Sydney, Melbourne house prices rocket

RPData has released its monthly house price results for September and the news is increasingly worrying with the Sydney bonfire spreading to Melbourne (sorry you had to wait like everyone else until today, Leith is having a well deserved week off):

RP Data and Rismark International today released housing  market results for September where the combined capital cities index recorded a 1.6 per cent rise over the month.

The latest data release marks what RP Data research director and analyst Tim Lawless has described as a ‘technical’ recovery in the housing market with the RP Data – Rismark Combined Capital City Index moving 0.7 per cent higher than the previous record high which was last recorded back in October 2010.  Based on the combined capitals index, capital city dwelling values fell by 7.4 per cent from the October 2010 market peak to the May 2012 trough.

Since the beginning of June 2012, capital city dwelling values have increased by 8.7 per cent through to the end of September 2013.

According to Mr Lawless, the September gains were primarily fuelled by Australia’s two largest housing markets, Sydney and Melbourne, where residential property values in each city were up by more than 2 per cent over the month. “Sydney home values were 2.5 per cent higher over the month and are up 5.2 per cent over the September quarter while Melbourne values have seen a similar 2.4 per cent month-on-month gain and a 5.0 per cent quarterly lift.  We haven’t seen market conditions this strong since April 2009 for Sydney and May 2010 for Melbourne,” Mr Lawless said

While Sydney and Melbourne dwelling values powered higher in September, most other capital cities are recording much more subdued housing market conditions.  Dwelling values moved lower in Brisbane (-0.3%), Perth (-0.1%), Hobart (-2.0%), Darwin (-2.5%) and Canberra (-0.7%), whilst Adelaide values posted a 1.1 per cent capital gain over the month.

Picture 3

Full release below. Macroprudential now.

RP Data Rismark Home Value Index 1 October 2013 FINAL by David Smith

David Llewellyn-Smith
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Comments

  1. reusachtigeMEMBER

    Go you good thing go! 😉
    .
    And SAY NO to macroprudential. This nation should be free to be dumb. LOL.

    • yes reusachtige – lets be bold as a nation and push on to new house price frontiers. we are a pioneering nation, we should not be afraid to head into uncharted territory no matter how risky or fraught with danger. Naysayers laughed at Columbus and the moon landing – for the sake of human progress lets push on, lets make history!

      • Absolutely. We’re a hard working people with a well managed economy. The rest of the world needs to look at us and learn. Higher house prices are justified properity reward for our diligence and prudence.

    • Hey.. We all should be making plenty of money right now. If you didnt see the crystal clear signs, that your own fault.

      You and your family only have yourselves to blame.

  2. tsport100MEMBER

    The best explanation I’ve read is:

    The biggest discounting is going on at the top end of the market. As a result more top end property is closing which raises the average sale price!

    Labelling all Sydney property as having risen 2.5% in a month is more than just a little bit misleading!

    • I would largely agree with this as well – we need to see where this interest is coming from.

      As mentioned always, if the FHB’s are not entering the market it is akin to pro poker players passing money around a table.

      • You seem to be trying to convince yourselves that this is not happening.
        Probably means you dont own property and have missed the boat.
        Its not too late to join this Ponzi scheme. Just make sure your not holding the parcel when the music stops playing (in 10 years).

    • That would be a valid explanation if anyone actually used straight median prices anymore. RP Data certainly doesn’t, ABS doesn’t, APM doesn’t, Residex doesn’t.

      They all adjust for the sort of compositional shift you describe above.

      • Yes, it is happening. At all price levels. Some of us said it would take off earlier this year. 8% yoy FFS.

  3. thomickersMEMBER

    This may be so… however Melbourne rents have fallen. Anyone who wants property for income is going to be disappointed.

    • flyingfoxMEMBER

      As if that was ever a concern … just ask your neighbourhood RE agent, bank manager or investment advisor.

      ROI, what is that?

    • wasabinatorMEMBER

      That’s ok, us taxpayers cover the shortfall as they work towards their massive capital gains >_<

  4. boomengineeringMEMBER

    Without usury these total house prices and costs would be only be whatever deposits are saved for and paid, which in some areas would be about $30- $40k. Imagine how much could be spent in the economy with the balance ( no repayments).

  5. boomengineeringMEMBER

    Usery is a tax on society, sure a $40k house would be old and dilapidated but it would be paid for, also a new house would still bear the building and infrastructure costs but the economy would be more robust because the usury drag component of the economy would be absent.

  6. * Nationally house prices now highest ever
    * House prices overvalued by 45% against rent and 25% against income
    * Sydney median multiples running at about 8x
    * Mortgage debt at highest level ever
    * OCR at lowest level ever
    * Every financial advisor with a pulse is telling their clients to get into NGed IPs
    …and our CB and PM/Treasurer say higher house prices are good for the economy

    What could possibly go wrong?

    • Wrong from who’s point of view Patrician?
      Seems to me you are simply stating that a trend is in existance, and only a complete fool would ever try to pick the end of it. and only a fool would ever suggest how far a rubber ban can stretch, and whether it is even a rubber band in the first place. So what can go wrong? I think it is obvious. NOTHING. As being wrong only depends what side of the fence you’re on.

      • So what can go wrong? I think it is obvious. NOTHING.

        “The stock market has reached a permanently high plateau.” Irving Fisher, economist, just prior to the Wall Street Crash of 1929

      • @Revert Umm…I think we are talking about the local property market right? Not some meaningless comment made back in 1929. LOL Keep to the topic man, of make the point you if you are trying to make one.

  7. So where are the zillions of bearish comments I used to read here month after month? All predicting doom and gloom. All suggesting prices had ALREADY started their 25-40% plummet? Where are they hiding?

    Why aren’t they here apologising for getting it so badly wrong? How many are capable of admitting they don’t really understand the way markets work, and that their bearish views were mostly emotionally based, grasping at any statistic that they ‘perceived’ would validate their argument?

    Where are you all? Sadly, most of my posts over the past 1-2 years never appeared here surprisingly enough, stating the decline at the time (barely even a blip actually) was merely a correction in an ongoing uptrend. Not because I just believed it to be so, but because the FACTS deemed it so. Bubbles don’t peak because a lot of naive bears come out of the woodwork and says property must fall. Prices don’t fall just because ‘yokem locals’ think prices are expensive. We live in a whole world environment, and money was always going to flood here from other economic disaster zones. No one ever thought to even raise such a simple and obvious issue.

    Now will all these perma bears learn anything? I guarantee the answer is NO for the vast majority. They missed out, and now have to stay bearish forever or until prices finally do come down. Even the intellectuals will have to do the same to save face. Hilarious really.

    This is why knowing when a trend will continue or not is SO EASY. If it wasn’t for all the ‘experts’ who have no economic or market training at all, think they can accurately forecast a market! LOL Really? And even being an expert at economics analysis won’t help you. Just look how wrong, and consistently wrong, Steve Keen was. Brilliant guy I’m sure, but completely clueless about the most basic world fundamentals, and how markets work.

    I hope the last 1-2 years has been an eye opener for many newbies, and that they can learn from it.

    • I don’t think even “newbies” take investment decisions based on just the last 1-2 years Adrian.

      Separately, you seem to have missed most of this site’s recent commentary. Here’s some to start you off.

      http://www.macrobusiness.com.au/2013/09/rba-enormously-worried-about-house-prices/

      http://www.macrobusiness.com.au/2013/10/chris-joye-why-the-housing-surge-is-dangerous/

      http://www.macrobusiness.com.au/2013/10/bubble-denial-dances-its-jig/

      http://www.macrobusiness.com.au/category/australian-property/

      • @Arrow2 I think you missed most of what I was saying. Try reading it again. I made ZERO reference to any articles published here. My comment was purely regarding reader comments, and local property price trends.

    • flyingfoxMEMBER

      @AP Let’s just get one thing straight. You are repeatedly referring to free markets.

      We have had no such thing anywhere in the world at least since the GFC.

      Stop QE in the states and get the Australian government to remove bank guarantees.

      While you are at it, contain NG to he same asset classes and either remove CG entirely or remove the discount.

      Once we have a free market we can have this discussion in 1-2 years.

      • @flyingfox. You’ve lost me completely. I never made mention of free markets did i? You seem to be misunderstanding what I said or merely trying to add in your own clause as an excuse for perhaps getting it wrong?

        House prices here in Australia are free to fluctuate any which way they like, and have done so ever since we landed here. And in most other developed countries they fluctuate in exactly the same number of ways, all depending on the number and urgency or buyers and sellers. Simple really.

        QE is meaningless in the board scheme of things. The money added is tiny compared to the deleveraging taking place.

        Bank guarantees are meaningless when it comes to the crunch, although they do help up to that point. But why are you even saying it when it has nothing to do with what we are talking a bout.

        Making broad meaningless comments without context is the direction people take when they know they have been wrong and are looking for excuses. There are NO excuses. If you got it wrong, no matter for what reason, then you got it wrong. Pure and simple.

        I gather from your bias that we will in fact never have a free market basis your definition, so you can therefore never be wrong LOL.

    • All suggesting prices had ALREADY started their 25-40% plummet? Where are they hiding?

      Can you cite one such example before you fling your shit?

      • @Mav Sorry? Are you a new member who is angry for some reason? Are you angry because you were one of the people who were bearish and got it wrong? You know, the best trader/investor is one who is humble and is happy and willing to admit they are wrong.

        Mav, if you care to read back through reader comments, over the past few years, in relation to any property articles on this site, I promise you will fund hundreds, and perhaps thousands of posts, many by the same set of people of course, that clearly stated how bearish they were, and how the property market would crash. Some said slowly, some said quickly. But the message to me was overwhelmingly clear by their words.

        And of course Steve Keen, was the leader, publishing many an article stating it as such. Nothing wrong with having a view of course. But it is foolish to have a view on a financial market unless you know what you are doing. and clearly most did not, because they overlooked all the key factors which actually determine were property price were heading.

      • dumb_non_economist

        AP,

        I think it’s you who is full of it. Do you invest in RE over a 5 yr time frame? I would think not, don’t worry as there’s plenty of time for your 25-45% drop.

    • + infinity

      Many posters here are probably still adament they think they know how the property market works and what is occuring now is just an aboration and they will be proven right eventually.

      By when? By 2023?? 2033???

      There will be a lot of money to be made in holding property and real assets between now and then in this money printing world and low interest rate environment.

      Tip: Work with the Central Banks and Government, dont try to work against them.

      • Im not posting here to give an economics lesson.

        If you can work that one out and how to take advantage of the situation, more fool are you.

      • flyingfoxMEMBER

        Many posters here are probably still adament they think they know how the property market works …

        There will be a lot of money to be made in holding property and real assets between now and then in this money printing world and low interest rate environment.

        You just did try to give an economics lesson …

        Jeesh you guys can’t even defend your ideas, stances …

      • It does look that way doesn’t it? I think I prefer Adrian’s overt aggression to the passive aggressive postings of the mortgagebot. More please AdrianP, maintain the rage against all those nasty bears!

      • @csfn Is is aggression or rage? Or both? Actually it’s neither, and perhaps your poor judgement suggests you are also one of the ones who got it all wrong. I am merely stating the obvious, and seeing how many people are of integrity. Well, actually I know most don’t even know what the word means. I actually think its hilarious, and loved reading all the bearish comments, over and over, ever week, ever month. It just solidified in my mind that there was basically a 99% certainty price would continue higher in the medium term.

      • It’s quite a tanty isn’t it? I’d prefer it without the mask though AdrianP. You know what I mean 😉

  8. boomengineeringMEMBER

    Adrian,
    Im not hiding, I didn’t miss out.
    Made and lost a fortune , now my shitbox fibro is supposedly worth over 1m, I don’t think so. Got interested in RE in the mid 1950s seeing mistakes made by my folks renting out a big house in North Cottesloe.
    Love to see prices drop without hurting the young mortgagees.

    • Thanks for popping your head up 🙂 And if the market values your fibro house at 1m then that is EXACTLY what it is worth. To suggest it might be worth less or more in the future is a dangerous pass time, unless you classify yourself as an expert in property and world cash flows, of which there are probably on a handful of people in the world who can make such a claim.

      • To suggest it might be worth less or more in the future is a dangerous pass time

        “It’s hard to make predictions, especially about the future”.

      • @Revert You are quite correct. In fact the best traders don’t try to make forecasts at all. The trend is the trend, until it ends. Let the markets tell you what they are doing. If people here had done that on the property market, they would have been told loud and clear, prices were still in uptrend. You’ll know when its a bubble top, because you’ll still be long, and prices are suddenly off 20% with no buyers:)

      • dumb_non_economist

        AP,

        You must have made a prediction re the future, why else would you invest in RE if you haven’t.

        By the way, most of that handful have stated their belief that Australian RE is in a bubble.

  9. boomengineeringMEMBER

    Market value does not always reflect real value.
    Used to argue this point endlessly with my finance industry gym clients 20 years ago

  10. boomengineeringMEMBER

    The reason for this is because the the market is made up of diferent factions, when the speculator faction are willing to outbid each other, the intrinsic value is surpassed