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.