RPData November report

RPData have recently released their November market update report (available below). Much of this data was previously presented in their recent YouTube report , however the report is still worth a look as it contains many other pieces of useful information.

RPData November Report

Comments

  1. Perth and Brisbane should continue to outperform the other capitals due to the infrastructure builds in those states, and Darwin has a growing importance in defense due to the geographical location, so those centres will experience some gains, or at least minimal falls.

    But I do worry about Melbourne. It looks very brittle. With manufacturing struggling, I can’t see any reason for a pickup in Victoria unless our dollar falls below parity.

    • This just in…man jumps of cliff. Bystanders report he appeared ‘brittle’ leading up to his fall.

    • Agreed about Melbourne. Not only is manufacturing struggling, but our economy is used to a relatively higher level of construction than most states.

      Either we continue to build at current levels and increase the level of oversupply, or we reduce the construction and increase unemployment.

      Neither option will be helpful in supporting house prices.

  2. I agree with Peter, the Melbourne market is particularly concerning, especially for unit/apartments.

    Since 2009, there has been an explosion of multi-unit developments in Southbank and the CBD and those developments that were recently completed still carry a high % of unsold stock.

    In 2012, we can expect to see an influx of investors’ stock of newly completed
    apartments and this will no doubt further dampen Melbourne’s already struggling property market.

    Gloomy days ahead!!!!!!!!

    • “the Melbourne market is particularly concerning” “Gloomy days ahead!!!!!!!!”

      why is it concerning? why is it gloomy? lower housing costs should be celebrated. it s basic human neccesity. the cheaper the better.

      on another note looks like “negetive equity” has arrived for some of the fools that thought “property only ever goes up”:

      ‘Nasty shock’ ahead for refinancers

      http://www.brokernews.com.au/news/newsletter/120094

      • Well there is no debate over the fact that high house prices bad thing.

        However, gloomy days ahead is correct as you can see from what has happened to every other economy when you have a house price correction.

        You have loss of jobs in the sector, you have bank losses, liquidity issues, and all the other flow-on effects associated with these events. Even though lower house prices are inevitable and are a good thing, the adjustment process is certainly gloomy.

    • I disagree with the view that units/apartments in Melbourne are more susceptible to a correction (relative to houses).

      According to available data, the oversupply of houses in Melbourne is much higher than the oversupply of units/apartments.

      Over the last twelve months, house prices have declined more than unit/apartment prices.

      New unit/apartments coming on to the market in the next twelve months will impact the price of unit/apartments. However, it’s likely that this will negatively impact both the price of units/apartments AND houses because of contagion and the derivative nature of middle/outer house prices (i.e. if the value of inner city apartments fall, the value of house prices in the middle and outer suburbs will also fall because the middle and outer suburbs derive their value mostly based on their proximity to the Melbourne CBD).

  3. The time to worry about the housing market was when prices were skyrocketing not now. I am worried that Perth and Brisbane may bounce back although I would not bet my house on it.

    Our housing market is the biggest economic scandal in the modern history of Australia with hundreds of billions sunken into unproductive assets and scores of people saddled with massive debt. Our government policies (at all levels of government) such as urban planning and housing related taxation deserve a Royal Commission.

  4. RP Data did release the cap city listing numbers for 23/10/11 recently. Here’s the chg % of total listings compared to a year ago:

    BRI +13%
    SYD +36%
    MEL +56%
    PER +3%
    ADE +35%
    DAR +10%
    CBR +17%
    HOB +36%
    AUS +29%

    A lot of Sydney’s listing’s surge has been in the last 3 months. Melbourne’s been up since March this year but is still climbing.

    As the RP Data report above notes the huge increase in listings is more due to a lack of sales rather than a rush to market by vendors. “(National) Sales volumes remain relatively stable in recent months” at -13% below the 5 year average, which is putting downward pressure on prices (and state government revenue).

    “Housing transaction volumes unlikely to improve significantly until the consumer mindset improves” – While Westpac reports an increase in the “Good time to by a house” consumer sentiment, it’s not translating into demand. It is likely that vendor sentiment is still high enough to keep listing prices high/sticky, but if listings are this high or higher in March of next year then this buyers market will be well and truly entrenched (except maybe in Sydney).

    The Sydney market has been the one reason why national price indexes can be spun as “flat”, but if prices there continue to fall then the Australian national property market has to be classified as a bear market IMO.

  5. Forget the supply of housing and apartments.. its the collapsing supply of cheap and easy credit that is going to burst the bubble.

    Banking contagion is real, and its coming.

  6. I have to agree with some of the other comments here that it is not a bad thing overall (especially in my part of inner Melbourne). My landlord recently wrote to me and said that because the rental market was softening he wasn’t going to increase the rent until May next year – by which time I’ll be much closer to buying my own house anyway (although inner Melbourne will probably still be too expensive for me). Who knows, if the market stays in a downward trajectory I might even rent for a bit longer – there’s no sense in jumping into a declining market until you can be sure that it has well and truly bottomed out (although that one will be much harder to call).

  7. dumb_non_economist

    Can someone please answer this question on how the median price and house price % rise/fall is arrived at. Not too long ago, Perth was just about to pip Sydney at the post for the highest median price in the country. On the above figures Syd is sitting at $550K and Perth at $450k, which would imply a 20% drop in the median price for Perth. I’m not aware of Perth having fallen anything like that, so how are these figures bastardized?