Home Prices – Page 3 – Digital Finance Analytics (DFA) Blog

Kiwis See Average 16% Home Price Falls From Peak, But Hopium Ahead!

In this show we look at the latest property data from New Zealand, from the REINZ and CoreLogic.

The Real Estate Institute of New Zealand (REINZ) released its July 2024 data at the end of August. The national median price decreased by 2.2% year-on-year, from $770,000 to $753,000, and decreased by the same amount month-on-month. For New Zealand, excluding Auckland, the median price decreased 1.5% year-on-year from $680,000 to $670,000. Month-on-month, the median price also decreased by 1.5%.

But here is the REINZ spin. “In July, we saw an increase in sales across the country compared to last year and June 2024. As more listings hit the well-supplied market, buyers are slower to make decisions, extending the average Days to Sell. Despite ongoing economic challenges, early signs suggest potential improvement, indicating favourable conditions in the residential property landscape might be on the horizon,”

The value of New Zealand homes continued declining in August, according to property data company CoreLogic. The median value of NZ dwellings was $811,583 in August, down 0.5% from July. August was the sixth consecutive month the national median value has declined. It’s now down $31,000 since its summer peak in February, and is 16.8% lower than its all time high set in January 2022.

“This all adds up to likely further restraint on property values, although the potential impact of lower mortgage rates can’t be ignored.”

So, as listings rise of course this puts downward pressure on asking prices as prospective purchasers have more choice and negotiating power. The RBNZ rate cut will certainly help the market, especially if further cuts follow. But lower net migration, and the cold winds of recession will continue to haunt the market.

It is certainly worth considering the fate on Australian home prices in the light of what happened in New Zealand, as rate cuts and recession grind the market down. But the one sure thing, true in both markets is that Real Estate Industry Hopium remains fully intact!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Is Property Springing Into Life, Or Catching A Cold?

Whilst data should be immutable, interpretation of said data can be tweaked and turned, to spin a particular story. As we have seen in the press this past week. Take, for example auction clearance results.

The preliminary auction clearance rates for this past weekend in the biggest markets of Sydney and Melbourne came out tracking nationally at 71.4 per cent of homes listed for auction based on CoreLogic data. Sydney’s clearance rate was 74.9 per cent and Melbourne’s 68.7 per cent, more or less in line with the previous week. Among the smaller capitals, Adelaide led the way with a clearance rate at 79.5 per cent, followed by Brisbane at 67.3 per cent and Canberra at 56.5 per cent, according to CoreLogic data. But these are on very low counts, so again not that meaningful.

Domain on the other hand reported a Sydney clearance of 67.8% up from 64.2% last week, and below the 68.7% from a year ago. Melbourne was at 62.4% compared with 59.6% last week, and 61.9% a year back. The national number was 63.5%, a significant divergence from CoreLogic’s higher 71.4%.

There are a few points worth making here. The final numbers tend to settle lower, because agents are always keen to promote successful sales, while those passed in are either never reported, or reported later. Some properties are withdrawn before auction, either because they are sold prior, or because the vendor changes tack. As such auction clearance rates do not tell us much at all.

Of course, the spring selling season is now ramping up, and about 2300 auctions are scheduled in the coming week, compared with around 2,000 this past couple of weeks. And listings are rising as vendors decide to sell or are forced to sell. We will chat about this again on Mondays Rant with Edwin. But we do continue to see a spate of ex-investment properties listing, especially in Melbourne, as I reported recently, and the trend is widening.

The bottom line of course is potential buyers should be careful what they purchase, especially as price growth ahead is not assured, especially if the weaker demand for iron ore puts the economy into recession. And prospective sellers would do well to select their agents carefully, as some are still pushing the auction route, one which does not necessarily guarantee a better net sale price, but which does guarantee more income for agents via their additional marketing and auction fees. Just saying!

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Is Melbourne The Property Problem Child?

You may recall that I often say, there is not one property market but many micro markets that behave in quite different ways. But at the capital city level, Melbourne appears to be in some strife in terms of price falls at the moment.

Overall, it certainly looks like the combined impact of state policy, higher interest rates, and also bad planning decisions, combined with significant interstate migration away from Melbourne, which is offsetting still too high net overseas migration, is translating into property weakness. That said, of course property still remains over expensive relative to income to a stupid amount, while the restriction of international studies this year will weaken demand for rental property, so while the currently rental growth is still 7.8% over the part year according to CoreLogic, it may well begin to weaken ahead, putting more pressure on property investors in the area.

It does indeed look like for now Melbourne is a property problem child, but it also to me highlights the exposure that Perth has given the risks to mining demand from a weaker China. And as the RBA minutes reinforced yesterday, its not likely we will see rate cuts anytime soon.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

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Who Killed The Australian Dream? With Elisa Barwick

In today’s deep dive, Elisa Barwick from the Australian Citizens Party shares her research on why housing has become so expensive, and what can be done about it. But this is not the normal discussion of high migration or currently government policy, rather it sheets the cause to a chapter of history dominated by neo-liberalists, austerity and the rise of technocrats who still now dominate our lives.

Links to Elisa’s research:

https://citizensparty.org.au/sites/default/files/2024-07/neoliberalism-home-ownership.pdf

https://citizensparty.org.au/sites/default/files/2024-05/hijacking-australian-banking.pdf

https://citizensparty.org.au/sites/default/files/2024-04/kennett-austerity.pdf

https://citizensparty.org.au/sites/default/files/2024-01/austerity_series-sm.pdf

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/