools with stalling tactics, misinformation and raw spruke from interested parties.
Since when has the word “solid” been associated with an annual grouth of sub 3% I’m not attacking the post, I love the work MB presents, but just want to point out how far things have changed.
Sub 3% in 2005-2008 and PF would have jumped out of the window!
Very weak response to those massive i rate cuts. And where is the volume? Where are the FHB’s?
Bah! Humbug!
Don’t Buy Now!
Wow, Leith gets quoted beside Comical Andy in todays Age.
“Other analysts confirm that Australia is experiencing a “two-speed” housing market.
MacroBusiness economist Leith van Onselen said Darwin and Perth were recording strong annual house price growth, while Sydney’s performance had outpaced inflation.
“Elsewhere, house price growth remained fairly weak, with values either falling over the year, or growing at rates below inflation,” he said.
Mr van Onselen also noted that Melbourne’s strong December-quarter performance was driven by a downward revision in APM’s September quarter figures.
“A key unknown in the year ahead is whether the October expiry of first home buyers’ grants on pre-existing dwellings in Sydney and Brisbane will affect house prices,” he said.
Read more: http://www.theage.com.au/business/sydney-outpaces-melbourne-as-house-prices-recover-20130131-2dlv2.html#ixzz2JUsl9huC
And of course the December figure will be revised down again in March to provide the satisfying headlines about some house price growth.
I do love APM’s massaging of the numbers to achieve their objective.
Aren’t they now calling for even bigger cuts Dave?
Wasn’t there talk of another 175bp in just a few jumps this year?
The medicine is killing the patient (double entendre intended)
Still my deposit builds……cash buyer before too long.
DBN
Raise interest rates now! Stoopid calls to bring them down.
Seriously, this just makes me want the whole thing to blow up even more devastatingly!
I find the whole debate about house prices incredibly shallow by both the MSM and seemingly intelligent economists.
Reported statistics about house prices reflect only the prices paid by the low percentage of houses that changed hands in a particular period amongst willing buyers / sellers.
What they don’t take into account is the vast majority of houses that don’t change hands every year.
The market is reflecting only the price of the active trading participants and affordability measures don’t reflect the fact that most owners didn’t purchase at today’s current prices.
In other words a vast majority of current housing is affordable because of when it was purchased – new entrants are being priced out of the market because of the expectations of vendors and lack of alternative supply.
If you were to ask many existing home owners, would they have acquired their homes at today’s inflated values, on their current incomes, without the benefit of significant equity, I am sure the answer would be a resounding NO.
For me the tipping point will be when equity needs to be converted to cash to fund retirements and/or further weakening in the economy.
Unfortunately what needs to be a quick correction is likely to be a slow melt.
+1 Stomper!
And nor would existing holders be disadvantaged by a land price correction, unless they cashed out for cars and holidays. Anyone have sympathy for that cohort?
The number of Boomers wanting to unload well-worn family homes in the middle suburbs for single level units (no steps please) continues to grow daily. This demography is unstoppable.
Reject the Kool Aid!
Don’t Buy Now!
both anecdotally and practically (in personal experience) the #1 strategy for the current generations of “pre-retirees” (age 50+) is to sell their investment property/s and live off the proceeds. It is honestly so sad to see that they have been conned by these ideas of “doubles every 10 years” et cetera… This is without consideration of inflation or reality.
If sensibility, unemployment, slower wages growth or higher interest rates aren’t enough of a catalyst for correction, circa 2 million cashing in their investment properties to fund their retirement will be.
For people in this position, the mantra isn’t “Don’t Buy Now”, it’s “Get Out While You Can”
I can see RE pundits out on window ledges before the end of this. If it’s not just spin but a firm belief in what they cling to.
Is it still a lie if you genuinely believe it?
Knock knock….who’s there?
Reality, could I speak to the property investor of the house please!
Be of good cheer, fellow sceptics. Whilst ever the blue line on this RBA chart continues its trend, the end of the debt-at-usury-fuelled house price Ponzi draweth nigh.
Half listening to the TV news this morning, there seemed to be much rejoicing that house prices are going up – hurray! I can predict that now the in-laws will be hassling us to buy a house, there will be the typical ‘you’ve been wrong all along, we told you that prices would go up again’ etc etc. But actually looking at the figures, Adelaide house and unit prices are still down over the year – but you certainly wouldn’t get that impression from the MSM.
Adelaide is going to be hit the hardest when the economy hits the wall… the fact that it hasn’t crashed sooner I find astonishing.
There’s simply no jobs to be had – it’s the poorest mainland state in terms of revenue and assets and SA also has the highest debt. A friend of mine was trying to convince me to move back to Adelaide (I’ve been absent for 12 years) but there’s no way I’d do it, especially given the astronomical house prices – it’s not even cheap anymore!
There is going to carnage in Adelaide.
The amount of townhouses/units being built (i.e. under construction) is staggering and the previous stock is NOT moving….
House prices to the moon…. Yes
but can you find a buyer who is ready to pay that price…. No
I know one person, with 1M debt and four houses. Their accountant has advised them to reduce their debt, they are trying to flog off two of their ‘renovated’ houses, on the market for more than 6 months, no interest whatsoever. Why did the accountant advise that way, because those houses were for ‘Rent’ but no tenants for more than 3 months and suddenly they have ‘PROBLEM’ with their debt!
Virus – I know of a lady in Adelaide who recently bought a house in Adelaide for ~$600k
Quite a lot for Adelaide but when you consider that 12 months ago she was the highest bidder at auction but the property was passed in for $1.0m with the vendor wanting $1.1m I think she has done well. 2nd time round she was negotiating with the mortgagee in possession.
+1 I have a mate who recently had to move back to Adelaide for family reasons but retained a national IT job and salary. Looked at buying a 4brm 3bth house in nice location for $1.2m. Thought better of it. Stayed with family for a month. Same unsold house then came on the rental market. He is now renting it for $620pw.
i will in the market for a “new lease” in couple of months.
Which suburb is he renting now?