Did the house price 'crash' start in April?

Fri, 12 Jun 2015  |  

The absolutely fabulous Corelogic house price series is showing falls in house prices. To be sure, the falls are from a staggeringly high base, but compared with the peak in the series in late April, house prices are down 1.9 per cent. What is interesting is where the price falls have been concentrated.

While each capital city had a different point for the recent price peak:

  • Melbourne prices are now down a not insignificant 4.0 per cent since April.
  • Sydney prices have eased by 2.2 per cent since the early May high.
  • Perth prices are 2.6 per cent down from their December 2014 peak.
  • Brisbane prices are off a more moderate 0.7 per cent while Adelaide prices, well here’s a shock, have reached a new high, having generally lagged the boom cities for the last few years.

It would be wrong to be excited about a modest drop in house prices for a couple of months after such a strong and unrelenting rise in recent years. But the Corelogic data is telling me that the house price boom is almost certainly over. The debate will soon start to shift about what sort of price drop we are likely to see.

comments powered by Disqus

THE LATEST FROM THE KOUK

Why Australians have lost $300 Billion this year

Mon, 22 Oct 2018

This article first appeared on the Yahoo 7 website at this link: https://au.finance.yahoo.com/news/3665708-004156966.html 

--------------------------------------- 

Why Australians have lost $300 Billion this year

The total wealth of Australians has dropped by close to $300 billion since the start of 2018.

How much of that is yours?

The fall in house prices and now the slump in the stock market is undermining the wealth of Australian householders.

This is an important trend given the solid link between the change in wealth and household spending. Numerous studies show that when wealth increases, growth in household spending is faster than it would otherwise be. It appears that householders view their extra wealth in a manner that sees them lower their other savings or use that wealth as collateral for additional borrowing fund extra consumption. They may even ‘cash in’ their extra wealth and use those gains to fund additional spending.

When they observe falling wealth, experience weak wages growth and realise their savings rates are perilously low, they will adjust their spending – down.

Labor almost home, not quite hosed

Mon, 22 Oct 2018

The extraordinary vote in the Wentworth by election, with the 18 or 19 per cent swing against the Liberal Party, presents further evidence that the Morrison government is set to lose the next general election.

There is nothing particularly new in this with the major nation-wide polls showing the Liberal Party a hefty 6 to 10 points behind Labor.

The election is unlikely to be held before May 2019, which is a long 7 months away. A lot can happen in that time but for the Liberal Party to get competitive, but for this to happen there needs to be a run of extraordinary developments.

In the aftermath of the Wentworth by election, the betting markets saw Labor’s odds shorten.

While the odds vary from betting agency to betting agency, the best available odds at the time of writing was $1.25 for Labor and $4.00 for the Coalition.

If, as most now seem to suggest, Labor is ‘across the line’, $1.25 is a great 25 per cent, tax free return for 7 months ‘investment’. Yet, punters are not quite so sure and seem to be holding off the big bets just in case something out of the ordinary happens.

While some segments of the economy look quite good, at least on face value – note the unemployment rate and GDP – others that probably matter more to voters – husong, share prices, wages and other high-frewquency cost of living issues are all looking rather parlous. And none of these are likely to change soon.

There is an old saying for punters – odds on, look on. But $1.25 for Labor seem great value.