Australian property prices surge 1% in August

CoreLogic’s dwelling price results have been released for August, which reveals a strong 1.0% increase in values recorded over the month at the 5-city level, driven by surging values across Sydney (1.6%) and Melbourne (1.4%):

It was the second consecutive monthly rise in home values at the 5-city level, which follows a run of losses extending back to August 2017:

Over the August quarter, dwelling values rose by 1.1% across the major capitals, the first quarterly rise since October 2017:

Over the August quarter, values surged across Sydney and Melbourne, but fell across the other major capitals:

The next chart plots quarterly price growth by major capital, which illustrates the massive lift across Sydney and Melbourne, as well as the improvement in Perth:

In the year to August 2019, home values have fallen by 6.1% at the 5-city level, driven by Sydney (-6.9%), Melbourne (-6.2%) and Perth (-8.8%):

However, the next chart, which tracks trend annual price growth, shows a strong rebound led by Sydney and Melbourne:

The housing market has clearly turned, led by Sydney and Melbourne where auction clearance rates have rebounded strongly:

How long the rebound persists is now the big question mark.

Comments

  1. Is it a bull trap? It’s easy to see how prices for established housing could be booming while new apartments (which aren’t selling) are on the nose. House prices are measured by those properties that are selling. Interesting year ahead as developers usually respond to rising prices with new supply but nobody is interested in the new supply.
    Hopefully won’t result in a rental shortage in the big cities..

  2. Complex Carbon Unit

    This is just what is needed so when the sh1t hits fan more specfester fools will get splattered with it ! , i just hope that those buying a house to live in and be their family home are ok,,,The shI1t will hit it’s only a matter of time …..

  3. The next boom is here! Let the spring air breath new life into your tired bones and free your animal spirits. Praise our Lord, Reusa, for he has led us from the wilderness back to the light reflecting from the RE agent’s whitened teeth.

    • proofreadersMEMBER

      Reusa was ably assisted by our happy clappy PM who said he would burn for us and he has. How good is Straya.

  4. The Horrible Scott Morrison MP

    Even MB and DFA have gone bullish on property prices. I hope YOU were smart enough to buy during the dip. If not, get in now whilst you can still afford to.

      • The Horrible Scott Morrison MP

        That’s like saying the belief in a round Earth is a contrarian signal for everyone realising it’s flat. Rising house prices are just basic science.

    • Nah, all the numbers are fake.

      It’s easy to tell, because now you can buy a house much cheaper than 10 years ago.

      • Peachy your comments here in general sh$$t me the most. If you are so confident I encourage you to borrow up big and go all in with at least a few IPs and stop wasting your time here trying to convince everyone else.

    • Yes CoreLogic stats are fake but I don’t think you can pretend that there are not rapid increases in the prices of those houses that are selling ( noting the low low volumes).

    • Its all about confirmation bias – everyone who is cheering on Corelogics rubbish data are desperate for it to be true – classic selection bias.

      Domain sold for Melbourne shows about 10 properties sold in the last 2 weeks (up to August 22) – ONE was over $1million – most are around $300k – there is literally nothing more you need to know – its absolutely beyond crashed, its through the floor. $300k properties in Melbourne has not been seen in years, decades.

      Martin North survey showed a total collapse in investment and owner occupier lending while the Stamp Duty taxes released last week showed a catastrophic collapse in takings.

      How people can believe the market is booming when Stamp Duty is collapsing is beyond me – there is just no argument.

      COre logic is rubbish and its embarrassing to be quoting it.

      Stamp duty
      https://www.macrobusiness.com.au/2019/08/stamp-duty-bust-wipes-2-4b-nsw-budget/

      https://www.domain.com.au/sold-listings/?suburb=melbourne-3004-vic-3004,melbourne-vic-3000&excludepricewithheld=1

      • “Corelogic is rubbish”
        >proceeds to quote domain “statistics”

        is this a new Reusa style parody account ?

        “How people can believe the market is booming when Stamp Duty is collapsing is beyond me – there is just no argument.”

        Total = price x VOLUME

        No . It must be a parody account
        No one could be this unironically stupid surely

    • CoreLogic’s methodology for it’s DoD (effects the MoM & YoY) is produced by an insider, a multi billion dollar purchaser of Aussie MBS. Secondly, we can no longer access the raw data from state stamp duty receipts. Thirdly the RBA has suddenly decided to change it’s own methodology for reporting it’s monthly mortgage stats (from banks).
      Yes their seems to be some kind of collaborative attempt by both Government and private authorities to deliberately alter Australian property values by presenting a different set of numbers to what is actually occurring on the ground with the deliberate intention of artificially pushing prices higher. This could be fraud on a scale that would make the recent Royal Commission look like child’s play and the largest scandal that’s ever hit the Australian legal system, however, don’t hold your breath for a journalist to join the dots….but you never know!

    • reusachtigeMEMBER

      LOLOLOLOL… Like last cycle when the big rate cuts happened “I don’t think Lower teh interest rates will cause house prices to go up much … blah blah blah”. I can’t wait for the next Lower teh interest rates to fix thing even more.

  5. reusachtigeMEMBER

    Yeah the totally normal cyclical negative sideways movement is now leading into the next hyper supreme ace boom! So who here has missed out and become poorer by being weak of mind?

  6. Up here in hinterland(Glass House, Beerwah, Landsborough) on the Sunshine coast houses are selling like crazy. Everywhere I see sold on the signs.

  7. Complex Carbon Unit

    lol lol lol lol lol all the property cock pullers will be blowing their minds with all this good news lol lol lol lol
    It will all come out in the wash as they say lol lol

  8. Polar bcnich BearMEMBER

    I spoke with someone last night about a hime selling for close to $40M toorak , there is some big money coming from HK
    Do any statistics confirm this?

    At some stage it’ll run out if steam, prices are up, you may get a few months, but next year hime loan interest rates will rise due to liquidity tightening from an external shock

  9. In August most apartments over 3 stories fell 30% or more. August will be viewed as the great disaster month for speculation and foreign buyers.

    • And this is where the LOLs really come. Because it is new build (apartments and house and land packages) that is where the economic benefits and employment sits. So a huge boom in established house prices isn’t going to stop the unemployment train hitting as the construction boom unwinds….

      This is why I think RBA, APRA, the Government, and the banks will ultimately fail in using housing to reflate the economy. It won’t drive employment….

      • This, when construction jobs disappear flow on effects will be painful labourers are pocketing $120k+

      • Yeh, buddy, no.

        We make money and create wealth by selling existing houses to each other, not building new ones.

        We just had an election on this too. One party wanted to juice construction, the other wanted to juice established housing. The latter is in power. The other is on the wilderness.

        • “We make money and create wealth by selling existing houses to each other, not building new ones.”
          This unfortunately is the truth most here don’t seem to understand. We make money by creating it out of thin air, or by creating debt if you want to get all technical and stuff. And all that is required to create more of the stuff is higher house prices to support it.
          This simple truth means the powers that be will do absolutely anything possible to ensure it continues.

  10. FACTS
    – Following the removal of the APRA minimum 7.25% loan assessment floor the banks have implemented their own assessment rates of as low as 5.5%. This is 175 basis points of income tha now counts towards servicibility and therefore allows higher loans. This is huge and is a total step change in lending that will be capitalised into prices. This change boosting borrowing capacity by up to 23 per cent.
    https://www.mortgagebusiness.com.au/breaking-news/13692-cba-ceo-downplays-stimulatory-effect-of-floor-rate-cuts
    – Volumes are very very low but there is depth in the bidding pool. This suggests that volumes would need to be much much higher to rebalance supply and demand. Low volumes are not therefore a reason to ignore what is going on.
    https://marketnews.com.au/2019/08/early-report-full-analysis-sunday/
    – Hong Kong is collapsing and the HK dollar peg is at risk of breaking. Now is the time for anyone with money who can get out to get out. The amount of money there is enormous. (And there are NO capital controls on Hong Kong, unlike mainland China)
    https://www.reuters.com/article/us-hongkong-protests-markets/hong-kong-protests-spark-capital-outflow-fears-unnerve-markets-idUSKCN1V30PI

    It is ugly but it is real. At least until the recession hits.

  11. People cheering on house price rises here are the same people who clap at the end of auctions.

    Personally, I don’t get it. Either China comes in and seizes everything on behalf of the CCP, or they succeed in having so much influence here, that you won’t be able to do as much as fart here without it going down on your social credit score.
    So haha, good luck with your housing price rises for now. Anyone with half a brain is planning their escape off of this rock.

    • I started looking for jobs for my wife in the USA today. My work is already there. Easy move, Better lifestyle.

      • Been there done that. Watch out for massive private insurance premium unless you/your wife is with a large company. I had an eye watering $1000 per month of which my 20 person company paid half.

        And the co-pay/deductibles were still massive.

        Thank god for Aussie Medicare

        • “Thank god for Aussie Medicare”
          Don’t worry, the liberals will get right back to dismantling it anytime now.

        • Yep Medicare is doomed, ultra neoliberalism will see to that, and Australian’s voted for the Liberals despite what’s been happening. So… only a matter of time before we become more “American”. Already been heading that way.

        • Depends. If you’re a low income earner then you’ll qualify for free or heavily subsidized health care in a lot of US states. From first hand experience we had fantastic service. Own your house outright and you should be able to survive somewhat adequately on a low income and be eligible for hospital cover (even dental sometimes).

  12. It is very much a Sydney and Melbourne phenomenon. It would be interesting to hear some analysis on why this is the case. What is causing prices to rise in those two capitals but continue falling everywhere else?

  13. MountainGuinMEMBER

    ABC AM radio just ran story on Townsville owner who could not sell. Saying the city has had prices half. Someone convinced her to drop a further 30K on renovations to help sell…. but didn’t work. Story ends with her as a 65 year old wondering if she can retire and a local developer calling on qld govt to extend first home owners grant to second homes…..reason offered was to help first home owners climb the next property rung.

    • ErmingtonPlumbing

      I got a mate having trouble selling a Townsville property.
      He’s got a Divorce settlement to pay and he has to sell.
      It’ll be interesting to see what it goes for.
      He was saying prices are below what he paid for it years ago..

    • Locus of ControlMEMBER

      https://www.abc.net.au/news/2019-09-02/townsville-property-housing-market-boom-bust-mining-north-qld/11464454

      People need to lose the mindset that house prices only ever go up. If you buy shares it’s well-known and accepted the value could go up or down and it should be the same with houses (so long as they’re being treated like ‘asset classes’ and not utilities). Maybe she should think of her house like her car. Do you expect the car you bought new to double in value after ten years? Nup. Then don’t expect it of a house. Think of the $100k loss as ‘depreciation’ or, at about $10k per year for ten years, the ‘utility cost’ for hanging onto it. No sympathy.

  14. I can only speak for inner west in Sydney as I am actively looking (upsizing as we have another kid on the way), can categorically say prices are jumping in this particular area. The last few Saturdays have seen much bigger crowds at auctions and multiple bidders per auction.

    • Jumping jack flash

      He’s right though. We need a ton more debt.
      Debt needs to expand at the same rate as the glory days of 2000-2007.

      RBA and APRA need to make it happen by whatever means necessary.
      Over the past decade debt hasn’t increased enough, and what we’re feeling now – the stagnant wages, the reduced living conditions and general funk and slump that we’re all in, is the result.

      I predict about 7 trillion extra debt dollars are required by 2030 to turn this thing around.

        • Do you think they are smart enough to come up with an alternate plan?
          Especially one that would be acceptable to the elites.

        • Jumping jack flash

          There simply is no other way but to create more debt, unless they want to release the sphincter of the economy and let nature take its course… and that’s just not an option.

          These guys are all bankers. Its all they have ever been. Banks just do things differently to what is normal.
          The most obvious being that banks see debt as a good thing.

  15. Meh. Markets don’t go up and down in a straight line. And prices drifting higher on low volumes is typical in a bull trap/sucker rally. As is the the fomo talk (fhb, must buy now), the desperate lowering of government regulations (5% deposit guarantee ect) , lending rules relaxed further, interests rates lowered (Phil lowe now visibly desperate).

    The discussions about the housing market even have that fragile feeling that I’ve noticed during bull trap (eg. The crypto dead cat after BTCs 20000 peak, pot stock pump n dumps). Overleveraged punters are desperately clinging to the idea that it’s “game on” or back to “normal” again. Because if it ain’t, well, what you gonna do? Sell up and move the family into a rental?

  16. Jumping jack flash

    Thanks, RBA. Thanks, APRA. The debt is saved!

    There really isn’t any other way but to ensure more debt is constantly created to grow this abominable economy. If we ever run out of debt, then two things can happen.
    One is we get constantly cheaper debt, forever. There’s no limit to how small interest rates can get, right? RBA, do your funky thang!
    Or if for some reason the RBA doesn’t want to cut interest rates then APRA can just reduce the lending standards so everyone can get more debt while their circumstances, including incomes, haven’t changed!

    Its a recipe for economic success!

    I read this morning that many people have transcended to the light and are now using debt to pay for medical expenses. Its a good thing we have private health insurance – medical care has never been cheaper or more accessible for all Australians!

    But everything is affordable if the bank gives you as much debt as you need to buy it.
    Just look at our cheap houses! 300K, 500K, 800K, a million dollars!
    Its all within reach now. The bank will give it to you.

    I read that 1/4 of people in Aus have <$1000 savings in the bank. And its a good thing too, savings is boring, dead money!
    Debt is where its at, baby! Exciting and fun and alive! Who needs savings anyway when you can access equitymate and get all the cash you ever need?

    Here, have some more debt. Its good for you.

  17. I’m looking to buy in the Lower North Shore of Sydney. There has definitely been a bounce up from prices 6 months ago, but the strong auction rates are belying a weak market in my opinion.

    The market is currently bifurcated between downsizers buying fully done smaller places for huge amounts of money, and upsizers with a lot less money buying places that need work doing. Stock on market in the area has been so incredibly low that vendors can get a decent premium, but in the last couple of weeks a lot more property has come on to the market, and there are not a lot more buyers.

    Anecdotally I have been to 2 auctions in the last week in Willoughby whereby only myself and another party were actually bidding. I lost out on both as the first one went for more than I thought it was worth, and the second one I wasn’t that keen and was only looking to get it for a bargain, (it probably still did go for a bargain (one bid over my bargain price), but I don’t have enough capital to capitalise on it). The vendor was overseas and had to speak to the auctioneer to confirm it could sell, so I guess it sold below reserve. A friend is looking to buy in Lane Cove and was the only bidder at her auction, and they still didn’t accept it.

    I think this recovery is hugely at the margins. It doesn’t strike me that buyers have any more credit than they did 6 months ago and the low stock on market has caused the bump up. With stock on market starting to increase I think the bump up is almost done, and it’ll be flat for a while now, taking another leg down sometime later.