The RBA, Interest rates and house prices

[keithj]

disagree completely. all this means is that cheaper houses aren't selling (or more to the point demand was dragged forward and is now satisfied) - not sure if anyone benefits from this?

If it was a simple median price index that had increased then I may agree with you.

However, it's the Hedonic Index that has increased by 12% over the last 12 months (including 2% in Jan & 1.4% in Feb) - it allows for the composition of houses.

From the Rismark site

....This index utilises comprehensive information on the attributes and characteristics of residential properties, such as location, land size, and bedrooms, to measure “quality-adjusted” changes in property value over time.

If (as you suggest) a smaller number of low quality properties sells then the index is unaffected.

 

[dunno]

Yes, I thought I mentioned that in my ramblings. excuse me for quoting myself.



I didn't mean above 3% inflation I meant 3% positive inflation apposed to negative inflation which would be deflation -3%. Maybe I should have just said 3%.

Sorry misread your quote-thought you were saying this wasnt a requirement

 

[Ausprop]

the index is good as it attempts to strip out improvements, however to suggest that in 1 month they can adjsut every sale based on the qualities of each transaction is IMO fanciful. i wonder if they have a 'chris joye weighting factor'??

 

[keithj]

the index is good as it attempts to strip out improvements, however to suggest that in 1 month they can adjsut every sale based on the qualities of each transaction is IMO fanciful. i wonder if they have a 'chris joye weighting factor'??

Sure, Joye is a bull. But the Rismark Hedonic Index tends to match the other 2 main indices & the RBA over time.

So yes, I still feel that property owners on average got 12% wealthier over the last 12 months, and 1.4% wealthier in February, despite all the bears reasons above why it can't possibly happen .

Full FEBRUARY NATIONAL HOME VALUE RESULTS here

Change in RP Data - Rismark dwelling values
3 months ending February 2010
•Sydney values +3.8% (median: $519,000)
•Melbourne values +5.4% (median: $480,000)
•Brisbane values +0.4% (median: $437,000)
•Adelaide values +2.5% (median: $385,000)
•Perth values -0.2% (median: $475,000)
•Darwin values +4.2% (median: $480,000)
•Canberra values +2.7% (median: $540,000)
•Hobart values -4.2% (median: $325,000)

 

[Ausprop]

12% sits ok with me. on the back of 0 to 40% declines in the year or two before.

mind you karratha is up probably 20% since Sep last year.

of course the first numbers have holding costs and neg cashflow to pay for, the second numbers are CF+. aint cashflow grand?

 

[HiEquity]

mind you karratha is up probably 20% since Sep last year.

Agreed.

the second numbers are CF+. aint cashflow grand?

Yes!

But doncha know you can't have +CF and CGs at the same time...

 

[Andy Pandy]

Must be time to start running the ruler over a FX home loan!

Anyone figured out how to borrow in Yen or USD and hedge without the risk of margin calls?

It is so frustrating seeing the mums and dads having to pay through the nose because of the inefficencies of state and federal goverments in getting housing supply in order and the greed of the Banks.

R

AndyP

 

[Sunfish]

Must be time to start running the ruler over a FX home loan!

Why would you do that? I would need a better argument than "What goes up must come down" before I bet against against the rampaging A$.

If you really believe the A$ is overvalued, don't shift loans, just hedge on the Fx markets. Much simpler.

 

[BV]

I agree. So if you are in Sydney, "Good luck!", you'll need it.

Why do you say that?
Our finance industry is alive and well, housing construction is on the increase and the NSW gov is in spending mode.

On top of that, we had record population growth this year and have officially reached 4.5 million people.
http://www.smh.com.au/national/boom-town-sydney-tops-45m-20100330-rbl4.html?autostart=1

I think most states will be ok but perhaps our exports overall will be down
and tourism will suffer because of the strong $ and the GFC which is still hurting other countries.