The full R.P. Data report

As H&H mentioned earlier today RP data release their latest home value index report (available below). RPData took a fairly bullish stance on the previous month’s data, but I did note at the time that I felt it was premature:

RPData’s bullishness is premature given this is a single month’s data and we all know it is the trend that matters. But we have seen a little bit of sunshine for housing over the last two months after many months of bad news and the ABS owner occupier data volumes leading into September did show an uptick in volume, so I won’t be too harsh on the report:

There is, however, nothing I can see in either the latest stock on market data from SQM research, or the latest credit aggregates from the RBA to suggest we are seeing a sustained rebound in lending and therefore a market bottom. I have questioned the usefulness of AFG data, but it did forecast this September jump and showed a drop again October (I will revisit that data). RPData disagrees.

The latest report certainly doesn’t provide a basis for continued bullishness:

Based on around 285,000 sales over the first 10 months of 2011, the market-leading RP Data- Rismark Home Value Index recorded a decline in the month of October prior to the RBA‟s decision to cut interest rates in November.

In raw and seasonally-adjusted terms, capital city home values slid 0.2 per cent and 0.5 per cent, respectively over the month of October.

Over the 10 months to end October 2011, Australian capital city dwelling values have declined by 2.8 per cent on a raw basis and by 4.0 per cent seasonally-adjusted.

With fixed and variable home loan rates falling to below-average levels while disposable household incomes grew quickly, and the cost of housing also lower, Australians are benefitting from a very welcome boost in overall housing affordability.

Across the capital cities there remains considerable dispersion in housing value movements.

Sydney and Canberra have been most resilient.

As Data Sword showed today, the slipping trend is moving below GFC lows and, as I have talked about many time previously, the reason the market moved beyond that slump was the stimulatory environment created by the government and the RBA. There is absolutely nothing to suggest that we are about to see a repeat of that position, in fact yesterday’s MYFEO made it very clear that there is absolutely no new stimulus for housing on the way, at least from the government. The RBA has shifted gear so we’ll see what effect that has. We’ll get AFG data for November in the next day or so and that will give us more to go on. For now I find it very difficult to suggest anything but the slow melt will continue for some time yet.

RPData Home Value Index Nov 30

Comments

  1. I have remained very modestly bullish for Brisbane, expecting a slight lift in November/December and beyond depending on interest rates, but those figures don’t support my case.

    • There might be something slight over the next month or two, but it’ll be a data anomaly. The trend is strong and I think people have started to understand that this may not be just a brief affordability reprieve, but something more, and who wants to lose $6000 a month on their investment? Especially first home buyers, they know how hard it is to save that money, I’m sure they don’t want to lose it, best to sit and wait…

      • I would have to say we will see the extent of reflexivity in the market, if you know that prices are falling are you more likely to buy? this is what has happened on the way up, will it happen on the way down as people’s “houses double in price every 7-10 year” beliefs are tested.

        You’d have to say a fair bit of Brisbane is flood related and yet Brisbane has employment growth in contrast to melb and sydney.

      • Wasted OpportunitiesMEMBER

        QLD has been leading the decline since well before the floods, and DE was right on top of it as it is his home state I believe.

        Just randomly checked September 2010 archives and found this:
        http://www.macrobusiness.com.au/2010/09/oz-real-estate-still-more-bad-news/

        As noted in the comments, QLD YoY growth had fallen from 5.1% (June) to 0.9% (August) in two months, so the falls had definitely begun.

        I think MB had additional commentary about this when the floods occurred, so you could check the archives around January for more info.

    • +1 Love MB and people that are prepared to change position without tossing ones toy’s out of the cot!

      I note that ‘MB’ are prepared to be bullish when the opportunity reflects a true bull moment!

      I think Bris-vegas has a bit more pain to come myself.

      But I am a perma-bear.

      😉

      TM.

  2. I live in Brisbane, and am an observer of house signs. While the area I live in has remained stable ish for the last year (the $4 mill house still hasn’t sold, and there have been a few signs up and down) I drove out to Wellington point along wynnum road recently, something I haven’t done in over a year. I was stunned at the number of houses for sale in Morningside, just about every other house for a k or two was on sale. These are places that are high enough not to have been flooded on the whole, although there may (doubtful) have been electricity/water issues.

    I also like to play the “how many houses are for sale” game on Main Road at wellington point- that has remained fairly stable – although the houses do change- over the last 2 years. Given that many are at the expensive end of pricing (waterfront!(swamp) bay views! helipad!), it provides a barometer on that end of the market.

    On the other hand, there are plenty of for lease signs around too. During the Great Rent Increase of 2006-2007 rent signs were about as common as hens teeth. There was never time to get them up before the property rented.

    • The high end of the market won’t come back for a long time in Brisbane, we don’t have enough high income earners, but we have lots of high value homes.

      We had too many wannabe’s over extend themselves.

      But I still expect the low end to start showing some growth over the next 12 months.

      If I don’t get that TM – then I’ll throw the toys outa the cot.

  3. Could the “improvement” in the figures be related to seasonal factors? It’s spring selling season afterall.