RP Data October housing market overview

Find below RP Data’s October housing market overview.

Some key points from this update:

  1. October saw the 10th consecutive month of home price falls. That’s the same number of months that prices fell during the GFC, when prices fell just 2.7% peak-to-trough on a seasonally adjusted basis. So the current decline from peak – 4.0% at the capital city level – has exceeded the falls experienced during the GFC.
  2. Transaction volumes improved in October – they were at the highest level since March 2011 – but remain 9.5% below the five-year average.
  3. Premium homes have been hit the hardest, whereas the more affordable areas have performed better.
  4. The number of homes for sale are 29% higher than the same time last year and are at an all-time high. The high level of listings has been caused more by the slowing rate of sales than a surge of new listings.
  5. The increase in the number of homes for sale varies widely across capital city markets. Melbourne has experienced the largest increase in homes for sale compared to 12 months ago (up 49%), followed by Hobart (up 40%), Sydney (up 35%), Canberra (up 32%), and Adelaide (up 29%). Perth (down 1.8%) and Brisbane (up 7%) have experienced the smallest change in sales listings since the same time last year.
  6. The average selling time in currently 55 days, compared with 47 days at the same time last year.
  7. RP Data expects transaction volumes to rise as interest rates fall, with home price declines also likely to stabilise.

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Unconventional Economist
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  1. A lot of talk from the usual suspects about rate rises causing the volume of sales to increase and hence prices to stabilise.

    Yet not much discussion on the impact of further job losses, or threat of job losses, and what that does to their base case.

    My base case is still that prices continue to fall in 2012 in the absence of massive GFC-like interest rate and direct govt stimulus (and i’m not sure that will be coming this time).

  2. Falling interest rates = economic problems, therefore use any freed up cash to pay down your debt.

    Falling interest rates = no confidence in housing market, therefore delay buying if you can, sell as quick as you can.

    Falling interest rates = less people will save at the bank, therefore less capital for business formation and less jobs.

    Falling interest rates = less confidence in currency, therefore buy PMs on dips (like now).

    • A big bet? Australia has bid the pot (land prices) up to $4 trillion. We are all in, fully geared and anxiously await the turn of every card.

      Unlike poker, the play is open. Anyone can count the cards. All the face cards are out and just low numbers remain in the pack.

      The only winning play is Misere.

    • Wouldn’t have been the “bet” between a local “expert” who has a vested interest in the ponzi, and a certain global funds manager who stated, without any vested interest, that we have an overpriced housing market would it?

    • The $100 million one-sided bet by Mr Chris Joye? Good (for Joye i.e.) that Jeremy Grantham said “Chris who?” in response.

  3. This takes its cue from the calculated risk link earlier in the morning:

    Australian household wealth has declined by $ 160 billion over the year (assuming 4% decline on $ 4 trillion of assets). Did the bots check where the debt sits in contrast? Wouldn’t be a pretty picture I imagine!

      • Thanks TP

        Taking March 09 as a base point (for no other reason than it wide acceptance when everything was ‘fixed’ and gives a broader time horizon as to context of what use the stimulus measures might be this time around)

        Affordability has declined. Yes it may have improved from say 12 months ago, but potential buyers are more likely in a worse position than those earlier cohort who got in late ’09. Pff…All that hype about rising incomes

        Same for debt to disposable income.

        The only favorable metric is debt/assets. Which I guess reflects the strong run up in prices post stimulus. This needs further watching I suppose.

  4. RPData just tweeted this:

    “While home owners and property investors endured a 2.8% tapering in home values over 2011, rental growth has been solid.”

    Tapering? Why do RE industry always grab the thesaurus off the shelf when they can’t bring themselves to say the big bad words.

    Its like “ocean glimpses” in a property description…