NSW Sydney entering positive territory

No, they aren’t.

I’d never even heard state grouped results prior to rea starting up.

In any case, this thread topic is Sydney not NSW.

 

Most likely 46% final clearance rate..... pretty bad.... ppl were jumping up last week when it reached 56%.....

Market will continue to go down.....
Ppl listen... wages are FLAT....casflow return is still so bad despite Low interest rates.... asset prices don’t make sense and in my opinion still has a good 10-15% to go down....

 

Corelogic has it the prelim at circa 58% this week. This type of level seems far more reflective than ~65% prelims last week (way too high for market sentiment, outlier) & low 40's of the December period (market was falling fast here).

Sydney definitely isn't rising (a 65% prelim clearance rate would likely suggest an actual recovery). It's simply now clearing & prices don't appear to actually be falling again on the ground. The adjustment has already been made and it was large in December QTR. Why is it clearing? IMO because prices have fallen a lot, sellers have got the hint & buyers are more interested at the current price level. IMO the data to the above tells the story a few months after the fact or in a drip feed mode.

House prices aren't quite like stocks where you buy at a certain day and they move at a certain amount. It's lumpier than that. I.e. prices on individual purchases don't fall by 1-3% a quarter or month like the data reads. It works more like, 'this property price has dropped 10-15%' in a small time period and data slowly begins to reflect that as more and more transaction data makes the above real at a macro data level.

 

That seems like a lot of speculation. But last weeks clearance final was 55%. This week Prelim is 54% but will be in the 40's once all the results come in. And price falls in the measured sense, are still going at a rate faster than the majority of 2018.

 

Thats exactly what it is. Speculation and random thought bubbles on how I see prices operating locally.

 

I am a buyer and think there is more to go down.......its not about how much it has fallen from peak, it about what makes sense for asset prices...and they are still a good off normal valuation

 

Did you buy the last time prices made sense? During the gfc?

 

@Redom
January’s credit data continues to slide. Do you think the pick up in activity will be reflected in febs data?


Shane Oliver on Twitter

“Aust Jan housing finance commitments continuing to slide. Owner occupiers -1.3%mom after -5.3% in Jan. Investor finance -4.1%mom after -4.4% in Jan. Credit tightening continuing. Housing downturn has a lot further to go.”

 

No it will be slower than that given credit lags activity. Credit data isn’t one city specific (and Melbourne is going through the worst of it now IMO). If I had to guess, it’d show positive readings in April. Ie it flip around like clearance rates.

All the data signals typically move in directions. If you want indications on what’s happening, lead data sources help.

Lead data:
- clearance rates
- time to buy index
- confidence type sentiment measures (probably a bit too removed from housing)

Lag data:
- price indices (not by much if large portions aren’t based on settled data)
- credit growth
- news cycle and what media reports

 

Ok how does the RE collection of data vary from Domain?

 

It’s explained above in the thread.

If it was the same, the results would be the same.

 

Markets are never rational

 

Update via Shane Oliver‏ @ShaneOliverAMP :

Prelim Domain auction clearances March 16

Syd 57% (=final ~49%, last wks final 48%).

Mel 55% (=final ~50%, last wks final 43%).

Seasonal bounce since Dec but still v weak. Sales vols around pre boom levels. Tight credit,record supply, crash in foreign buying, tax uncertainty all weighing

 

Thoughts? Is this a slow of the decline?

It’s stronger that q4 last year - but interesting to see where we go from here

 

+8% to clearance rates is the average in Feb/March. So seems about what we'd expect.

But IMO Price falls should slow now as new credit limits become the norm, and because -4.5% drops per quarter would be apocalyptic to the economy if continued, gov would/will throw everything at it.

 

Gary176, what makes sense for asset prices depends on a number of factors, but most importantly the interest rate.

The interest rate represents the hurdle that returns need to exceed for prices to appear rational.

In most cases, observers of real estate prices merely "feel" that prices are expensive, perhaps because it is legitimately difficult to get a deposit together these days.

However, high asset prices are perfectly rational in a world of low interest rates.

Below is the % of our income spent on mortgage repayments for a Sydney property. While prices were high, repayments were completely within range.

 

If this is a slow decline like Perth then what’s going to tank the hardest in Melbourne? In Perth it was units and outer suburbs. In Melbourne, units and outer suburbs are expected to hold up the best due to affordability. That would mean houses in inne/middle suburbs will take the brunt of the downturn.

 

How do you come to that conclusion? Perth units and outer suburbs were them most affordable but were hit hardest, Why would Melbourne be any different?

 

Different core reason. Perth slump is due to demand drop as a result a negative migrantion and economic issues

Melbourne has neither of those. Economy is ok and there is still positive migration.

This the drop is heavily credit and confidence related. Also removal of Asian buyer

People buying cheap can still get finance, and that is the busy part of the market. The 1.5mil+ places saw a limited buyer pool shrink by half. This is Melbournes issue.

That and buyers are now wait and seeing.

 

Interesting graph. I believe it's actually contry to what most believe.