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RP Data November 2013 Report: House price rise slows to a crawl; It looks like we may have hit peak growth. Capital city values grew only 0.1% in November.
Topic Started: 2 Dec 2013, 02:23 PM (1,163 Views)
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House price rise slows to a crawl

December 2, 2013 - 2:09PM
Chris Vedelago

The strong run for Australia’s housing market may be beginning to wane as the growth in dwelling values slows to a rate not seen in half a year.

The easing could be good news for first-home buyers and middle-income families that have been hard pressed to get into a market where house values have risen 8.4 per cent and units by 8.2 per cent so far this year.

RP Data-Rismark reports that capital city values grew only 0.1 per cent in November after posting a rise of more than 1 per cent each month for the last six months (except August which was 0.5 per cent).

‘‘It looks like we may have hit peak growth. If you look at the last two growth cycles in 2007 and 2009, they peaked around 18 or 19 months in. We’re now at 19 months in this latest phase and growth is starting to flatten,’’ said RP Data research analyst Cameron Kusher.

‘‘Obviously interest rates are still low and there will still be some capital growth in the market but we don’t think it will be as strong as it has been over the last few months.’’

RP Data-Rismark found the Melbourne market fell back by a notable 2.1 per cent in November. Brisbane failed to show any movement and values fell by 0.5 per cent in Hobart and 1.3 per cent in Canberra.

Rises of 0.9 per cent were recorded in Sydney, Adelaide was up 1.2 per cent, Darwin by 2.8 per cent, and Perth by 2.9 per cent.

But analyst Louis Christopher of SQM Research disputed the call that the market has peaked based on a single month’s data.

Read more: http://www.smh.com.au/business/the-economy/house-price-rise-slows-to-a-crawl-20131202-2yl0t.html
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RP-Data Rismark property index shows capital city house prices edged up by 0.1 per cent in November

By business reporter Michael Janda
Posted 4 hours 14 minutes ago

After months of exceptionally strong gains in several cities, capital city home prices lost some momentum in November.

The average across the eight capital cities was a monthly gain of 0.1 per cent, capping off a large 3 per cent rise over spring, and an 8 per cent increase over the past year.

Perth and Darwin were the two strongest markets last month, with increases of 2.9 and 2.8 per cent respectively.

However, a 2.1 per cent fall in Melbourne prices during November dragged on the average national result, while Sydney's 0.9 per cent growth was down on recent rises.

RP Data's Cameron Kusher says there are signs that home prices are losing some of their momentum.

"Maybe some of that heat that we've been seeing in the market has now cooled a little bit, and we've probably passed now what would've been the peak growth conditions, particularly across the Sydney and Melbourne housing markets," he said.

However, Sydney remained by far the hottest market over the spring selling season, with a 5.8 per cent gain over the three months to November.

That backs up steep price rises in winter, leaving Sydney home values 12.5 per cent above where they were a year ago.

Perth and Melbourne also had significant year-on-year gains of 8.9 and 6.6 per cent, but most other markets showed only modest rises and prices fell 1.4 per cent in Hobart over the past year.

Tasmanian prices to continue struggling

Cameron Kusher says Tasmania's property market is likely to keep struggling.

"We're not seeing really strong levels of interstate migration, and that really fuelled that market back in the early 2000s," he observed.

"Plus we've got a higher unemployment rate in Tasmania, lower levels of economic growth ... and there's not a lot of big business located down in Hobart or in Tasmania for that matter.

"So, although those prices do look very affordable, there's not a lot of drivers that are going to see a turnaround in that housing market at the moment."

Hobart prices are now 15.6 per cent below their previous peak, with Brisbane 8.4 per cent lower, Darwin off 7 per cent, Canberra down 3.5 per cent, Melbourne 2.8 per cent and Adelaide 2.7 per cent.

Only Perth (2.3 per cent) and Sydney (10.1 per cent) have risen above previous highs, although the price surge in Australia's largest city has lifted the average capital city price 2.1 per cent above its previous record.

As for the outlook, Mr Kusher expects continued moderate price growth in most markets in the low interest rate environment, and he predicts that units will outperform houses.

"Markets like Sydney, Melbourne, Brisbane, Canberra and Darwin, more than 50 per cent of all dwelling approvals over the last 12 months were for units," he said.

"So we're going to continue to see that densification of the inner city, and I think you might actually start to see over the next 12 months the capital growth performance for units starting to outpace houses."

Read more: http://www.abc.net.au/news/2013-12-02/house-prices-rises-lose-momentum/5128538
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Mike
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Well you have to expect the market will move in fits and burst of activity followed by a pause or lull then a repeat of the cycle. A lot of it has to do with data catching up with the indices and contracts being completed.

I have seen little slow down in Sydney's clearance rate but perhaps the price growth has not followed in the last month. Sydney has grown quickly over the past 4-5 months. Melbourne had a small pull back but I think that was expected due to its large amount of stock on market although decreasing.

A lot of buyers may also be saying the price rises are to quick for them and wait a few months till the new year but I expect to see a similar trend to the last 6 months at least until deep into 2014.

The market wont really take a deep breath until we get hit with interest rate rises, and you will need more then one. That will take a little heat out of the market when it happens, if it happens. A lot depends on events in the US & China.
http://mike-globaleconomy.blogspot.com.au/
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John Frum
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Mike
2 Dec 2013, 06:57 PM
Well you have to expect the market will move in fits and burst of activity followed by a pause or lull then a repeat of the cycle. A lot of it has to do with data catching up with the indices and contracts being completed.

I have seen little slow down in Sydney's clearance rate but perhaps the price growth has not followed in the last month. Sydney has grown quickly over the past 4-5 months. Melbourne had a small pull back but I think that was expected due to its large amount of stock on market although decreasing.

A lot of buyers may also be saying the price rises are to quick for them and wait a few months till the new year but I expect to see a similar trend to the last 6 months at least until deep into 2014.

The market wont really take a deep breath until we get hit with interest rate rises, and you will need more then one. That will take a little heat out of the market when it happens, if it happens. A lot depends on events in the US & China.
Mike, your skill at discharging bursts of meaningless waffle masquerading as detailed analysis is nonpareil for APF.
Have you ever considered a career in TV punditry?
"It were not best that we should all think alike; it is difference of opinion that makes horse races." - Mark Twain on why he avoids discussing house prices over at MacroBusiness.
"Buy land, they're not making any more of it." - Georgist Land Tax proponent Mark Twain laughing in his grave at humourless idiots like skamy that continually use this quip to justify housing bubbles.
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zaph
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Mike
2 Dec 2013, 06:57 PM
Well you have to expect the market will move in fits and burst of activity followed by a pause or lull then a repeat of the cycle. A lot of it has to do with data catching up with the indices and contracts being completed.

I have seen little slow down in Sydney's clearance rate but perhaps the price growth has not followed in the last month. Sydney has grown quickly over the past 4-5 months. Melbourne had a small pull back but I think that was expected due to its large amount of stock on market although decreasing.

A lot of buyers may also be saying the price rises are to quick for them and wait a few months till the new year but I expect to see a similar trend to the last 6 months at least until deep into 2014.

The market wont really take a deep breath until we get hit with interest rate rises, and you will need more then one. That will take a little heat out of the market when it happens, if it happens. A lot depends on events in the US & China.
Beak beak beak!!!!!!!!!!!!
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themoops
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Sif read Mike's bland crap.
stinkbug omosessuale


Frank Castle is a liar and a criminal. He will often deliberately take people out of context and use straw man arguments.
Frank finally and unintentionally gives it up and admits he got where he is, primarily via dumb luck!
See here
Property will be 50-70% off by 2016.
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stinkbug
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themoops
2 Dec 2013, 07:56 PM
Sif read Mike's bland crap.
Who's Sif?
---------------------------------------------------------------

While it's true that those who win never quit, and those who quit never win, those who never win and never quit are idiots.

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Count du Monet
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Business lending will suck funds away from house lending. That's why house prices general will be still much the same by the end of the decade. As Business lending increases you'll see general house prices fall from their present levels.

If conditions warrant it Business lending is preferred because it is more profitable. House lending is considered more reliable but it is less profitable.

Onwards with the decade of no capital growth in general house prices as business recovers! :D
The next trick of our glorious banks will be to charge us a fee for using net bank!!!
You are no longer customer, you are property!!!

Don't be SAUCY with me Bernaisse
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Dr Watson
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Count du Monet
2 Dec 2013, 08:40 PM
Onwards with the decade of no capital growth in general house prices as business recovers! :D
Your prediction about the lack of capital growth might well be right Count, but the problem I see is that land sizes will continue shrinking and commute times will continue increasing. A median dwelling in Melbourne might cost you around $620,000 today and it theoretically could still cost you $620,000 in a decade. But what you'll get for that $620,000 in ten years will most likely be smaller and further from the city centre than today.

I really can't see us ever going back to the days of 20% p.a. capital growth because people are tapped out.

But it wouldn't surprise me if the median value stays where it is while it buys you less.
Edited by Dr Watson, 2 Dec 2013, 09:12 PM.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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One stat shows a market peak, but should we believe it?

By Terry Ryder
Thursday, 05 December 2013

Back in May some media outlets were telling us that the property boom was over.

After dwelling prices had recorded “the biggest rise in three years” in the March quarter (a 2.8% quarterly rise, as an average across the eight capital cities), data published in May was interpreted as the end of the alleged boom almost before it had started.

The limelight seekers at RP Data, who tend to sacrifice credibility at the altar of cheap publicity, had published (on May 1) their analysis of what happened to prices in April, apparently forgetting that it would take months before a full set of data was available to make an accurate call.

These (very) preliminary figures spat out of a careless computer found that prices fell 0.5% in April. This led multiple newspapers to declare the market recovery to be over.

It was, of course, a statistical aberration and prices, on average, continued to rise in subsequent months. The same media outlets were pretty soon shouting about “white hot” markets creating that most dreaded of property phenomena, the bubble.

That experience should have been a timely lesson that one month’s figures from one source are meaningless, particularly when there are numerous other research outlets with different figures.

But, no, we are back in the same territory again. The same rubbery figures factory reports price stagnation in November. Media, aided and abetted by RP Data mouthpieces, has declared the peak of the market.

Louis Christopher of SQM Research has disputed the validity of the figures. He says it’s wrong to claim that the market has peaked based on a single month’s figures. He’s right of course and anyone with any experience with real estate research would agree.

Privately, the boffins at RP Data would probably agree too. If they don’t, they need to find a new profession. But the objective is today’s headlines, not genuine analysis.

But hang on. If you dig down deeper in the dodgy data, prices allegedly rose 2.8% in November in Darwin, 1.2% in Adelaide and 2.9% in Perth. Sydney showed monthly growth of a tick under 1%, which, in annual terms, is still a strong growth rate.

Only Canberra and Melbourne showed significant falls.

So the basis for declaring the peak of this market cycle is flimsy indeed.

If you chose to place any credibility on these figures, which I don’t, you would interpret them as depicting markets still growing strongly in Sydney, Perth, Darwin and Adelaide.

So this so-called research fails on two major points. It treats Australia as one property market and declares that “dwelling values increased 0.1% in November”, ignoring regional differences, which show that most of our major markets are still rising strongly. And it places undue significance on a single month’s figure from a single data source.

And when you look at the figures from the same source for the three months to November, they actually show capital city homes values (again treated as one market) rising at their fastest pace in three years.

The end result of this shameless lust for publicity is misinformation and confusion for property consumers.

Read more: http://www.propertyobserver.com.au/residential/one-stat-shows-a-market-peak-but-should-we-believe-it/2013120466793
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