This Housing Downturn is Over

Copious amounts of people have little to no money after finishing their paycheck and or maxing out credit on lifestyle choices. Nothing wrong with that if that tickles their pickle, but they don't have 'skin' or cash on the line in financial investments if they own none.

 

88.56%

 

That's a great quote and sentiment for anyone who thinks that it is all too hard and should be easier. At some point they have to decide whether they want to take control and make things happen or continue to slide through life. Hey it might even require a few sacrifices but it will be worth it.

Here's another from George Bernard Shaw

“People are always blaming their circumstances for what they are. I don't believe in circumstances. The people who get on in this world are the people who get up and look for the circumstances they want, and if they can't find them, make them.”

 

Whilst your statement is true there is a vast difference between having $100 on number 8 in the first at Randwick, (punting) as to having a million riding in an investment portfolio.
Skin for punting, body parts for investing!

 

IMO, property cycles don't really exist anymore. Human, capital and information flows have become too fast to allow for traditional 7/14 years cycles that continued throughout last 100 years or so.

If cycles do exist, please explain Brisbane to me!

 

I will try,for that you would have to go back to the 1983 Commonwealth Games before and after ..

That's when in my simple opinion the prices starting to fall into the 7-10 double price cycle ..

Then it would come down to if one did a complex study of government policy x rapid economic activity and raw capitalism as they have always been closely linked and chain linked at the hip..

Or target the small S/S inner city pockets of Brisbane that never seem to be in standstill mode not matter what the media --non property title holders investment gurus think..

Then once you scope down on those small pockets ,the same streets come up year in year out maybe 3-5 streets and all the other streets within those small pockets span of the land value in those affluent streets..

But the simple way,as it's no different anywhere in the world,it's a market within a market within a market ,and not everyone wins in real estate and if the do it's paid off bigtime,,imho..

.

 

Very true. Was it the ABS that came out in the last couple of weeks with a report stating that 40% of the population lives paycheck to paycheck?... No sorry it was ME Bank:

https://www.mebank.com.au/getmedia/...old-Financial-Comfort-Report_June-2019_v2.pdf

They don't have skin in the investment game but I expect most would want it. Some would be poor managers of their finances, while others it's a case of a hand dealt to them. As you point out it's a large contingent of the population.

 

Your statement relies purely on the percentage of net worth being invested. A million is nothing to some people while a hundred is everything to others. Given we are talking about psychology the value shouldn't come in to it.

 

There has been a big change in the Core Logic Daily Index for Sydney and Melbourne in the last few days. Sydney and Melbourne index values have moved 0.586% and 0.606% respectively which is an unusually large change in 7 days.

In the last 28 days Sydney and Melbourne index values have changed by 0.805% and 0.779% respectively.

Since the date of the election (89 days ago) the Sydney and Melbourne index values have increased by over 1%.

Why such a big jump now? Whatever the cause I am quite sure this will set off plenty of discussion.

My summary below of % changes over various periods.



Chart below is based on the raw data from Core Logic but rebased to the election date.



Lastly the raw data alongside my calculation of daily % change going back one month.

 

It was pointed out to me that spikes can be caused by batched data dumps from State Revenue departments ( thanks @standtall ).

That would perhaps explain the jump on the Election Date ( essentially 1.5 months after the end of the March Quarter ) and the jump end of this week ( essentially 1.5 months after the end of the June Quarter ).

 

Classic WA, not giving a toss about what's going on over east.

 

Just more proof downturn is over and prices starting to increase. Time will tell if I was right.

CoreLogic weekly Australian house price update: rocket - MacroBusiness

 

Interesting. I saw these spikes and assumed they were a mistake. Why would they have jumped a factor of 10+ in only one day, considering previous movements either up or down. Certainly don't think it's a sign of anything conclusive.

 

why not? i'd assume corelogic would know why and wouldnt publish the results and leave them published if it was a mistake

 

Most stats are all fluff and unhelpful to me. Probably one of the last things I glance over before buying a place but quite low on my list of importance for DD.

I find broad stats ( in terms of usefulness for investing) have alot in common with many economists projections - voodoo based and nonsense.

 

The pace of Sydney & Melbourne house price growth appears to be rising quite quickly.

0.60-0.65% up for the month of August to date.

Makes sense to have this level of price growth now...the price data is simply following clearance rate data as it has every time over the last 12 years. The relationship looks to hold, as it always has.

Given we already have clearance data for the month of June/July/August, it probably indicates that price growth data will be strong for the months of August/September/October at least. Will we crack the 1% MoM growth at any point? That's pretty fast level growth akin to boom periods.

This downturn is clearly over. It was over in May. I think there's enough data now that we can conclusively say that now. All QoQ data is positive, clearance rates increased dramatically, etc. Perhaps many still aren't convinced and perhaps they're right and it'll belly flop from here.

IMO we're now at the next stage of this cycle and onto new questions.

How fast & how long will prices rise for?

It's now quite possible that house prices will be higher at the end of 2019 than at the beginning. I.e. a 3-5% Sydney and Melbourne recovery may already have happened in the second half of this year. Will need the winter strength to carry over to early spring season to get this result.

 

Major problem with property statistics is that they are too granular and too many. You really can’t use statistics on a suburb level unless there have been plenty of recent sales for the specific property type you are looking for so you can safely ignore most suburb level statistics publicly published on real estate website. It’s no coincidence that they vary greatly from website to website.

A national running index like core logic is a different story as it’s not a statistic, it’s really the whole universe but then you gotta know how to read trend lines.

Fluctuations of 10-20 or even 50 points are easily possible. These fluctuations are less than one tenth of a single percent point in grand scheme of things.

From my little bit experience of following core logic, movements generally go in one direction for a long time and once they start swinging in one way, you can expect them to keep going that way as long as growth is at an accelerating rate which is currently happening in Sydney so I would expect this growth trend to keep going for now.

Cycles of property index movements

Growing at an accelerating rate means peak is far away (current Sydney index)
Growing at an decelerating rate means peak is in sight (Sydney from mid 2017)
Declining at accelerating rate means further declines to come (Sydney in Mid 2018)
Declining at decelerating rate means market bottom is close (Sydney in Feb 2019)

Sydney seems to be caught up in these mini (2-3 years) cycles for a bit now and we are quite far from the new peak at this stage.

 

I don't disagree there may have been some pent up energy coming into some stabilisation. But what will sustain any growth? Who are the buyers going to be?

Foreign buyers gone and not coming back. Investors/upgraders approvals are at 5 or 10 year lows. First home buyers are still priced out in anywhere but the urban fringes (which are looking extremely weak). Looming global economic downturn. RBA running out of bullets in the chamber. Rental yield is weak. Where is the upside?

 

You're right. I think it would be less likely that they would leave a mistake up. However, looking at the back data the 13th Aug bump is 5x bigger than anything in the last year. I don't know the calculations but did a large developer settler or something? It just seems bizarre.

 

(A little off-topic)

I'm not usually big on property shows but this one's peaked my interest.

Property-obsessed: Nine and Domain launch new property program