Peter 14.7
03-04-2004, 01:00 AM
Hi All
As like many, if not most of us, I watch/read/surf intently to see some sign of where the market is heading. Are we in a bust, plateau, rise even and where is it coming?
Attached is an article from Alan Kohler of the Age which points out very well why it is so hard to get a handle on these things.
http://www.theage.com.au/articles/2004/03/17/1079199290845.html
In short Alan states that determining the market direction is confusing because of old data and confusing and inaccurate reporting. So where is the problem?
It seems there are two broad sources of data on prices and sales: state valuers-general and the real estate agents.
The ABS mines the former while research firms Residex and Australian Property Monitor collect material from the V-Gs and by ringing up agents.
Most of the V-Gs are pretty good: they send out their data about 35 days after each settlement has been filed with them. Victoria, however, waits up to 200 days before sending it in. And do not forget that settlement is between 60 and 120 days after the property is actually sold.
So as you can see even on the best case, property sales are reported four or five months after a transaction, and in Victoria it can be nearly a year.
This is what the article calls "dangerously useless information" but often quoted in TT and other Current Affairs Shows as being "hot off the press". Is this delay why in December we started to hear the market peak was July 2003?
The other source is Residex and APM who also ring the agents and provide more update information in additon to the VG, which is why APM could put out a survey of capital city median prices for the December quarter on February 14 that is entirely at odds with an ABS release of the same data for the same period on March 4 (price moves ranging from 3.2 per cent to 12 per cent versus -1.6 per cent to 9.3 per cent).
So where is the market going?
The articles closes with two different sources of data but perhaps better than most on predicting a bust!
Robin Matters of Mortgage and Estate Realisations, who handles most of the repossession sales for Australian banks, and Ian Graham, who runs the largest mortgage insurer, PMI Australia.
Matters rings at least 20 agents around Australia every day and he sees most of the bank mortgage defaults. He says he has had an influx of defaults in the past three weeks from around the country, although less from Victoria. He says he has some concerns about inner Sydney apartments, but has not seen any distressed selling in that sector in Melbourne yet.
Matters is worried about the Melbourne rental market but senses a lot of pent-up demand, especially outside Sydney and Melbourne, to the point where he reckons that if there is no further rate rise, the market will kick up again.
Graham says unemployment is still too low for there to be any major problems with defaults, and thus with distressed selling and claims on mortgage insurance.
Another kick up? Graham doubts that very much, but from where he sits, the market is not even close to a major turning point. Apartment investors still have a lot of equity in their homes and for the moment, at least, most believe it is better to accept a low rental than to sell.
Both hedge these comments by stating markets can unravel unexpectedly and quickly. It might be happening right now. We'll find out in a few months, after it is too late. :(
Regards, Peter 147
As like many, if not most of us, I watch/read/surf intently to see some sign of where the market is heading. Are we in a bust, plateau, rise even and where is it coming?
Attached is an article from Alan Kohler of the Age which points out very well why it is so hard to get a handle on these things.
http://www.theage.com.au/articles/2004/03/17/1079199290845.html
In short Alan states that determining the market direction is confusing because of old data and confusing and inaccurate reporting. So where is the problem?
It seems there are two broad sources of data on prices and sales: state valuers-general and the real estate agents.
The ABS mines the former while research firms Residex and Australian Property Monitor collect material from the V-Gs and by ringing up agents.
Most of the V-Gs are pretty good: they send out their data about 35 days after each settlement has been filed with them. Victoria, however, waits up to 200 days before sending it in. And do not forget that settlement is between 60 and 120 days after the property is actually sold.
So as you can see even on the best case, property sales are reported four or five months after a transaction, and in Victoria it can be nearly a year.
This is what the article calls "dangerously useless information" but often quoted in TT and other Current Affairs Shows as being "hot off the press". Is this delay why in December we started to hear the market peak was July 2003?
The other source is Residex and APM who also ring the agents and provide more update information in additon to the VG, which is why APM could put out a survey of capital city median prices for the December quarter on February 14 that is entirely at odds with an ABS release of the same data for the same period on March 4 (price moves ranging from 3.2 per cent to 12 per cent versus -1.6 per cent to 9.3 per cent).
So where is the market going?
The articles closes with two different sources of data but perhaps better than most on predicting a bust!
Robin Matters of Mortgage and Estate Realisations, who handles most of the repossession sales for Australian banks, and Ian Graham, who runs the largest mortgage insurer, PMI Australia.
Matters rings at least 20 agents around Australia every day and he sees most of the bank mortgage defaults. He says he has had an influx of defaults in the past three weeks from around the country, although less from Victoria. He says he has some concerns about inner Sydney apartments, but has not seen any distressed selling in that sector in Melbourne yet.
Matters is worried about the Melbourne rental market but senses a lot of pent-up demand, especially outside Sydney and Melbourne, to the point where he reckons that if there is no further rate rise, the market will kick up again.
Graham says unemployment is still too low for there to be any major problems with defaults, and thus with distressed selling and claims on mortgage insurance.
Another kick up? Graham doubts that very much, but from where he sits, the market is not even close to a major turning point. Apartment investors still have a lot of equity in their homes and for the moment, at least, most believe it is better to accept a low rental than to sell.
Both hedge these comments by stating markets can unravel unexpectedly and quickly. It might be happening right now. We'll find out in a few months, after it is too late. :(
Regards, Peter 147