Saturday, November 29, 2008

Could house prices actually be climbing?

About that debate between Rory Robertson and Steve Keen, the audio is here. HT: Keen


Widespread claims that house prices are falling seem to fly in the face of statistical evidence, with Australia's most accurate price index showing gains in each of the last two months and Melbourne prices climbing the fastest in eastern Australia.

The RP Data-Rismark Hedonic Property Value Index measures changes in the prices of houses that are actually similar. Other indexes lump sales together, meaning that if more expensive houses are sold in one month than another overall prices appear to rise or fall even though the price of each house may not have changed.

By comparing, for example, the price of an unextended 3-bedroom house in Glenroy only with earlier sales of unextended 3-bedroom houses in Glenroy the index is designed to give a truer picture than those produced by the Bureau of Statistics and real estate organisations.

The index suggests that like-on-like prices climbed 0.2 per cent in September and a further 0.4 per cent in October. Melbourne prices slipped 0.3 per cent in September before jumping 1.4 per cent in October, a performance better than that of any other eastern states capital...

RP Data's head of research Tim Lawless said he believed "doom and gloom merchants" had misunderstood the property market.

“It appears Australian property values have proven to be remarkably resilient despite multiple interest rate hikes in early 2008 and the effects of the credit
crisis,” he said.

The improvements are in line with figures released by the mortgage broker AFG which says its October home loan volumes were the strongest since November 2007, climbing by 18 percent in one month.

Most of the price increases in Melbourne took place in the price of houses. The price of units grew more slowly.

Perth and Sydney prices are down 5 per cent and 3 per cent so far this year with prices in Adelaide and Darwin soaring 7 per cent and 9 per cent. Melbourne prices climbed 1 per cent.

Reserve Bank credit figures show borrowing for housing continuing to climb, although borrowing for investor housing is growing more slowly than at any time since records were first kept 17 years ago.

Borrowing for owner-occupied housing grew by 9.2 per cent in the year to October, its slowest growth rate in 9 years.

Personal borrowing slipped another 1 per cent in October, its fifth consecutive monthly decline.

"It looks as if consumers are cutting back on borrowing in an attempt to minimise debt," said Commonwealth Securities economist Savanth Sebastian.

"Borrowing for things other than houses is contracting as consumers deleverage the balance sheets in response to economic slowdown and a credit squeeze, said TD Securities economist Joshua Williamson.


Michael S said...

Really? Vested interests are more accurate than the ABS?

Quit spruiking for the your mates Gans and Joye, the RE industry and be a journalist.

Michael S said...

Also realise that the ABS indices are not crude medians, but are stratified and weighted.

Reece Boroughs said...

Regardless of the stats at the present stage, to think that house prices are going to hold up when every other asset price in the world is going down is foolish. I would say that the stats are probably right but that we will find that house price declines will occur later here than say the US or the UK, because the flow on effect from the commodity downturn has only just occurred. I wouldn't want to be holding WA property at the moment - there will be a fire sale soon now that the large miners are closing mines quicker than ever and all of a sudden a dishwasher in the Pilbara who was earning 70K is unemployed!

Peter Martin said...

Michael S,

ABS figures are not always the most accurate.

It was the ABS itself which outlined to me the faults in its preliminary dwelling price measure, not vested interests in competiton with the ABS.

The Reserve Bank uses the RP Data measure.

Perhaps that's because, like the ABS itself, it believes the ABS measure has faults.

chris joye said...


The RP Data-Rismark Index, which is reported by the RBA and has been selected by the ASX as their benchmark index, is the first 'hedonic' regression method to be used to measure Australian house prices.

Research published in the past by the RBA (refer to the relevant RDPs) has found that the hedonic method is technically the most accurate way to measure house prices. However, because of historical data limitations no-one could produce them.

Measuring house price changes accurately over time is of profound importance to government and the community. The average Australian household has over 60% of their wealth invested in housing.

The RBA and others have historically been highly critical of the quality of house price indices in this country, which is why we sought to develop a much more advanced hedonic method.

In June 2004, the former Governor of the RBA, Ian Macfarlane, said, " an extremely important asset class for most people, yet the information we have on prices is hopeless compared with the information we have on share prices, bond prices, and foreign exchange rates…It really is probably the weakest link in all the price data in the country so I think it is something that I would like to see resources put into."

The RP Data-Rismark Indices are based on Australia's biggest property database, with over 100 million records on homes across the country. This is far bigger than the ABS database and benefits from a lot of proprietary data collection RP Data undertakes focusing on property attributes--bedrooms, bathrooms, land size, floor space etc.

Our index method is also far more sophisticated than the ABS approach, which is nevertheless quite good.

Moody’s has independently reviewed the RP Data-Rismark Indices against the alternatives and concluded:

“The suite of indexes calculated by RP Data-Rismark represents a significant improvement in the quality of housing price statistics available in Australia.”

“We look forward to seeing these indexes as they are released and believe that they will quickly take a central place in the macroeconomic data framework of Australia.”

“These data are more sophisticated, detailed and have better coverage than that used in the construction of existing housing price indexes in Australia. The high quality of the data makes it possible to implement not only median price and repeat sales indexes but also hedonic indexes, which up to this point had proved difficult to construct in Australia due to data constraints”

Other comments from the Moody’s report include:

“Perhaps the most exciting methodological development is the introduction of hedonic price indexes to the Australian market. This approach to price index construction controls for compositional change by obtaining information on housing characteristics (e.g. bedrooms, bathrooms, land size, suburb, etc.)...”

“Through their Strategic Alliance with RP Data, Rismark has access to arguably one of the best databases available anywhere for the construction of hedonic indexes.”

“At present no hedonic price indexes are regularly produced for Australia, a void which RP Data-Rismark aims to fill. The adoption of the hedonic approach means that a better balance can be achieved between sample coverage and adequate control for compositional change. Hedonic methods potentially offer an improvement over the house price measures currently available in Australia.”

“..the way in which the real-time data is collected, via real estate agents (over and above the traditional valuer-general and land titles sources), has the potential to solve many of the timeliness problems that has plagued measurement in this area.”

carbonsink said...

Er, Moodys, they were the guys that rated trillions in toxic debt as AAA weren't they?

None of this gels with what I'm seeing in my local RE market, where nothing has been selling for more than 6 months, and now I'm seeing plenty of heavy discounting ... like 30% or more.

chris joye said...

I also offered up the RBA and the Securities Industry Research Centre of Asia-Pacific (SIRCA), the latter of which is a not-for-profit financial services research organisation involving 36 collaborating universities across Australia and New Zealand. SIRCA in particular undertook a full review of the RP Data-Rismark Indices and found that:

"...the results of our analysis indicate that the…property price indices developed by RP Data-Rismark represent a material improvement over the simple median price series that have historically predominated in the Australian market. In this regard, it is pleasing to see private sector organisations that are committed to undertaking sophisticated residential real estate research and advancing our otherwise crude understanding of this complex market."

In relation to your point about your local market: you are right. There is a great deal of local area price dispersion underlying the capital city and national price indices. We recently ranked the top 114 regions or statistical sub-districts (SsDs)--these are regions comprised of circa 10 postcodes--based on their last 12 months price change and found enormous cross-sectional variation with (as you would expect given the overall market’s flat price changes) roughly half delivering positive returns and half negative. In each positive and negative cohort there were areas that had delivered 15% or more price growth over the last year and regions that had suffered 15% plus price falls. But the objective of an index is to proxy for the performance of the entire housing stock in the relevant city or national market. This is akin to comparing the price changes of an individual stock or subs-sector index with that of the overall ASX All Ordinaries Index. The individual stocks or subs-sector indices have much higher return volatility. When we have quantified the empirical volatility of individual homes in Australia over the last 10-20 years it tends to be around 15% to 20% per annum depending on the home owner’s holding period (the volatility is not time-invariant). However, the volatility of our capital city or national market indices, which proxy for hundreds of billions or trillions of dollars worth of housing stock, is incredibly low at less than 5% per annum.

Banks, insurers, economists, the RBA and Treasury are concerned with market-wide price changes, which is what the indices address. A common mistake people make is extrapolating out from their specific circumstances and assuming that the index performance will be the same. Hence I often hear even experienced listed company executives and commentators talk about how Australian house prices fell by 30% in the early 1990s. But this is grossly incorrect. According to a range of independent data, Australian house prices actually rose by around 3-4% per annum between January 1990 and December 1992. This is in spite of the fact that unemployment increased from 5.6% to 10.9% and mortgage rates averaged 13.7% over the same period.

People also make the same mistake in reverse. The old adage about the safety and security of ‘bricks and mortar’ and the very low volatility of residential real estate confuses the index-level performance with the vastly higher risks assumed by an individual owner-occupier. As noted above, the volatility of an individual home is akin to that of equities. Furthermore, households gear into the asset-class heavily with Australia’s system-wide LVR being about 65%.

Arguably the most important learning from the global credit crisis has been that the system has had too much leverage. This is particularly true of the household sector, which in many advanced economies has assumed unsustainably high levels of interest-bearing debt. There is, however, an elegantly simple solution to the widely accepted need to ‘deleverage’--and that is equity.

As Joshua Gans recently noted on his blog, this was the exact recommendation of the report I completed for the 2003 Prime Minister’s Home Ownership Task Force. I argued that households should be able to draw on both external debt and equity when financing their property purchases, rather than just relying on debt.

Anonymous said...

Housing prices up, you bet.

Govt (State & Federal) is doing all it can to prop up the property bubble:
Reduction in land taxes,
FHO Saving Scheme floated in Sep08 (but smashed by stockmarket crash of Oct08),
NRAS of $512M – virtual gift to corporate sector (tax credit indexed to cpi even),
Increase FHO Grant to $14k for existing homes and $21k for new dwellings,
Shared equity with Govt - introduced in Tasmania Nov08 ($50k govt equity?). I think this was tried in WA earlier this year but is already abandoned due to lack of funds?),

Tax system that still allows investors to get loan interest deductions on both new dwellings and existing property (only 1 in 12 investment dollars is for new construction, so 11 in 12 or about 90% of investors use tax concessions to outbid genuine FHO at sales and auctions - a complete waste of tax payers funds).

This is despite recommendations by both the RBA and Senate: RBA 2003 see point 22 recommendations

Here are a few predictions govt will use to keep the bubble alive:

• Home buyers allowed loan interest deductions for next 2 years
• RBA will continue to slash interest rates and govt will continue to allow & encourage the use of debt accelerants such as negative gearing and interest only loans – as if Aus needs more debt
• Further incentives offered to the corporate sector to build new dwellings, eg increase the NRAS to $12k per unit per year for 15 years (currently $8k per unit for 10 years)
• UK style carrot (tax incentive) for investors to put vacant property on the market (rather than deeming a rent and tax accordingly)

I could continue, it is almost fun thinking like a neo-conservative. It is a bit like the enjoyment one feels when the breaking of glass is heard. But then one remembers that the glass needs to be fixed and there is a cost that goes with that.

Creative destruction - the Labor Liberal ideal.

chris joye said...

lol. yep...

i don't want to get into a debate about it--because i am about to write something elsewhere--but i think that a very sophisticated analysis of the housing market would actually call into question whether there is a bubble. i find it deeply curious that with US house prices only off 7% from their peak according to the OFHEO index (Case Shiller is useless because it ingores 32 US States) and UK house prices having only declined about 6% according to the FT index (which, unlike, the Halifax index includes all property sales, where the latter is just based on the HBOS loan book), while at the same time shares in both countries are off about 50%, people persist in saying that there is a house price "bubble" when in fact the objective evidence says that there was much more of a share price bubble. and the housing data has tended to be biased downwards by distressed sellers.

the truth is that there was a credit bubble, which has led to a system wide deleveraging process, which has in turn precipitated global asset price deflation. But many commentators and seemingly smart analysts are wagging their dogs with their tails by alleging that the housing bubble caused the problems in the first place...

Anonymous said...

Correct Chris, there is a credit bubble.

And houses are bought on credit, yes?

So it is not such a stretch to say there is a housing bubble, no?


Michael S said...

Chris is in good company.

In 2005 Ben Bernanke said there was no housing bubble in the US, and that any housing slowdown would be mild and not affect the broader economy.

I think Chris needs to brush up on his history and read 'The Land Boomers'. Or maybe even some Fred Harrison, or heaven forbid, a little Henry George.

iconoclast said...

All of this information provides a nice “rosy” picture for the Australian housing market under circumstances where there is continued and vibrant economic growth. However, under current conditions, this is definitely not the environment we are finding ourselves in.

Only if one has a superficial understanding of what is taking place in world capital markets, since October 2007, and more specifically the entirely dysfunctional debt market rather than the schizophrenic equity market, can one believe that all bodes well for access to credit into the future.

The commercial paper market, as part of the global money market, is dysfunctional and has completely seized up; central banks around the world are the only lenders that are propping up these zombie markets.

Moreover, this directly implies that financing via the commercial paper market, being the source of funding for credit card receivables, car loans, commercial loans, renovation loans, personal loans, et cetera is going to be very expensive, and pretty much inaccessible to most, save those with outstanding credit. This segment of the Australian population is becoming ever more minuscule.

The spreads for even "AAA" corporate bonds, as compared to their zero risk equivalent Government debt securities of equivalent maturity are extremely expensive. This will put a stop to any source of cheap credit for the corporate sector. Bye bye all these leveraged buy out that should never have happened in the first place. We have already seen BHP take control of it's senses and back out of the RIO buy out.

Australian banks raise about half their cash from local deposits, a quarter from local bonds and the remainder from the global debt market. Banks are no longer able to access the latter two sources of funding, as they once did, neither in quantity nor in cost. One just has to look at all the local mortgage funds that have been forced to freeze their redemptions and close off their funds, whilst the global debt market is severely risk averse to MBS funding. The rebalancing of capital to bank deposits, due to a fleet to saftey, is by no means going to offset this funding gap.

The 2nd tier banks, BoQ, Bendigo et al., with their current BBB+ ratings, will be priced out of the market reducing further credit availability.

With the ANZ and NAB recent attempt to recaplitalise, via the allocation of preference shares, sends out a strong signal questioning the quality of their balance sheets and their ability, looking forward, to willingly and confidently lend to an economy that is rapidly weakening.

The mortgage securitisation market is dysfunctional, and to all intense and purposes, is shutdown; the Government being the buyer of last and only resort of these securities.

The recent $8 billion announcement to support this market is a drop in the ocean in comparison to the amount of securitisation only one year ago of approx. $200 billion.

The no-doc and low-doc loans market has been decimated.

And with all this baloney that Australian banks are one of the safest and that we have a strong regulatory frame work overseen by APRA. Where was APRA when HIH went under?

We will see in time, if Australia's banks are prudentially managed and we will see if the bureaucrats are worth what they get paid.

This should send a *very* strong signal to all that we are heading into significant credit restrictions with credit rationing being the result.

Moreover, this credit rationing will be so broad that no part of the local economy will be spared the impact of this, when it really begins to feed it's way through next year, is going to be a real d oozy!

Personal consumption, corporates capital expenditure and borrowing, housing, car, renovation, personal finance credit, personal retirement income, are all going to be significantly impacted on the negative side.

Low interest rates, won't matter to someone who is about to loose their job or going to inspire someone to take on a large debt, and neither will the lending institutions be willing to lend without the debt being subordinated with a hefty haircut.

The $10 billion stimulus will be a drop in the ocean, given that 25% of GDP was attributed to debt. The stimulus package is only 1%. This hasn't taken into account the certain collapse in export revenue that has suddenly come to a shuddering halt. Pretty big gap left, hey!

That's, after all, why its called a credit crisis.

So the over inflated house prices that have existed during this housing bubble in Australia, is going to implode big time.

A smattering of evidence supporting the view that we are in big trouble:

BNP Paribas:
High household debt (higher than US), low housing affordability (second lowest in world, behind New Zealand), high interest rates, dependence on overseas borrowing make Australian version of Northern Rock likely.

TED spread: 2.16%; a normal spread is about 0.5. Short term funding remains high. Interbank lending is still frozen.

3mo BBSW-OIS spread: 51 bps has come down from a peak of 150 bps in mid October, but still significantly higher than the long term average of about 10 bps; cost of short term funding remains high.

Jobs growth slows, particularly in NSW.

Consumer Sentiment hit by financial crisis.

Wholesale borrowing costs (about half of bank requirements) are more than 1% higher than before the crisis began. Retail borrowing costs have also tightened significantly as the smaller institutions that are now denied access to funding in global markets pressure domestic funding costs. A test of whether we can expect further bold moves from the banks will be the degree to which they are able to manage down retail deposit rates. Banks are intermediaries. They can hardly be expected to aggressively cut lending rates if deposit rates do not also fall.

Index of Commodity Prices -2.7% in November.

RJ/CRBCommodity index down sharply (242.2) from July 2008 peak (473.52). Forward looking, this does not bode well for commodity exporting countries. The commodity boom is over, for now at least.

Baltic Exchange Dry Index (BDI):
Sharply down (715) from a high of 11,500 in June 2008.

Housing finance for owner occupation, dwellings financed - Trend (5609.0)
% Change Previous Period: -1.9
% Change Corresponding Period Last Year: -27.1

Dwelling unit approvals - Trend (8731.0)
Mthly Sep 2008
% Change Previous Period: -2.0
% Change Corresponding Period Last Year: -14.5

Building approvals -Trend (8731.0)
Mthly Sep 2008
% Change Previous Period: -1.4
% Change Corresponding Period Last Year: -3.1

Total dwelling units commenced - trend (8750.0)
Jun Qtr 2008
% Change Previous Period: -1.2
% Change Corresponding Period Last Year: 3.0

Total new motor vehicle sales - Trend (9314.0)
% Change Previous Period: -1.4
% Change Corresponding Period Last Year: -10.8

Yield curve continues to flatten, signaling recessionary environment.

TD Securities-Melbourne Institute:
Inflation gauge dropped 0.6 percent in November — the biggest one-month fall in its six-year history. Note, even after a significant AUD devaluation, disinflation is still taking effect.

The Australian:
Adelaide-built Commodores are shipped to the US as Pontiac G8s, but GM is reviewing prospects for three of its eight divisions, with Pontiac top of the list, in a desperate bid to cut costs and secure $US50 billion ($76 billion) in federal funds. This puts the Holden plant in a very tenuous predicament.

As Paul Krugman rightly put it:
“…to get sucked into the biggest bubble in history over housing, which you know has been around for say 5000 years and some how believe the old rules do not apply over buildings is really really pretty bad…”

“… Anybody who looks at the numbers, can see that housing prices are way out of line…”

If you look at house prices relative to rents or income they are completely out of line with in historical patterns, but of course they try to ignore this information.

As is normal in human nature, the ones, once blinded by greed, are attempting to rationalise why previous house prices do not apply, and this time it is somehow different. Until greed quickly turns to fear.

The fallacy in the argument that all is well is based on an attempt to use flawed inductive reasoning, by which one extrapolates historical trend into the future, whilst ignoring other information that suggests the historical trend is no longer relevant. This is at best naïve and at worst delusional.

Those types might want to skate to where the puck is going, *not* to where it is.

So one may ask, how is it that one can say all is well?

Well I suppose if you have your head buried in the sand. That probably helps :-)


Another article that puts things into perspective is:

Michael S said...

I don't see anything in the RDP that suggests that the hedonic index is the most accurate.

Nor do the RBA use the hedonic index exclusively - they also use ABS and APM indices.

Someone's telling porkies!

RBAblogger said...

You really make some silly comments.

Firstly you are looking at the wrong RDP. The relevant RDP is here:

This analyses the stratified median method used by the ABS and APM against other more sophisticated constructs. Essentially the RBA concludes that if you cannot run the regression based models because of data limitations then the stratified median approach is a good benchmark.

The two other indexes you referred to, namely the ABS and APM measures, are both 'stratified' median price indexes, which follow the recommendations in the Prasad and Richards RDP linked above.

In this RDP the authors comment:

"One major problem in measuring housing price growth results from the
infrequency of transactions and the heterogeneous nature of the housing stock...In addition, problems associated with
compositional change can be exacerbated by problems of data timeliness if there is
a systematic lag between when particular sales are agreed to and when they are
recorded in a database of transactions...

If detailed and timely data on transactions are available, it is possible to use
regression-based approaches to deal with the problems discussed above.

Note that the RBA does not publish the Residex repeat-sales regression index because there are well-known biases in repeat-sales measures. They generally kick out a huge amount of data and historically revise through time.

The ONLY regression based method the RBA publishes in the RP Data/Rismark Hedonic Index.

The APM and ABS indexes by definition used a far cruder stratified median method compared with the hedonic regression technique which the RBA argues are useful when you face data limitations that don't allow you to estimate a hedonic index.

Quoting the RBA:

"One clear advantage of a mix-adjusted measure is its relative simplicity. However,
more sophisticated approaches are possible, most notably the two regression-based
measures studied in Hansen (2006)."

As has been noted by bloggers above, the ASX has selected the RP Data/Rismark Index to set up its new residential futures market when it had the choice of all the index providers.

The RBA publishes it and only references two other far simpler median price methods.

It is rather hard to see how one could reasonably argue that a hedonic regression technique (which is exactly how inflation is measured) is not a vastly superior method to a median price index even with stratification.

Not therefore sure what you are carrying on about!

Michael S said...

Since when has sophisticated meant more accurate?

I see no mention anywhere by the RBA that a hedonic index is more accurate than a stratified median.

Crude does not mean inaccurate.

Anonymous said...

The reality regardless of any index spruikers for anybody with any brains and open eyes in their own community is that property is off between 10% and 20% whether in NSW over a multi year period or in regional Qld over the last year ..... so why doesn't this show in the indexes?

RBAblogger said...

because you are extrapolating out from the properties in your immediate area to those that are represented by the national indexes which in turn proxy for $3.3 trillion worth of real estate.

what many middle to upper income commentators forget is that less than 5% of all property sales are for homes more than $ 1 million in value.

the affluent $1m plus property market that is getting hammered right now is therefore largely irrelevant to the performance of the index.

given a median house price of $450k the most important thing is what is happening in the sub $650k market. Rory Robertson of Macquarie has recently emphasised this point.

if you speak to any real estate agent dealing in the affordable sub $650k market there are no problems selling properties.

this is in part because rates have fallen by 30% with more to come and the FTB grant has been doubled and trebled.

look at the latest housing finance volumes released by the ABS and AFG. they are up. according to AFG the share of FTBs has nearly doubled to 22%.

despite all of the above, the NSW market has been flat in real terms since about 2004 so your intuition is not far off the mark. i have not checked the regional QLD data and am not sure whether ABS releases this.

This is CBA’s summary of the ABS (not AFG) data:

“The number of loans to owner occupiers rose 1.3% in October - the first increase in lending since January. The number of owner occupier loans has risen in just 3 out of the past 12 months, and is 24% below the level of a year earlier. The total value of owner occupier loans increased by 2.4% in October.

The October housing finance figures show the first signs of a response from first home buyers to the increase in the first home owners’ grant, lower interest rates, and improved affordability metrics. The number of first home buyers rose by 5.9% in October, and as a percentage of the total loans, remained around 6-year highs at 19.5%. First home buyers’ appetite for credit was evident again, with a further increase in the average loan sizes. The average first home buyer home loan size rose $3,400 to $264,500.

The aggressive easing undertaken by the RBA since September has shown its first signs in the October housing finance data. Since October, a further 175 basis points of easing has been delivered. It is likely that the Australian Government’s fiscal stimulus package (which was targeted at stimulating the first home buyer side of the market) has only just begun to impact first home buyer demand – particularly given it was announced only half way through the month. Several indicators suggest that forthcoming data will reveal households are responding to the policy stimulus delivered thus far. In particular, anecdotal data suggests a surge in first home buyer activity in November, and December consumer confidence figures showed a massive increase in the proportion of consumers who believe it is now a good time to buy a dwelling.”

Michael S said...

A $3 trillion residential RE market vs a $1 trillion economy. What's the size of the non-residential market

Hmm ...

RBAblogger, I hope you're not of the same cloth as this unfortunate chap:

Credit crisis tides are turning: RBA deputy

Posted Thu Aug 14, 2008 11:09am AEST
Updated Thu Aug 14, 2008 1:55pm AEST

Reserve Bank deputy governor Ric Battellino says he believes the worst of the credit crisis is over.

Mr Battellino was giving evidence before the House of Representatives Economic Committee in Sydney on competition in the banking sector.

Bank losses from the US subprime crisis and the credit crunch have reached nearly $600 billion globally.

But Mr Battellino told the committee that he thinks the tide has turned.

"My feeling is that the worst is behind us there," he said.

"I mean the write-offs that banks are making in America and Europe have actually lessened in recent times.

"So there's no doubt more to come but my feeling is the big blips and losses are behind us now."

Only one month later and the worst hit! I am finding it rather amusing that both Stevens and MacFarlane are out there saying no one could have predicted this. Plenty did. They should read more widely in the blogosphere instead of listening to RBAbloggers!

Anonymous said...

RBABlogger with family, friends, and contacts spread over the country I dont think my perception is far wrong and i would also dispute that the NSW market has been flat in real terms since 2004 in the real world rather than an abstract index?

And no, I'm not talking $1 million plus property! In my regional Qld coastal centre values were off $55k in general, or my stated 10-20% for mid range properties for 12 months and that was back in September before the shit hit the fan. I get the same story feeding back from around the nation now?

Real estate stats are still rubbish and open to abuse. Some of Chris Joyes commentary in particular is self serving. A comment of his to disregard forced sales is obtuse maybe we should disregard margin sales on the stockmarket also?

You comments indicate you are just another Sydney commentator mistakenly guaging the national scene from your own window?

RPX said...

Interesting claims from Residex today: Australian house prices up 3% in the year to November (based on a very small sample for November.

Residex use a ‘repeat-sales’ regression method that is quite different to the RP Data-Rismark hedonic regression approach or the ABS stratified median method.

They exclude all new homes and must have repeat-sales in order for the data to be included.

The Residex numbers used to be reported by the RBA but are no longer included in the SoMP.

While I would not trust the November data, their year--to information is a useful guide.

House prices maintain positive growth
Mortgage Magazine
Tuesday, 16 December 2008

Australian house values managed to grow by just under three per cent in the year to November, according to figures released by Residex this week.

The median value of the Australian home grew 2.97 per cent, Residex said, to $398,500. This compared to growth of 9.88 per cent in the year prior but was a strong result compared to share markets which lost around 40 per cent in value over 2008.

The median unit value grew by 3.94 per cent; this compared to 6.41 per cent in the 12 months to November 2007.

Residex said it expected capital growth to remain subdued for the next five years, given the current economic climate.

It forecasts Australian houses and units to grow at an average rate of 2.96 and 1.49 per cent respectively per annum over the next five years.