Another dose of charts and common sense from Tarric Brooker, as we look at the latest data and explore the implications for Australians on Australia Day. Houses and Holes, mate, Houses and Holes!
See the charts here: https://avidcom.substack.com/p/dfa-chart-pack-26th-january-2024
And Tarric’s article on the Houthi Strikes, The Closure Of The Gate Of Grief And The Sea Of Economic Consequences https://avidcom.substack.com/p/houthi-strikes-the-closure-of-the
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Its Our Australia Day Special: With Tarric Brooker!
Our latest review of the latest property market, as the new year gets into gear. According to the WeeChats, “buy now”, but on the other hand, listings in Melbourne continues to build.
But things are not that straight forward. Perhaps we should review “Three Monkeys And An Elephant”, to misquote two parables…
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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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The NSW government has already announced plans last month to build more than 200,000 homes and focus on higher density living by building up, not out. But now NSW Premier Chris Minns says the state will not meet its housing target, but is doing its best to boost supply.
The plan includes 138,000 new homes at rezoned sites in 31 suburbs, and 47,800 homes near eight major transport hubs, with the latter to be completed over the next 15 years.
Those suburbs include Bankstown, Bays West, Bella Vista, Crows Nest, Homebush, Hornsby, Kellyville and Macquarie Park.
The government will offer developers in those zones a fast-tracked approvals process, called a state significant development, to ensure apartments are built quickly.
It will be offered to developments over $60 million, and construction must start within two years of approval.
The government also intends to relocate Rosehill Racecourse and replace it with 25,000 homes as part of the plan.
But Housing industry insiders say they are not surprised by the NSW premier’s admission that the state will not meet its housing targets agreed to just last year.
The target, which was set out by the federal government in August, would see an average of 75,000 new dwellings a year over the next five years. It is part of a broader plan to build 1.2 million homes across Australia during that period.
Premier Chris Minns said the government would fall short of the goal but was working on building as many houses and units as possible to alleviate housing shortages and skyrocketing costs.
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Stupid Promises Collide With Reality As Housing Targets Won’t Be Met!
Once again, another horrifying sage of dumped asbestos turning up in the wrong place, with potentially fatal consequences.
As the Guardian reported, Asbestos has been found in additional samples of garden mulch taken from the Rozelle parklands in Sydney’s inner west, with the state government still unable to say where else in the city the contaminated material may have been used.
After an initial find, an urgent audit was under way to determine what other sites could be affected by what the premier, Chris Minns, described as “a toxic substance”. The government closed the Rozelle parklands to the public and called in contamination experts just three weeks after the park opened above the interchange.
The nearly 10 hectares of green space includes extensive cycleways and green expanses alongside large exhaust stacks for the tunnels below. The parkland was meant to appease inner west residents who had put up with years of tunnelling noises and road closures during the construction of the Rozelle interchange.
The premier said the government needed to know where potentially contaminated mulch had been used “as soon as possible” so it could close the other sites.
“I realise that is massively inconvenient during the school holidays … but we can’t muck around with safety – this is obviously a toxic substance,” Minns said.
John Holland built the interchange and the park. One of its executives, Mark Davies, said he could not immediately disclose a list of the other sites where the mulch had been used.
Over 97% of the asbestos products used in Australia was non-friable material in which the asbestos fibres were bonded by cement, vinyl, resin or other similar material. This form of asbestos product/material is often cited as quite safe unless damaged, sawn, drilled, sanded, crushed or is excessively weathered; But if any of these occur, then non-friable hard bonded asbestos products may release fibres and become friable.
In other words, bonded asbestos is not safe. Corrugated asbestos sheet roofing often shows signs of weathering. When it’s broken into smaller fragments, fibres are released. So Non-friable (bonded) asbestos has the potential to become equally as dangerous as friable asbestos, a distinction should never be made because of the type, colour or form of asbestos – all types, colours and forms of asbestos have the potential to kill people!
My first Friday chat with Tarric Brooker, Journalist and Chart-Meister.
Will recent developments force a replay of the recent inflation crisis and keep rates higher for longer. If so, what are the potential implications politically and economically?
His charts are here: https://avidcom.substack.com/p/dfa-chart-pack-12th-january-2024
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It’s All Happening - Again! With Tarric Brooker...
Following my post about Household Financial Stress https://youtu.be/G1T72rUFlgA and the upcoming live show tomorrow, I received many requests for postcode level analysis. So I made an extra show here to cover some of the requests.
Post Codes Covered (In Order) In This Show: 3912 4868 2560 4670 2487 6149 3842 3799 6072 4178 2042 4215 3690 2640 6030 2137 4670 3174 3012
Join us tomorrow on the live show for more. https://youtube.com/live/nXhfjacOnA0
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Household Stress: You Asked, We Answered! [Postcode Analysis]
Another deep dive into the dynamics of property with our insider Edwin Almeida. How are the new listings tracking, and how does this compare with the MSM stories we are seeing? Will new construction volumes remain in the doldrums?
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Today’s post is brought to you by Ribbon Property Consultants.
CoreLogic reported that their national Home Value Index (HVI) rose 8.1% in 2023, a significant turnaround from the 4.9% drop seen in 2022, but well below the 24.5% surge recorded in 2021. December’s 0.4% increase saw 2023 finish with a relatively soft monthly rise in home values.
Despite the annual 8.1% increase, the year was punctuated by diversity , with the annual change in housing values ranging from a 15.2% surge in Perth to a 1.6% fall across regional Victoria.
So now of course, the question is what will happen in 2024. Last week I made two shows for the channel, one on the top 5 elements supporting home price growth in 2024 and the other on the top five elements which could drive prices lower.
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. On the other hand, 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.
To make an assessment of what will play out, you then have to do is to weigh the relative influence of each of these forces, against an unstable local and global economic environment.
This is something we model dynamically, in our Core Market Model, which incorporates all these elements and delivers scenarios at a post code level for houses and units.
In comparison, the AFR published estimates from a panel of 10 property market experts and economists. Overall, they take a more sober view on growth prospects for the housing market, with most tipping gains of somewhere between 1 and 5 per cent. The most optimistic prediction is for house price gains of up to 8 per cent, while the most bearish forecast is for prices to fall nationally by as much 5 per cent.
Last year’s “very unusual supply and demand dynamics” are expected to normalise in 2024, according to Barrenjoey chief economist Jo Masters, who is tipping 4.8 per cent growth nationally. Sydney house prices could rise by 3.8 per cent, with Melbourne up 3.2 per cent and Brisbane 5.9 per cent.
“Importantly, we think borrowing capacity will re-emerge as a key constraint on demand,” she told AFR Weekend in a quarterly property survey.
Trying to pin the tail on the property price donkey, is fraught with difficulty, because of the uncertainty in the system – one reason why I run scenarios, and why the specific tale you prefer will influence your expectation of price movements.
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Pin The Tale (Yes, I Do Mean Tale), On The Home Price Donkey…
