Australian Property market chart: Technical Analysis

I’m curious about people’s experience of charting the property market.. Has it been done? What were the findings?

Does anyone have a good resource or examples of technical analysis for the Australian property market?

please discuss or post links to some data / evidence Unfortunately I have nothing to add at this stage but very interested to see what is out there.

 

i too am curious about this. i would probably start with median house prices nationally and then by state/city.

i would also look at the REITs index APTJ S&P/ASX 200 REIT Index (AXPJ) - Investing.com AU

 

The property market isn't purely for investment. I'd imagine you'd get a bit of noise.

 

Agreed there might be some noise to contend with but also of the opinion that charts follow certain rules if applying TA?
Paging @Alex Straker @kitdoctor

 

I have previously done some work with the A-REIT / XPJ demonstrating that residential property prices or any index measuring them lag XPJ by a period in the order of 9 months from when XPJ reaches an important low, however, you do need to know how to identify which lows in XPJ are important. So, say for example XPJ was falling and property prices were also falling, when XPJ reached such an important low and reversed, residential property prices would continue to keep falling for a period in the order of 9 months before also reversing. Such was the case when XPJ reached important lows in 2011 and 2018.

XPJ does not have a long history but it has twice, in 2007 and 2020, given a warning of a significant down turn in XJO (and XAO). However, you do again need to be able to identify when XPJ is about to reach an important high (marking such an occasion where other markets are impacted) and will itself undergo a significant down turn.

XPJ topped on 17 February 2020 only days before XJO (and XAO). My target was 1773.2 and it reached a high of 1736.2. The high marked the end of the advance from 9 March 2009, ending five waves at Primary degree, which in Elliott wave degree is very significant because it ends a wave one degree higher, i.e. a Cycle wave. The sign of approaching trouble emerged in mid 2019 when XPJ ended Intermediate wave (3) of Primary wave ((5)), meaning only a corrective wave, Intermediate wave (4), and one further advance, Intermediate wave (5), remained before Primary wave ((5)) would be completed which would also mark the end of a Cycle wave. See chart.

 

TA of residential property prices is constrained by the lack of historical data. By this I mean the free or subscription data doesn't go back decades and decades. Then, what data is worth analysing? Corelogic has moved away from median prices and developed indexes, as has the ABS. A subscription service, like HtAG, offer quarterly median prices and sales numbers going back to 2009/2010.

I have done some work using HtAG's data for various suburbs (and Local Goverment Areas) that interest me and also the ABS data (capital cities), although I have not kept this work up-to-date since late 2018 when I did it. What I observed and it was seen more clearly in HtAG's data was that no matter what suburb or LGA was analysed, provided the data set was big enough (at least 40 sales/quarter), when analysing the history since 2009/2010 (a period of rising prices) all the charts have the same kind of signature or "look". The advance in prices comprised a first wave up, a second wave down which largely erased the gains of the first wave, a third longer wave up and what was the start of a fourth wave down (2017). The conclusion I made is that prices (and indexes) adhere to the basics of the Elliott Wave Principle, i.e. prices advance in 5 waves (3 up, 2 down).

The sales data also showed some interesting characteristics. For example, sales often peaked about mid wave through the third wave but despite this prices kept rising with falling sales volume. I understand this because the Elliott Wave Principle explains this but the observation was a good signal that the third wave was about half way along when this characteristic was observed.

 

Really interesting posts. Thank you.

The XPJ drop would signal for December crash which is about right based on others' predictions

 

Here is an example of median prices moving up to a high in a third wave. The green bars are HtAG's predictions for sales volume and the three curves (light blue, yellow and grey) are their range of predictions for median prices. As you can see when this was done historical prices had started moving down in a fourth wave from the peak in wave three.

You can see how the second wave erases a good proportion of the first wave and wave three is the longest and strongest. These are Elliott wave characteristics.

The final fifth wave up (not shown) was the period from about July 2019 to early 2020. So, five waves up would complete a first wave one degree higher, so a three wave correction of larger size must follow which is what we're in now.

You can also see how sales volume (orange bars) peaked about mid way through the third wave up, then fall away but prices keep rising. In this case, there was also a second slightly higher peak just before the end of the third wave, another characteristic that is common.

 

@MikeyM and @charttv I have posted in response to your questions.

 

It's now eight months since the March low and almost right on cue residential dwelling prices are now rising across Australia. Some areas started sooner, others later but overall the bottom of the market is now in.