CoreLogic: home values finish 2019 on high note

by Chris Becker

Housing prosperity continues to fall as house prices hit another high in the December quarter – up 4% according to CoreLogic:

Dwelling values rose by 1.1% over the month of December and by 4.0% over the quarter to finish out 2019 on a positive note according to the CoreLogic national home value index. This result represents the fastest rate of national dwelling value growth over any three month period since November 2009.  Darwin was the only region amongst the capital cities and ‘rest-of-state’ areas to record a fall in values over the month, with a -0.5% decline.

CoreLogic head of research Tim Lawless said, “Although the monthly capital gains trend remains fast-paced, the 1.1% rise in December was softer relative to the 1.7% gain in November and the 1.2% rise in October. This would suggest that the pace of capital gains may have been dampened by higher advertised stock levels or worsening affordability pressures through early summer.”

Here’s the full release:

CoreLogic home value index Jan 2020 FINAL

Comments

  1. So tell me this, genuine question.

    If interest rates are lowered from the current 0.75 cash rate, much of this is not going to be passed on to consumers in loans as bank margins are already compressed. This means that maximum mortgage size is unlikely to increase in any material fashion.

    Barring of course the blind eye that will be turned to foreign capital. Without out external capital can house prices increase significantly. I will never say never but the goose appears to be cooked to me.

    The banks could go for 30-40-50 year mortgages but will external funders of the banks call BS on this? Keeping in mind that all banks have been requested by APRA to bolster their capital adequacy ratios, and Westpac was called out for an additional round to handle provisions. Wages will go no where while the population ponzi continues, there is already 14% slack in the workforce. I cannot see how negative rates work for the banks other than cause a flight of cash and further exacerbate their capital adequacy ratios.

    • Bruce,

      The goose has plenty of baking time left whist the AUD holds up and we continue to run a trade surplus.

      Unless the AUD starts to really slide there is boom left in the boom.

      And you can be absolutely certain that Morrison and Frydenberg will leave no boom stone unturned.

      That is why nice Josh always looks a bit sweaty and half hearted …..he knows what he is doing is cynical and dodgy.

      That is why Scott looks so smug……….he could not give a damn either way.

      https://theglass-pyramid.com/2018/06/14/crystal-balls-when-will-aussie-house-prices-crash/

      • If mortgage size doesn’t increase, I cannot see how house prices can take off.

        For mortgage size to increase the multiples of debt to income will have to become stratospheric instead of just mad given wages will not move any time soon.

        It basically just cements in the crash.

        • It is certainly getting harder to further inflate or even just maintain the bubble but I address your points in my article.

          Population growth (especially ponzi population growth) permits total credit growth even if credit per person is reaching its limits (fresh credit at the bottom of the property market helps the upper levels) and additional subsidies can make property asset price speculation more attractive.

          Tax deductible mortgage payments just for starters.

          Don’t underestimate the potential for creativity and innovation from asset price fluffers. They are not like normal people.

          Only the AUD really cramps their style and that is holding up better than any expected as China simply refuses to do what western observers insist it must…….suffer a financial crash.

          • St JacquesMEMBER

            Yep, China isn’t going to allow a financial crash. 100 percent there. Their economy will grind slower but crash, Lordy no.

        • Josh knows what he is doing. He lacks confidence in what he is doing but that is quite different.

          Only an ignorant fool (or sociopath) could look calm and relaxed and that is a much better description of Scott (or the RBA) than Josh.

    • ErmingtonPlumbingMEMBER

      ”Barring of course the blind eye that will be turned to foreign capital”

      We only need a minuscule percentage of those 2.7 billion Chinese and Indians wanting to call Little old Australia home to keep prices up in our land of only 25 million.

  2. So is the core logic data being put out fake or not. I see these comments every now and then that the data is fake and designed to juice the market for the players. Is there any proof of this.

  3. Have a look at Aussie 10 year, is sneakily creeping up to 1.40%
    I have a bad feeling about long dated aussie bonds.
    I was a bull (lower interest rates) but it’s starting to smell a bit fishy

  4. The fires will seize up the property market, with boomers tree/sea changes plans most likely to be put on hold. Lower volumes on the market will probably push prices up.

    • Fishing72MEMBER

      Not to mention the increased costs required to accomodate the radical new fire protection requirements which will soon after be imposed on the tree changer / sea changers essential* renovations or build on their new place .

      * Certainly can’t be expected to live in the simple houses which were suitable for the past 70 years in those little rural towns ! Renovations don’t count against your virtue signalling about your concern for climate change either . It’s considered to be the concerned environmentalists equivalent of a tax deductible charity donation.

      • innocent bystander

        new building regs already in place in most jurisdictions I think?
        and in my shire new regs for fire are in place for extensions and renovations as well.
        as a consequence almost impossible to sell vacant land as the new build cost is exorbitant.

      • We just spent an interesting few days over new years doing the bushfire boogaloo with some friends in Gippsland. It was an…interesting…holiday.

        Their recently built house on a 1 acre rural block had been built in accordance with recent bushfire regs.

        They may be about to find out how good those rules are as the place across the road from them is being set up as a last line of defence and they’ve been ordered to evacuate in the last couple of hours.

    • innocent bystander

      think it depends on the area.
      I am told some areas in NSW have a blanket ‘zoning’ by insurance companies to calc premiums (to the high side), whereas where I am it is based on postcode, even tho each block is assessed for fire danger in order to know which build regs you have to satisfy (neither of which is considered by the insurance company). All of this will change I am sure as some places will become uninsurable….
      https://www.abc.net.au/news/2019-10-23/the-suburbs-facing-rising-insurance-costs-from-climate-risk/11624108

    • A place in rosedale sold for $1.5m, a record in that area, just 2 days ago with fires completely surrounding it. Its now a pile of expensive ash. Its overwhelmingly sad but it highlights just how thick and blindsided some people have become.

  5. innocent bystander

    markets within markets. let alone nationalising it.
    stuff exists outside of Melb/Syd.
    like fires. just in case anyone was thinking of driving across the Nullarbor.
    https://www.abc.net.au/news/2020-01-01/road-closures-cause-nullarbor-travel-chaos/11836476

    We had no idea the road was cut off, and just from chatting to other people who are stuck here I can tell nobody knew.

    and back on Dec 20:
    https://thewest.com.au/news/disaster-and-emergency/truck-drivers-holidaymakers-left-stranded-in-nullarbor-after-330km-long-stretch-of-road-closed-due-to-out-of-control-bushfire-in-esperance-ng-b881417330z

  6. If those 10 year “change in dwelling values” are correct, then they are horrendous. Could’ve got much better returns elsewhere. Even Sydney’s stand out 66.7% over 10 years is dog sh1t – let alone for all the hassle.. what happened to doubling every 7 years? The future 10 years ain’t looking any brighter either. Aussie property investment really is for the dumb money. Get out while you can.

      • Actually, yes, I did consider leverage. In addition to interest payments. You could also add in a multitude of other costs and risks such as stamp duty, agent fees, property management commissions, rates, body corporate fees, repairs and maintenance, damage by tenant, a buffet of insurances even on the mortgage itself to protect the bank lending you the money and having a laugh at the profits generated from creating the loan from nothing in the first place… the list is endless. Not to mention all these additional costs are inflated – because it’s real estate.

  7. I do wonder at times if Core Logic is False Logic. But I’ll like to believe the numbers are true, it’s just what kind of picture you want paint with it. I remember an earlier article on macrobusiness about the suburbs on the edge of Melbourne becoming “modern slums”. I feel that people are sometimes look too superficially at the numbers.
    https://www.macrobusiness.com.au/2019/10/abc-melbournes-outer-migrant-suburbs-a-modern-slum-nightmare/

    Just look at this numbers being reported. 4.04% yield and under 500k in median sale price.
    https://sohoapp.com/au/search/sale/properties/Tarneit-VIC-Australia-47723

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