Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
This is an edited version of my live discussion about the latest from our surveys, as we look at mortgage, rental, investor and financial stress across the country, down to a post code level.
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Interesting to see the momentum now turning to discussion of whether the Government intends to tackle negative gearing having U-turned on the tax cuts.
As The Conversation put it, there are two things the prime minister needs to get into his head about tax. One is that saying he won’t make any further changes no longer works. The other is that negative gearing doesn’t do much to get people into homes.
Australia’s Treasury has begun publishing estimates of the cost of the present unfocused system of negative gearing. Its latest, released last week, puts the cost at $2.7 billion per year, to which should probably be added a chunk of the $19 billion per year lost as a result of the capital gains concession.
Albanese is normally cautious. But as he is showing us right now with his rejigged Stage 3 tax cuts, there are times when he is not. If he really wants to throw everything he has got at building more homes, he knows what to do.
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Today’s post is brought to you by Ribbon Property Consultants.
More from our Property Insider, Edwin Almeida as we look at the low listings, and rentals, and the reasons why markets are not behaving as some (who should know better) said they would.
Edwin referred to this post: https://www.tiktok.com/@shallowchal/video/7326805682114645255
We also look at trends in Western Australia, as well as our normal East Coast analysis.
Things, as they say are getting interesting…
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Today’s post is brought to you by Ribbon Property Consultants.
We got the latest on New Zealand Property for December 2023 from the Real Estate Institute of New Zealand.
I love how they spin the release, saying that the December 2023 figures show a notable increase in sales activity, median prices lifting, lower days to sell, and a clear sense of more confidence overall (year-on-year).
This is despite the fact that actually New Zealand house prices edged lower in December, down around 0.3% mom on a seasonally adjusted basis,
though trends diverged across the country, ranging from a 1.9% mom fall in Northland to a 4.2% lift in Tasman.
The national average was weighed down by a 0.9% mom price fall in Auckland. Among other big regions, Wellington prices lifted 0.6%, while prices in Canterbury eased 0.1%.
ASB’s commentary on the REINZ figures are helpful here. They say the NZ housing market has struggled to establish a clear direction since the last housing market correction came to an end in around March/April last year. Monthly price movements have usually been modest in either direction, with the market oscillating between small lifts and even slighter falls over most of the year (see our chart above for the contrast between 2021’s large price rises and 2022’s decent falls with 2023’s more meagre movements).
All-up, prices managed a bounce of only about 1.2% over H2 of last year.
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I get very tired of the high-level reporting of home prices, because as you know I believe we have many discrete markets, which are behaving very differently across locations, states and types of property. Averages mask.
But in some areas, prices are indeed continuing to drop. And drop fast.
For example, in my old stomping ground, Thirroul, median house values rose significantly from 2019, peaked in 2021 at over 2 million dollars, that’s double their 2019 levels, then fell away to a new trough of $1.68 million in March 2023, before rising a little, but then moved down to around $1.78 million. And Units in the same area are still descending and on average are just now over $1m.
Similar patterns are showing up elsewhere.
Last year I did a number of “antispruik” shows where we did deep dives at a post code level and looked at how vendors were cutting their asking prices to get a sale.
And actually, as the AFR reported home values in 27 coastal towns have plummeted by more than $200,000 from their pandemic highs two years ago, while 56 towns lost more than $100,000, analysis by CoreLogic shows.
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Today’s post is brought to you by Ribbon Property Consultants.
Wishing all our followers and supporters a happy 2024. We will be back with daily shows on finance and property, and we briefly touch on some of the items on our new year agenda.
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In this show, we examine the main reasons why it is likely property prices will fall next year – this is a counterpoint to my earlier show which went through the Five reasons why they will rise – as trotted out by the property spruikers.
In summary, the risks from higher unemployment or a recession, the exit of property investors, higher delinquency and defaults, higher mortgage rates for longer, and dire housing affordability are all reasons why prices could fall in 2024.
And let’s be clear, the great Australian dream of owning a home is now totally out of reach, and many who were pulled into the market in recent years are in strife, to the point where rental costs have gone though the roof, and tent cities are becoming a thing. The very soul of Australia is decaying, unfortunately, that is unless you are fortunate enough to have family wealth or an existing property portfolio, which could now potentially fall in value.
Of course, the actual trajectory of home prices will vary across states, locations and types of property, and averages mask important differences. Which is why in our modelling we go granular – to a post code level, and also consider various scenarios based of the relative weightings of the positive drivers to prices we discussed yesterday, and the downward drivers we looked at today. So the answer is: it depends.
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Today’s post is brought to you by Ribbon Property Consultants.
In this show, I will explore 5 reasons why home prices in Australia could rise in 2024.
If you take, low supply, high demand, easing lending, Government support and RBA/APRA stability concerns, the potential for home prices, especially houses to rise in 2024 seems pretty strong.
But in my next show, I will look at the arguments on the other side of the coin, because as you may have guessed, there are also a series of coherent arguments as to why prices might go sideways or fall!
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Today’s post is brought to you by Ribbon Property Consultants.
Despite the recent recessionary news from New Zealand, low consumer confidence and high interest rates with floating rates around 8.63%, the latest ASB Housing Confidence survey shows that “for the first time in eighteen months, more New Zealanders expect house prices to increase than decrease”. Aucklanders continue to be the most bullish in their house price expectations with a net 39% anticipating prices will rise.
They say more bullish housing market sentiment is very much a New Zealand-wide story. All of the regions we survey are anticipating prices will rise by a net margin of 30-40%. While the housing demand/supply balance varies from region to region, other factors are likely to be driving prices higher – the likelihood mortgage rates are close to peaking and the prospect of a more stimulatory government policy regime – are national in scope.
They conclude, “With recent data generally showing prices no longer falling, Kiwis tend to think the housing market has reached a turning point” Despite this, There’s been little change in the net balance of Kiwis who think now is a good time to buy a house, with that figure unchanged at 6%. Still, that’s a far cry from the mood of the market over much of last year, where by a 20-30% margin, respondents felt it was a bad time to buy.
But the key to this expectation is the high migration flows.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
The prospect of another interest rate rise on Melbourne Cup day has shaken buyers’ confidence, sending auction clearance rates to their lowest level in seven months, data from CoreLogic shows.
Preliminary results show 68.5 per cent of the reported auctions across the combined capital cities were successful, which is 2.3 percentage points lower than the previous week and weaker than the average for this time of the year.
It comes as the number of homes taken to auction soared to 3383, which is the largest volume since the week before Easter last year.
Tim Lawless, CoreLogic research director, said such a large number of auctions was always going to test the depth of buyer demand. “Basically, it has not passed the test as shown by the lower clearance rates, which lines up with renewed speculation that interest rates are about to go higher once again,” he said.
And as reported in the AFR, a build-up in home listings and worsening affordability slashed the rate of house price growth by a third to 1.9 per cent across the combined capital cities during the September quarter, a new report from Domain shows.
Nicola Powell, Domain’s chief of research and economics, said the pace of price increases would moderate further amid rising supply, but the prospect of another interest rate increase was unlikely to halt the broader upswing and reverse the earlier gains. We will see!
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Go to the Walk The World Universe at https://walktheworld.com.au/
