Recall that Chris Joye’s Flying Circus recently declared:
So I will repeat what I have publicly and privately advised the many folks who have inquired about my forecast for the $7 trillion-plus residential real estate market: home values are unlikely to fall materially and, in my central case, will either move sideways or at most fall by up to 5 per cent over the next three to six months, after which the robust cyclical boom will resume.
Sounds like a conviction call given it is a “central case”. Or not, today:
For the time being, however, we are happy to bet against every other mainstream analyst on the performance of Aussie housing over the next 12 months, albeit that this cannot be a high conviction call given the unprecedented nature of the 1-in-100 year Great Virus Crisis.
For what it is worth, I remain bearish. The CoreLogic index is hedonic and compares like-for-like so it should compensate for compositional bias. That said, collapsed transfer volumes are a better guide to weakness in the market. I still expect material weakness because of:
- collapsed immigration;
- unemployment;
- rising rental supply and falling rents;
- consumer caution, and
- credit tightening.
It’s a high conviction call!
