Rismark and RP Data house price index results for May - prices up again!

Hi Guys,

Well, that's what they WILL say tomorrow won't they...

We all know prices are on the increase, so I thought I'd post the thread before the media latches onto it tomorrow. Feel free to post the links here when they do appear all over the place.

Just so I don't look like too much of a nutcase, here's some heads up media out today:

Goldilocks housing

Alan Kohler said:

Tomorrow Rismark and RP Data will release their latest monthly house price indexes for May, and the early indications from RP Data’s Tim Lawless and Rismark’s Chris Joye are that they will show another rise.

The first four months of 2009 has already seen 2.8 per cent growth, according to their numbers. The growth, it seems, has continued into a fifth month.

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Alan Kohler said:

If you look at all the various indices, house prices in this country have fallen 4-5 per cent in the year to March and have since started rising again. It’s even possible that the Rismark RP Data numbers tomorrow will show that most, if not all, of the fall has been recovered.

And even a relative economic pessimist like me can see that there is little reason in the short to medium term for house prices to start falling again: thanks to last year’s big interest rate cuts, housing affordability is near a record high (that is, most affordable); population growth is the highest in 40 years; developers are having trouble getting finance, as well as land, so there is a shortage of supply.

Against that, prices at the top end have fallen more than the medians and remain soft, and unemployment is likely to keep rising over the next 12 months at least, which is likely to restrict both finance and housing demand.

So far, so good. But remember: Goldilocks’ mistake was falling asleep in the just-right-bed, having eaten the just-right-porridge.

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Lets hope the RBA doesn't fall asleep and lets prices gain some momentum before they put the brakes on. Somehow I think they will, against the global economic backdrop.

I like that even Alan Kohler, who is a self-admitted pessimist, has come out and conceded that they're unlikely to fall now unless "we fall asleep at the wheel"...

Cheers,
Michael

Yes, this data backs up the Residex stats which also indicate that house prices are rising. So we just need the ABS stats (to be released 4th August) to show similar results and perhaps the gloomers will finally concede that a crash is off the table (for this cycle anyway).

<gloomers slink away muttering something about 'manipulation' of the figures>

Even Alan Kohler has admitted he was wrong about overpriced houses in todays 'eureka report'. Pretty much lists exactly all the bullish points you lot have listed for ages as to why property is not over priced.

See ya's.

topcropper said:

Even Alan Kohler has admitted he was wrong about overpriced houses in todays 'eureka report'. Pretty much lists exactly all the bullish points you lot have listed for ages as to why property is not over priced.

See ya's.

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I'm not going to start gloating yet though. Too much more has yet to play out before this is a bona fide, died-in-the-blood property market recovery. But it certainly is looking better by the month. And you have no idea how much flack Shadow and I and a few others copped over our "perma-bull" attitudes. Ah well, thats the price of conviction I guess...

Here's a one from about a year ago: Its different over here...

Now on with my "money where my mouth is" Mona Vale development!

Cheers,
Michael

RP Data says 4%.... 2008 losses virtually wiped out.

Ausprop said:

RP Data says 4%.... 2008 losses virtually wiped out.

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Yep, here's the first media coverage I spied:

House prices surge 4% in first five months of 2009

Smart Company said:

New housing data shows the value of Australian properties rose 3.9% during the first five months of 2009, nearly wiping out losses incurred during 2008.
The RP Data-Rismark national home value index shows prices increased in May by 0.9% to a median of $468,819, just $520 below their February 2008 peak.

The data also shows that home values increased in every mainland capital city except for Perth, and that housing prices have increased nationally by 1.6% over the 12 months to May 2009.

The index shows prices rose in Sydney by 5.2% to an average price of $529,785 in the five months ending May 2009, Brisbane rose by 2.6% to $432,101 while Melbourne experienced the highest increase of a massive 6.1% to $443,811

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Go Melbourne and go Sydney! 6.1% and 5.2% respectively...

But I am Sydney biased so I have to point out that in absolute terms Sydney still grew by more than Melbourne over the period, but just. In the last 5 months Melbourne went up by $27,072 and Sydney went up by $27,549.

Cheers,
Michael

Nice, I like this one!!

More media just in...

House prices to rise by 12 percent this year

Ninemsn said:

Craig James, chief economist at CommSec, said Australia could rightly claim the title of 'wonder from Down Under' as prices continue to rise.

"It is a simple case of supply and demand," he said. "Demand for homes is being spurred by improved affordability, the fastest population growth in 40 years and weak returns on other assets."

The climb in prices should boost activity in the market, Mr James told ninemsn, helping to push prices between 5 and 8 percent higher from now until the end of the year.

This booster will shield the market from slipping when the first home buyers' grant is wound down in the second half of 2009, Mr James added.

Alex Joiner, an economist at ANZ, also expects to see "modest growth" in property prices this year.

"These results put beyond doubt the fact that the local property market is not headed for the Armageddon scenario foreshadowed by some and that we will not see house prices fall to the precipitous extent that has been seen in many other advanced economies," Dr Joiner added.

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I like that little dig at Steve Keen by Dr Joiner. When is he going to have to climb Mt Kosciuszko?

And its Craig James at Commsec suggesting another 8% on top of the 4% achieved so far this year. 12% total gains in the middle of one of the worlds biggest financial crisis on record would be no small achievement...

Cheers,
Michael

Must be some economists in other countries overseas surprised at what's happening over here. Not only have we been not effected, but looks like we will have increasing house prices as well..!!



I still think it's all a worry though, and I'm not cheering this on like the rest of you lot. I think the stimulous was never designed to cause a boom or even a rise in prices, it was designed to stop prices from dropping. Rising house prices at a time of dropping national income and exports is going to cause some problems down the track.

I'd think some of the people who engineed all this, while cheering it on in front of the media, would be quietly concerned about whats happened.

See ya's.

topcropper said:

I still think it's all a worry though, and I'm not cheering this on like the rest of you lot. I think the stimulous was never designed to cause a boom or even a rise in prices, it was designed to stop prices from dropping. Rising house prices at a time of dropping national income and exports is going to cause some problems down the track.

I'd think some of the people who engineed all this, while cheering it on in front of the media, would be quietly concerned about whats happened.

See ya's.

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I agree with your sentiment TC, I'd definitely be feeling a little nervous in the current environment if our properties were experiencing some of the rises being mentioned around the place eg. 10% in 3 months etc.

Thankfully ours are just holding steady or experiencing continual gradual increases (eg. 5%ish in 7 months), but nothing to write home about. I'm happy with that.

topcropper said:

I still think it's all a worry though, and I'm not cheering this on like the rest of you lot. I think the stimulous was never designed to cause a boom or even a rise in prices, it was designed to stop prices from dropping. Rising house prices at a time of dropping national income and exports is going to cause some problems down the track.

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I think they would ideally like stable prices that will effectively be eroded in real terms over time. the only people that win from rising house prices are house owners. whilst it is great to refi your house for that alaskan holiday it is a drag on the economy. Still if prices rise I guess that opens the doors for hikes in property taxes - beats income tax rises

topcropper said:

I'd think some of the people who engineed all this, while cheering it on in front of the media, would be quietly concerned about whats happened.

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Depends on whether you are a conspiracy theorist or not.

If you are not, then the guys pulling the levers on the economy train have no idea what they're doing and just lurch from one crisis to the next without giving thought to flow on effects.

If you are, then they are doing this to protect their cronies in the Banks from damaging falls in asset values.

steveadl said:

....I'd definitely be feeling a little nervous in the current environment if our properties were experiencing some of the rises being mentioned around the place eg. 10% in 3 months etc.

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Yeah, I'd be feeling a bit nervous too - but for a different reason. More like nervous excitement that I can go and hit-up a couple of lenders for some more deposit money

another useless report...

i'm sorry, but i don't buy properties in sydney, melbourne, brisbane...

i buy them in particular suburbs

judging price direction by the cities is like judging health of hospital patients by average body temperature in a hospital

topcropper said:

Must be some economists in other countries overseas surprised at what's happening over here. Not only have we been not effected, but looks like we will have increasing house prices as well..!!



I still think it's all a worry though, and I'm not cheering this on like the rest of you lot. I think the stimulous was never designed to cause a boom or even a rise in prices, it was designed to stop prices from dropping. Rising house prices at a time of dropping national income and exports is going to cause some problems down the track.

I'd think some of the people who engineed all this, while cheering it on in front of the media, would be quietly concerned about whats happened.

See ya's.

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You are forgetting the pyschological impact of the GFC and the stock market.

Alot of my 'professional' friends have seen their mates who had investment properties come through this period with flying colours.

They are all saying that property is the right way to go because its 'safer'.

Even my stock broker was telling me a story that was going through his office: that stock brokers should invest in residential property as it acts as a counter balance to their main form of income. ie that its dangerous for a stock broker to concentrate their investments in shares, because when the stock market is weak, not only do their investments underperform, but also their income stream declines (because fewer people buying and selling shares).

Ah people never learn, the herd mentality is as strong as it ever was.

Propertunity said:

Yeah, I'd be feeling a bit nervous too - but for a different reason. More like nervous excitement that I can go and hit-up a couple of lenders for some more deposit money

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Nervous excitement, you bet.
Its only been a couple of months and now on to my 4th development site in Melb can now tap into equity.
Keep the good news coming.

Interesting thread. Now every stray knows that at least in Sydney and Melbourne property goes through the roof. Media publishes the stories that at auctions "fight" has moved from the dimension of "wallets" to the dimension of real face punches. Auction clearance rate stays above 70% for as long as one can remember, and in Melbourne occasionally going over 80%. Median auction price in Sydney at the end of 2008 was at the region of $530K, last week it was $660K. I have a question to MichaelW and Shadow. Anyone who was atacking you on this thread - did they have guts to admit their mistakes and apologise?

ToDo said:

Median auction price in Sydney at the end of 2008 was at the region of $530K, last week it was $660K.

I have a question to MichaelW and Shadow. Anyone who was atacking you on this thread - did they have guts to admit their mistakes and apologise?

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Hi ToDo,

None received but none really expected. I didn't put my opinions out there to try and make a point or win brownie points, I only did so to try and counter-balance the prevailing mood of fear created by the scaremongers and doom&gloomers. There's still a few around, but thankfully the facts of late have meant most have quietly withdrawn back to more accommodating forums...

Here's some interesting reading on Sydney I spotted today:

Prices are on the run

Domain said:

Visitors to the Mount Kosciuszko national park should not be surprised if they see a sweaty, middle-aged man jog past them wearing a T-shirt bearing the words: "I was hopelessly wrong on home prices! Ask me how."

Earlier this year, university economist Steve Keen and Macquarie Bank interest rate strategist Rory Robertson went head-to-head over the future direction of property prices in Australia whomever lost the bet had to run the 200 kilometres from Canberra to Mount Kosciuszko wearing the offending garment.

Judging by the surprisingly positive house price figures being reported by RP Data, it looks like Keen who predicts house prices will fall by 40 per cent in the next decade should be getting in some jogging practice.

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hehehe... Seems I'm not the only one to pose that question of late!

I agree with the author's position that this is just the beginning as we're still climbing the wall of worry. As more and more positive indicators are reported it will progressively sway the masses back to a positive stance. By then all the good buying will be gone, and experienced investors will be locking down their portfolio's and focussing on cash flow enhancement.

But today is a buyer's market. And as KeithJ made the point in his thread, its the right type of boom underpinned by appropriate fundamentals.

Unless of course you're part of the ever diminishing defeatest crowd, in which case this is all just froth before the storm. Hold on to your hats we're going to crash! Sorry, I'd rather just hold on to my IPs...

Cheers,
Michael

ToDo said:

Now every stray knows that at least in Sydney and Melbourne property goes through the roof. Media publishes the stories that at auctions "fight" has moved from the dimension of "wallets" to the dimension of real face punches. Auction clearance rate stays above 70% for as long as one can remember, and in Melbourne occasionally going over 80%. Median auction price in Sydney at the end of 2008 was at the region of $530K, last week it was $660K. I have a question to MichaelW and Shadow. Anyone who was atacking you on this thread - did they have guts to admit their mistakes and apologise?

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Haha. No, I wouldn't expect them to. The gloomers just scurry off to their caves at times like this, and maybe they will poke their heads out now and again to repeat their old mantras when some negative news come out again. At least Steve Keen has finally admitted defeat. Not many property bears left out there now. Even in the UK, prices are up 9% this year, and latest reports suggest that US prices may have bottomed too. So much for the 'global' property crash. Wasn't really global at all. And no 40% falls anywhere!

Shadow said:

At least Steve Keen has finally admitted defeat. Not many property bears left out there now.

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Has he really? I haven't read about it in the media yet. Where's Evand, he won't believe it...

And you're right. Most of the bears have gone back to their caves now. At least Alan Kohler has the good grace to admit he was way off the mark and is now full swing behind the "we're different over here" crowd and singing the praises of the Australian economy once more. Here's his latest:

Australia in Pole Position

Alan Kohler said:

Meanwhile those who were predicting a far worse downturn, including the IMF, the Bank for International Settlements and yours truly, are looking silly and in some cases are still warning that the crisis did cause lasting damage and that there are still problems ahead. Markets are paying no attention to them.

And even in a world that is recovering, Australia is an island. This is almost entirely due to two significant shortages: of houses in Australia and commodities in China, as its economy roars out of a brief downturn turbo-charged by bank lending.

Those two shortages have kept up house prices, and therefore consumer confidence, and last week we saw business investment bounce back unexpectedly from a shallow downturn – 3.3 per cent growth in the June quarter versus market expectations of minus 5 per cent, which probably just tells us the forecasters are still too cautious.

As a result June quarter GDP in Australia is likely to be much more than barely above recession levels – closer to 1 per cent.

Which in turn means that Treasury’s ridiculed forecast of 4.5 per cent growth in fiscal 2012 is not only likely to be correct, but will probably happen earlier than even Treasury predicted.

What’s more, there seems to be almost no lasting damage to the Australian economy, apart from the federal budget. And despite the warnings from an increasingly desperate coalition, even that is not particularly serious.

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Takes a big man to admit so publicly that you were wrong and report accurately now what you see to be the truth of the situation. My hat's off to Alan. I did start to question his credibility through the "crisis" when he went all bearish on me. I had figured he was one of the better economists, up there with Ross Gittins domestically, but he did lose the plot a bit for a while. He's come good now though and restored my confidence in him. We're all allowed to make mistakes if we're big enough to admit them once identified.

Cheers,
Michael

MichaelW said:

Has he really? I haven't read about it in the media yet. Where's Evand, he won't believe it...

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Yes, Steve Keen has finally thrown in the towel, and admitted he will be walking up Kosciuszko...

http://www.debtdeflation.com/blogs/2009/08/30/debtwatch-no-38-the-gfc—pothole-or-mountain/

The Boost has certainly had the impact the government desired, of arresting the fall in Australian house prices.

It will also almost certainly guarantee that I'll be walking (and running) to Kosciuszko under the first half of the bet with Rory Robertson.

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