Monthly RP Data housing analysis

By Leith van Onselen

Above is RP Data’s October Housing Market Update, presented by Tim Lawless, which covers housing market conditions as at the end of September. As alway’s, the presentation is worth watching for the plethora of data on offer.

This month, Tim Lawless is fairly upbeat following the 1.4% gain in national capital city values for the month of September. Of particular note, the growth in values appears to have occurred on thin transaction volumes, with the number of sales in July down -5% on the same time last year and by -10% on the five year average (see below chart).

The recent increase in home prices amid falling transaction volumes is also borne out by the housing finance data, which shows a significant increase in average loan sizes despite the number of housing finance commitments (ex-refi) remain relatively flat (see below chart).

Interestingly, the two capital cities where stamp duty concessions were introduced in July – Brisbane and Canberra – experienced a large surge in transaction volumes, with Brisbane up 61% in July versus June, and Canberra up 52% over the same period (see below charts).

Houses are also seeling faster than at the same time last year, with the average home taking 58 days to sell currently versus 62 days last year (see below chart).

The level of vendor discounting has also fallen versus the same time last year (see below chart).

Auction clearance rates have also improved versus last year (see below chart).

And the number of homes for sale has fallen over the past year, but remains highly elevated relative to recent history (see below chart).

First home buyer demand has picked-up a bit this year, but remains subdued relative to the past decade’s experience. Demand has also likely been pulled-forward by the October expiry of the first home owners grant on pre-existing dwellings in New South Wales and Queensland.

Finally, Tim Lawless states that he doesn’t see housing transactions picking-up significantly until consumer confidence picks-up from current depressed levels (see below chart).

In my view, the big X-factors going forward are:

  1. whether the October cancellation of the first home owner’s grant on pre-existing homes will cause a slump in housing demand and prices in New South Wales and Queensland;
  2. the extent to which lower commodity prices adversely affects disposable incomes and jobs;
  3. whether the most recent cut to interest rates, as well as future cuts, are successful in stimulating mortgage demand and prices; and if so
  4. whether the banks can fund the increased mortgage demand assuming deposit growth slows following the decline in disposable incomes, job losses, and the lower interest rates on offer.

Twitter: Leith van Onselen. He is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.


  1. The answer to points 3 & $ is, Yes. The future has been written before ” New Zealand property values extended their gains last month, and have recovered the losses seen after the global financial crisis and the bursting of the country’s housing bubble” ( So expects a retracement of all of your property price ‘melting’ before the next correction arrives. When prices are back to where they were, no current owner can accuse the Government of not looking after their interests when they have been given a second-chance of escape.

    • Fabian AlderseyMEMBER

      Meh. It’ll allow me to build up a bigger deposit. I hope some of my friends are able to sell their houses (but then again, some of my other friends will probably buy those houses). It’s hard to imagine another sustained surge in houses at this point, but if so, then we’ll be back to a correction in a year, with mortgagees complaining if the RBA tries to lift rates from 2% (or wherever they are at that point).

      • It’s cold and lonely out in the winter of any asset price correction, FA. Trust me, I know! Keeping the faith will be harder than it appears; even from where you sit, today.

      • I wrote a detailed article comparing the Australian and New Zealand experiences in this week’s issue of MacroInvestor. There are some striking similarities, but also some key differences, mostly on the supply-side.

  2. Does anyone have a break up of off the plan sales or new sales over existing property sales?

    It would be extremely useful to see how the new grants for new dwellings are affecting purchasing decisions. If there is a pick up in construction there could be a decrease in unemployment and a transition that the RBA keeps on harping on about.

  3. We are reminded again and again just how slow moving the land market is as we squabble over 2 per cent movements. Those long see rises as a ratchet; the sceptics, paradise postponed.

    Let’s ask some different questions: What is the economic utility of high land prices? Is it in anyone’s long term interest to snare young adults into a lifetime of debt serviced from highly-taxed wages? Is economic depression a necessary pre-condition to genuine tax reform?

    Economics is the sum of our actions. So act.

    Don’t Buy Now!

    • Having suffered the most shameless and relentless financial spruiking on the part of the vested property interests monolith, statements of this kind cannot be uttered enough.

      Despite massive efforts at reinflation, the bubble is simply quivering slightly back and forth around the same limits as 2 years ago.

      Like a real party balloon, the skin will begin to wrinkle, and the volume contract. Soon, two thirds its original size, it will gather dust and dander in a forgotten corner of the national loungeroom.

      Attempts to reinflate its tired tissues will simply bring about prompt collapse.

  4. re Q1. Its difficult to get a read on the pre-Oct1 pull forward effect here in Qld. Auction volumes are notoriously low in Bris to extract any useful conclusions. What little I can say is that there has been little change in the last month since the FHB change announcement,
    Anyone Qlders care to share their experience or data?

    • New buyers in Qld are waiting for the new construction grant, so sales have temporarily slowed. Houses are definitely selling, but contract dates are important at the moment.

      • Phil the engineer

        What percentage of FHB’s build a new house? I would think the total sum of grants would be much lower than the earlier blanket $7k for all first home buyers (hence CN’s motivation for the changes).

  5. TheRedEconomistMEMBER

    Why is there no mention in the RP Data report about the removal of the FHB grant in NSW.

    The recent rise in values, I believe, have been a direct result of first home buyer entering the market to get the grant before if expired on Oct 1.

    This has brought forward some purchases, which confirms the spruiked line “increase buyer activity”

    As fiscal stimulus is withdrawn, particularly in the existing property market, we will continue see a slow melt. Prices will not keep up with inflation.

    What will be the line propagated from vested interest if value decline, even after this recent cut in rate?

    The Weather?

    • “What will be the line propagated from vested interest”

      If prices go up it is good news, if prices drop good news again – improved affordability.

      • TheRedEconomistMEMBER

        Agreed Al…

        But the Panacea being prescribed by vested interests is that as rates drop, prices will rise.

        The first rate cuts (akin to a Panadol)have made little impact as price slid from Mid 2010 till Mid 2012. Now we are seeing a little improvement on the patient as the strength of the dose increase (Panadol Forte).

        The next cuts will be like Morphine… this is when one starts to worry about the whole economy as unemployment rises.