Please find below RP Data’s June house price release, which reveals that dwelling values rose by 1.9% at the national 8-city level, sightly below 2.0% increase reported earlier today at the 5-city level.
According to the Media Release:
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Annually, capital city home values rose by 3.8 per cent throughout the 2012/13 financial year which is a significant improvement from the -3.6 per cent fall in values over the 2011/12 financial year.
According to Mr Lawless, the capital gains recorded over the financial year highlight that lower mortgage rates are starting to have a positive impact on the housing market, however current conditions are far removed from the buoyant conditions experienced in 2009…
In an apparent swipe at detractors, both RP Data and Rismark go to some length to defend the integrity of their daily index:
Mr Lawless said that while there has been some natural volatility in the month-to-month readings of the RP Data-Rismark Index, the trend is much more indicative of an ongoing recovery in dwelling values…
Ben Skilbeck, CEO of Rismark International, highlights that the daily index method provides timely insights into market dynamics not previously able to be observed using property indices. Unlike index methods which look at the mid price point of a basket of properties that happen to sell in one quarter and compare this to the mid price point of a very different basket of properties which happens to sell in another quarter, the RP Data-Rismark home value index tracks the change in the value of the same basket of properties through time. In fact, it tracks the value of the entire housing market on a daily basis.
“While the underlying mechanics to achieve the daily index are complex, its accuracy is proven through its audited performance over time. In essence, on each day of calculation the index simply uses all the available data in the market place on that day, including sales and property attributes information, to determine the changes in value of each property comprising the market. Historic data such as sales information from last week or last month is clearly an important part of determining the current state of the market, however, to make it relevant to the current day, time variables and weightings need to be properly applied to the historic information.”
“This index methodology highlights that housing markets do show intra-month and intra-quarter volatility as one would expect, although this volatility is very low compared to the share market…
Both, however, believe that the recovery in dwelling values will continue at a relatively subdued pace:
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When looked at over a longer period, such as the last 3 months, recent index results highlight that capital gains remain relatively sluggish despite the presence of low interest rates and high auction clearance rates,” Mr Skilbeck continued.
Mr Lawless points out that many other indices are also showing some movement which is reflective of the uncertainty that households are experiencing and the transition that is underway across Australia’s economy. “Consumer confidence also dipped over April and May before recording a rise in June, data on labour markets is jumpy and housing finance data shows hardly any improvement in the average loan size. If confidence levels remain high and labour markets continue to show a low rate of unemployment then we would expect that home values will continue to trend higher, albeit at a relatively measured pace.”
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
