Steve Keen might have to climb Kosciusko!A five-month surge in Melbourne home prices has undone all of the damage wrought by the global financial crisis, pushing up the median house price to $469,357 and the median unit price to $377,077 - both record highs.
Melbourne home prices have soared the fastest in the nation so far this year, jumping 6.1 per cent in five months to eclipse 5 per cent-plus gains in Sydney and Darwin. Only in Perth did prices continue to fall.
Produced by RP Data the May price figures are regarded as more representative than those produced by real estate agents as they only compare "like sales" with "like sales" and so are not distorted by changes in the composition of the stock sold They are used by the Reserve Bank and cover 98 per cent of Australian sales.
"Our results herald a national recovery," said RP Data's research chief Tim Lawless...
Our index was the first to capture the start of the downturn and was the first to capture the start of the recovery from January 2009."
Mortgage provider Rismark, which part-finds the RP Data index declared "doomsayers defied".
"The housing market has been the cornerstone of the our economy’s stability in 2009, said chief executive Christopher Joye. "The robust rise in values this year has given builders and developers the confidence to hire labour and buy materials to invest in new homes. It has also given existing owners the confidence that their largest investment has been a secure store of wealth while other asset classes
have been decimated.”
Melbourne houses sold in May stayed on the market for an average of just 29 days, the shortest time in Australia.
The most dramatic prices rises have been away from the centre of Melbourne in Hume City in the west, Eastern Outer Melbourne, and Frankston city. Prices in inner Melbourne and the Mornington Peninsula continued to fall.
"So far the recovery has been led by first home buyers, said Mr Lawless. "But
we are expecting to see more investors as rental yields continue to climb."
Separately-released Reserve Bank borrowing figures showed housing and government borrowing to be the only bright spots in credit markets with both personal and business borrowing sliding further.
The Housing Industry Association reported a slide in house sales in May with Victorian sales down 8.7 per cent, most likely because of uncertainty about what was going to be in the May Budget.
The ANZ Bank said it placed more weight on the house price figures, with economist Alex Joiner declaring now unlikely "the Armageddon scenario foreshadowed by some".
"From here on we expect prices to continue to show modest, consolidating, growth as although the property market is performing well, broad-based economic recovery seems some way off," he said.
Published in today's Age
15 comments:
Can we have less cheerleading and more analysis?
Chris Joye (of Rismark) has a vested interest in publishing positive real estate data. Last I heard, the ABS data was still going backwards.
If you want a more balanced view of the state of the real estate market how about this from Westpac: Australia: housing upturn delicately poised
I'm genuinely astounded - I have been expecting a crash for years, or at best a soft landing. How can the multiple of income to house prices be maintained? Surely wages are not growing in line with property. I can see how a crash would be very damaging, but surely a continued rise is not good for the long term either. From what I hear anecdotally, skilled immigration visas have been slowed down so population growth will surely slow.
What was the timeframe for the Keen/Robertson bets?
Re the ABS:
Here's Rory Robertson:
· It’s worth nothing that Australian home-price indexes have come a long way since RBA Governor Macfarlane in 2004 labelled existing measures as “hopeless” relative to the information available on share prices, bond prices and foreign exchange rates.
· Private-sector providers like RP Data-Rismark, Australian Property Monitors and others now publish world-class price indexes, after mining great detail from a large subset of recent home sales.
http://www.rpdata.com/indices/property_data_sources.html
· Indeed, now that the private sector has made providing reliable monthly home-price indexes a major focus, there seems little point in the ABS continuing to produce its quarterly House Price Indexes (HPI). The next time the ABS finds itself looking for budget savings, it should discontinue its now-supplanted HPI before it considers again downsizing its labour-market and retail-sales surveys.
http://www.abs.gov.au/Ausstats/abs@.nsf/mf/6416.0
So we'll just take the advice of property spruikers from now on instead of the ABS?
Seriously, asking Chris Joye to produce a house price index is like asking Craig James to compile GDP numbers, or asking Steve Keen to do the private credit numbers.
Re the timeframe for the Keen/Robertson bet:
Merely "peak to trough", with no time limit.
Rory writes Obviously, I expect this distinction will not make a difference, with the ABS house price index likely to surpass its Q2 2008 level well within 5 years.
It nearly has.
Govt is on a winner. FHB Bribe worked. Prices went up.
Excellent, would make good book:
How to make Housing more affordable by increasing the Price, Whoops'
Endorsed by Housing Minister whats her name.
Recommendation, keep the FHB Bribe and index to inflation which is currently about 12%*
* Don't Mention the Debt 19Feb09 The Age http://business.theage.com.au/business/dont-mention-the-debt-20090219-8c6e.html?page=-1
Has any independent body bothered to check the robustness of the Riskmark data? If the US example has taught us anything, it is that relying on a group of entities who all have "skin in the game" to produce an objective and balanced analysis is doomed to failure due to self-interest. Both the source RE data and Riskmark's analysis - being produced by entities who stand to benefit from the continued upward movement of property prices - are subject to the same conflict of interest.
Oh boy Peter, what a schoolboy error! Given the governments borrowing to distort the bottom end of the market, it's little wonder that the government has created a false market.
Also, do you not care to provide a 'REAL' increase instead of just quoting less meaningful nominal numbers? Guessing not, you look to be trying to prove your employers' agenda rather than discuss the reality of the market. Rudd's flooding the market with money and getting us into debt will undoubtedly cause price inflation in NOMINAL terms. So lets get real.
Calum, if prices have surged 3.9 per cent in five months, there's been a real increase - not that it makes much sense to relate house price movements to the CPI, but that's another story. You asked.
Poor Steve Keen,
Steve, apart from climbing the mountain, will now have to stump up 5% more for a new house having sold his at "the bottom of the market" and moved to rented premises where the landlord is no doubt talking to Steve right now about a rent hike.
Back to the books on REAL WORLD economics Steve.
Annon
Loser Annon.
Down is the new up for rents. Haven't you heard? All those dumb-a55 FHBs who took the bait and jumped on the Ponzi even as it was falling have left RECORD inventories for the rest of us. And as your RE guys are always telling us, it's all about supply and demand...
Is it just me? Government hand outs (1st Home owners Grant, insulation, solar, rainwater tanks) just increase the price in the short term leading to PAIN later on. & are peoples mortgages just OBSCENE.. KOCHI
Can Australia decouple from the world economy and ride out the worst global recession in 70 years without any pain? As we saw in the US unemployment report last night, this ain't over yet.
Can Australia, with some of the most overpriced real estate in the world avoid a housing correction, when every other economy with similarly inflated prices has already suffered serious housing downturns? Sure, its plausible I guess, but it seems unlikely.
For those (like me) who realise that the housing bubble cannot continue forever...no need to get upset.
There is not much we can do about the spruiking and FHB's making stupid decisions - but ultimately the credit market and unemployment will do all the talking for us.
Just be content that you know what is ahead and that you have some time to prepare for it. Those who have been misled or who cannot think for themselves will not fare so well.
If there is one thing I have learned about these market crashes - they take time (even the Great Depression took years to unfold).
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