cobran20

6416.0 - House Price Indexes: Eight Capital Cities, Sep 2010

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SEPTEMBER KEY POINTS

ESTABLISHED HOUSE PRICES

Quarterly Changes

  • <LI type=square>Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities increased 0.1% in the September quarter 2010.
  • The capital city indexes increased in Melbourne (+2.7%), Perth (+0.4%) and Darwin (+0.3%), and decreased in Sydney (-0.9%), Brisbane (-2.1%), Adelaide (-1.4%), Hobart (-1.4%) and Canberra (-0.4%).

Annual Changes (September quarter 2009 to September quarter 2010)

  • <LI type=square>Preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities increased 11.5% in the year to September quarter 2010.
  • Annually, house prices rose in Melbourne (+18.8%), Sydney (+11.0%), Canberra (+11.0%), Darwin (+9.8%), Perth (+9.4%), Adelaide (+6.3%), Hobart (+4.2%) and Brisbane (+3.0%).

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I wonder how much demand was pulled forward by the combined effect of record low interest rates with record high grants-a-plenty programs?

I've noticed the media spruik this week turned its attention to units.

No more new money. Endgame.

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I wonder how much demand was pulled forward by the combined effect of record low interest rates with record high grants-a-plenty programs?

I've noticed the media spruik this week turned its attention to units.

No more new money. Endgame.

More stimulus please its not a free market

http://news.smh.com.au/breaking-news-business/no-stimulus-weighing-on-house-prices-20101101-179pc.html

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No correllation with the RPdata.

eg did Perth fall 5% in the Q (RP) or rise 0.4% (ABS)?

there's some good news in there for the folks from sydney and canberra - their first negative growth figures from any data provider.

i believe rpd use rea reported data and abs uses govt stats. perhaps there's just some lag.

city. rpdata. abs

sydney 0.8 -0.9

melbourne 1.0 2.7

brisbane -1.6 -2.1

adelaide -.04 -1.4

perth -4.3 0.4

hobart na -1.4

darwin 0 0.3

canberra 1.8 -0.4

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The revisions are interesting:

the March quarter 2010 was revised from a second estimate of +4.2% to a final estimate of +3.4%.

year to March quarter 2010 was revised from an estimated increase of 19.7% to an increase of 18.8%

the weighted average of the eight capital cities increased by 2.0% in the June quarter 2010. This was revised from a preliminary estimated increase of 3.1%. The through the year movement has been revised from an estimated increase of 18.4% to an estimated increase of 16.3%

The Boost inspired bubble-on-a-bubble becomes less pronounced with time.

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With the government sitting at $1 Trillion guaranteeing deposits and related Bank funding I'd suggest they consider a Real Estate Investment guarantee... ;)

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How SMH spun it.

And, best name for an economist ever?

Shortage keeps prices up

“It suggests the housing market has come off the boil,” said St George chief economist Justin Smirk. “House prices are tracking sideways and perhaps softening a little bit.

“House prices really haven’t gone anywhere, affordability is stretched and if that was the only issue, house prices would probably fall right now,” said Mr Smirk.

But the shortage of supply balanced against the weaker outlook for housing was holding prices steady, he said.

Mr Smirk noted that ABS data tended to lag the private measures such as RP Data, he said.

Edited by booboo

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And, best name for an economist ever?

Definitely best name ever.

I wonder about the stagnation theory though. I would dearly love for it to happen but the figures for negative gearing indicate there are a lot of investors out there. If rents don't get them to break even point and the cap gains stop then it seems likely there will be drops.

All I can hope is that the governments dedication to propping up the market inadvertently causes stagnation.

Shortages are fine and well to argue but they seem to be demand driven more than necessity driven and so become a fairly meaningless concept (to me, I realise others consider them important for other reasons).

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Definitely best name ever.

I wonder about the stagnation theory though. I would dearly love for it to happen but the figures for negative gearing indicate there are a lot of investors out there. If rents don't get them to break even point and the cap gains stop then it seems likely there will be drops.

All I can hope is that the governments dedication to propping up the market inadvertently causes stagnation.

Shortages are fine and well to argue but they seem to be demand driven more than necessity driven and so become a fairly meaningless concept (to me, I realise others consider them important for other reasons).

how about stagflation?

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glad to see that, for brisbane anyway, prices were negative for both rpdata and abs stats.

everyone I speak with says that people they speak with say it's "a buyers' market".

well - sitting back and waiting for the bubble to burst (for the last 3 years) has given me some extra savings, but at the same time i've seen houses in the area I want to buy go from $350k to $550.

hopefully they start getting back to some level of normalcy soon...though I am wondering what policy levers gov't policy advisors will tell their ministers pull to keep their own investment properties values high...the reason i say that is i remember laurie oakes (the reporter from ch9) once complaining that canberra journalists were all just a bunch of real estate investors. he said this when lamenting about the children overbaord coverage or something back when johnny "chuck-a-slipper-at-me" howard had either won, or was in the process of winning another election.

i'm thinking the canberra public servants have also become a bunch of amateur real estate investors too - keen to do whatever it takes to keep their property values high...

Edited by tommydafool

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glad to see that, for brisbane anyway, prices were negative for both rpdata and abs stats.

everyone I speak with says that people they speak with say it's "a buyers' market".

well - sitting back and waiting for the bubble to burst (for the last 3 years) has given me some extra savings, but at the same time i've seen houses in the area I want to buy go from $350k to $550.

hopefully they start getting back to some level of normalcy soon...though I am wondering what policy levers gov't policy advisors will tell their ministers pull to keep their own investment properties values high...the reason i say that is i remember laurie oakes (the reporter from ch9) once complaining that canberra journalists were all just a bunch of real estate investors. he said this when lamenting about the children overbaord coverage or something back when johnny "chuck-a-slipper-at-me" howard had either won, or was in the process of winning another election.

i'm thinking the canberra public servants have also become a bunch of amateur real estate investors too - keen to do whatever it takes to keep their property values high...

If I remember correctly your girlfriend was in favour of buying "right now". Has she changed her tune?

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how about stagflation?

Logical steps to it? stagflation has got to be one of those things economists and will avoid at all costs. What would you see as a series of events leading into it?

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The quick reversal of consumer confidence towards Australia’s housing market in recent months has caused a surge of experts trying to dismiss the fact that Australia is in the grips of one of the biggest housing bubbles in the world. The Economist magazine has recently reported Australia has the most expensive housing of the twenty countries it monitors, indicating that residential housing in Australia is as much as 63.2 percent overvalued.

Last week it was Westpac’s turn to join the Commonwealth by telling the world that a bubble in Australia’s housing market is a myth, and that we are different. Both the Westpac and Commonwealth banks have the biggest exposure to residential housing loans in Australia.

Westpac chief economist Bill Evans makes the argument that there is no bubble in Australia, because it would have popped by now given the stress placed on it during the global financial crisis. News Limited writes :

Westpac disputes a housing price bubble is being created, saying this would have been highly unlikely to survive the “stress test” of 2008 when prices fell, investor demand slumped and sentiment towards housing was “intensively negative”.

What Mr Evans fails to realise is the massive support the government provided to the market to ensure the bubble didn’t collapse. With mortgage approvals falling 25% to September 2008 and house prices starting to take a dive (see chart above), the Government stepped in and rescued the housing market from imminent collapse by doubling the first home owners grant as part of a $10.4 billion economic stimulus plan.

This recent fall in demand has been attributed to the winding back of the first home buyers grant and stimulus. Last week the Adelaide Sunday Mail reported :

Real Estate Institute president Michael Brock said governments were achieving a false economy by cutting back grants, a major factor in falling first home buyers.

So it appears now that false economies are no longer created by generous housing grants & incentives, but rather the removal of them. Mr Brock’s comments were contained within an article showing the number of first home buyers in South Australia has dropped to its lowest level since 1998.

Mr Evans from the Westpac last week provided further confidence suggesting “With the population boom continuing and particularly strong growth among key first-home buyer age groups, there is significant upside to future housing demand.” Lets just hope the bank is right, or it could get very messy, very quickly. The bigger the bubble - the bigger the fallout.

http://www.whocrashedtheeconomy.com/

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Real Estate Institute president Michael Brock said governments were achieving a false economy by cutting back grants, a major factor in falling first home buyers.

Dear government, give us some more of that false economy.

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Why does an industry with no real external competition, need so much government subsidy to remain viable?

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Logical steps to it? stagflation has got to be one of those things economists and will avoid at all costs. What would you see as a series of events leading into it?

I think stagflation is one of those things we would not have except for economists, i.e. they create it trying to fight a deflationary low growth period they increase the money supply unnaturally and you end up with a low growth inflationary environment like the 70s. Niall Ferguson suggested governments no longer have the stomach to preside over deflation so will increase the money supply to preside over stagflation in stead. All that said it has done nothing for the Japanese they get deflation and yet I am sure they are trying to avoid it.

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If I remember correctly your girlfriend was in favour of buying "right now". Has she changed her tune?

nope - she went ahead and bought anyway despite me saying wait wait wait...she's not tryin to sell anytime soon so don't think it really affects her...except for the rate rises eating more of her take home pay, and perceived "lack of wealth" from falling home values.

if she'd waited, instead of buying when she did, she'd now be able to get more for her money...but i think a lot of sellers are still holding out hoping for things to turn around.

another mate of mine tried to sell his place at auction and it was passed in below reserve...

the cold wind of excess supply and choking demand is starting to blow.

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Why does an industry with no real external competition, need so much government subsidy to remain viable?

because busy monkeys are happy monkeys, while unemployed broke monkeys tend to riot.

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Why does an industry with no real external competition, need so much government subsidy to remain viable?

Easy. Just look at:

1. the number of politicians who own IPs,

2. the amount of donations political parties receive from vested interests from the RE industry.

They need help to maintain rising prices.

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