When Stephen Koukoulas (aka ‘The Kouk’) held “The Great Housing Debate” against Coolabah Capital’s Chris Joye, I thought he was crazy to forecast only a 7% peak-to-trough decline in Australian dwelling values based off the CoreLogic dwelling values index.
The Kouk subsequently revised his forecast to a 10% peak-to-trough decline in dwelling values, which I still thought was crazy.
Most others seemed to agree, with consensus forecasts (including from me) expecting a 15% to 20% peak-to-trough decline in national dwelling values.
The Kouk may have gotten the last laugh, however, with values appearing to have bottomed-out in February with a 9.1% peak-to-trough decline:
Based on CoreLogic’s daily dwelling values index, values have rebounded hard in March, led by Sydney, despite another interest rate hike from the RBA:
At the 5-city aggregate level, values have risen 0.28% over the first 15 days of this month, with all major capitals other than Adelaide recording increases:
CoreLogic reports capital city listings over the past four weeks were 19.9% below the previous five-year average for this time of the year, which is keeping a floor under prices amid soft demand.
Net overseas migration has also rebounded to record levels.
The rebound has led Catherine Cashmore to declare Kouk the winner of the Great Housing Debate:
To be fair, it is still too early to declare Kouk the winner.
As noted by CoreLogic on Wednesday, “the housing market is still facing some considerable downside risk” and “it’s still too early to call a bottom of the cycle”.
“Interest rates may rise further from here, as well as the fact that we are yet to see the full impact on households from the aggressive rate hiking cycle to date”, CoreLogic notes.
“Additionally, economic conditions are set to weaken through the middle of the year, as household savings buffers are being depleted and labour markets are likely to loosen further”.
CoreLogic believes “one of the key metrics to watch will be the flow of new listings coming on the market”.
“Any sign of a larger than normal level of freshly advertised stock could signal that prospective vendors aren’t willing or able to wait out the downturn any longer. A rise in advertised supply to above average levels could be a signal this recent trend of growth has run out of steam”.
Accordingly, “the next few months will be critical to understand whether the housing market is indeed moving through an inflection point or if it is simply the eye of the storm”.
Regardless, the Kouk has gone against the herd with his -10% peak-to-trough house price call amid the sharpest interest rate rises in history.
If indeed this is the bottom of the market, he deserves to be praised. Because it was a very brave call.
