Stockland: House price growth “unsustainable”

ScreenHunter_19 Jun. 06 13.57

By Leith van Onselen

Stockland’s chief, Mark Steinert, delivered a warning yesterday that the double-digit house price growth experienced over the past two years is unsustainable, and expects growth to slow to just 1%. From The Canberra Times:

Booming double-digit house price growth could screech to a halt, according to Stockland, one of the country’s biggest residential developers, which is now forecasting rates of growth closer to 1 per cent.

…while population growth and undersupply would underpin demand, he expected that the pace of growth in prices would slow, allowing the development of more affordable houses and apartments.

‘‘We don’t expect the rate of price increases we’ve seen in the last 12 months [of between 10 and 11 per cent] to continue at that rate,’’ Mr Steinert said at the release of the group’s full-year result on Monday.

Steinert probably won’t need to wait long for price growth to moderate, with the major house price data providers recording slowing annual growth in the June quarter, with housing finance growth also turning down (see next chart).

ScreenHunter_3833 Aug. 19 11.00

Moreover, house prices have grown at four times the rate of wages over the past year -  which is clearly unsustainable – with wages growth also seemingly a lead indicator for house prices over recent times (see next chart).

ScreenHunter_3834 Aug. 19 11.04

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17 Responses to “ “Stockland: House price growth “unsustainable””

  1. churlish says:

    “Soft landing” anyone?

  2. Phil the engineer says:

    Interesting charts… so based on past performance, the time to buy is 12 months from now? :)

  3. The Patrician says:

    Who needs real wages growth when you’ve got negative real interest rates?

  4. greg says:

    You need a CONSTANT infusion of new credit to keep price gains up. Neg interest rates aren’t enough…after those effects have worked their way through, you need more…always more.

    when will the RBA serve it up?

    • Bubbley says:

      Today’s post on the RBA in a nutshell or shall we call it the executive summary….

      “The numbers are looking dodgy but we’re not sure what we should do, so we will do nothing as that has worked for us so far.”

      • Mining Bogan says:

        It’s all good. Their mates in government will just ooint at smelly brown people and blame them for everything.

        Works every time.

    • Andy! says:

      It’s just that the level of negative interest rates isn’t enough – further cuts should take care of that… ah fk it make them nominally negative – savers deserve to lose our savings for not borrowing

      • Slambo says:

        Given the track record since the GFC, does anyone seriously believe there will be a moments hesitation before shafting those who have saved their money to redistribute to those who have leveraged themselves to the hilt. For the greater good of course.

        It is only the exact method which is open to conjecture.

      • StatSailor says:

        Given we have a government by baby boomers for baby boomers, as soon as there are more baby boomers who are retired than adding to their portfolio, the gov’t will be trying to push interest rates up, not down.

  5. Leviathan says:

    Wow.

    Not much of a chartist – but the over shoot on the house price looks telling, whats more the house prices have always come off a far higher peak before following wages.

    There is no doubt the LNP are waging an all out war on wages in order to drive down costs for corporations – however their voters are still the boomers – and they are going to get SMACKED.

    The one good thing about a generation being locked out is they are immune from the housing collapse.

    • flyingfox says:

      Yeah and it’s not even in the proper context. We should be looking from 1990 onwards ….

  6. Bubbley says:

    Unsustainable?

    O really? The debt ceiling has been hit. The money pie is gone.

    The only surprise is that took so long.

    • There’s more money to be thrown under the bus: your superannuation plus the federal government’s low debt can be made available at the stroke of a pen to pump the Ponzi