Sunday, 19 March 2017

Countdown to Melbourne $1,000,000 median house price


Saturday, 7 March 2015

Interests rates on hold – for now

Official rates on hold following February cut
Weak recent economic data indicates further rate cuts likely
Housing market activity rising as confidence lifts with falling rates
The Reserve Bank has decided to leave official interest rates on hold over March following its February rate cut.
The Bank cut rates last month after 16 consecutive months on hold reflecting growing concerns over the performance of the national economy.
Official rates will remain at the record low of 2.25 percent despite recent data indicating a further weakening in the economy.
The ABS reported a national unemployment rate of 6.4 percent over January – the highest monthly rate for 12 years.
ABS wage index data also points to a stagnant economy with the 2.5 percent growth over 2014 the lowest annual result recorded in the series. 
Australia’s low growth, low inflation economy was validated by ABS CPI data which recorded minimal 1.7 percent growth over 2014.  With lower fuel costs yet to impact the general economy the inflation rate is set to remain low and likely weaken which will act to reinforce underlying low wages and profits growth.
High budget deficits constrain policy makers’ capacity to stimulate economic growth leaving the heavy lifting to monetary policy. 
Other recent data however has been more encouraging.  Although capital city home building approvals fell over December, an annual increase of 15 percent was recorded over 2014.
Despite generally underperforming local economies, early signs are that housing markets have commenced 2015 positively.  Auction activity in Sydney, Melbourne and Brisbane has been solid to strong with the Sydney market remaining particularly robust.
Although rates remain on hold over March the bias for future action from the Bank clearly remains downwards. Much will depend as usual on measures of economic activity - particularly unemployment rates.
Rising housing market activity on the back of lower mortgage rates, may present the Reserve Bank with a dilemma however with further rate cuts potentially fuelling strong prices growth particularly in the Sydney market.

Dr Andrew Wilson is Domain Group Senior Economist

Wednesday, 25 February 2015

Estimated real-time capital city median house prices


Saturday, 21 February 2015

Land prices surge in Sydney

Sydney land prices now rising faster than houses
More bad news for first home buyers as outer suburban land rush intensifies

Sydney’s median residential land price increased by 19.7 percent over 2014 and remains clearly the highest of all the state capitals according to the Domain Group.

The December quarter median land price of $390,000 was well ahead of Melbourne at $245,000 and Brisbane $237,950.

Sydney’s annual land prices increased at the fastest rate in over a decade and recorded stronger growth than booming house prices that increased by 14% over 2014.

Sydney’s outer suburban residential land market recorded strong growth over the year with prices in the south west increasing by 25 percent to a median of $350,000 and the west up by 8.3 percent to a median of $410,500.

The median residential land size sold in the west over the six months ending December was 564m2 at $759 per m2.  In the south west, the median land size sold was 500m2 at $652 per m2.

The most popular outer west suburbs for land sales over the 6 months ending December 2014 were Riverstone, Colebee, Pitt Town, Kellyville and Glenmore Park. The most popular outer south west suburbs for land sales were Harrington Park, Campbelltown, Moorebank, Appin and Edmondson Park.

Kellyville recorded the highest median land price over the second half of 2014 at $643,000 with a median land size of 701m2 at $912 per m2. Land prices in Kellyville increased strongly by 38.2 percent over 2014.

With Sydney residential land prices now rising faster than booming house prices, the task for first home buyers is becoming increasingly difficult. 

Despite recent changes to the NSW First Home Buyer’s Grant that provides a $15,000 subsidy for first home buyers buying a new property, the rate of growth of outer suburban land prices is continuing to push the great Australian dream out of the reach of entry level buyers.

It should also be noted that the First Home Buyers grant will reduce to $10,000 from January 2016 when on current trends outer suburban median land prices would have increased by at least another $40,000.

First home buyer market share in Sydney is set to remain at or near the current near record lows until chronic undersupply of residential development land in Sydney is effectively addressed.

TOP LAND SALES SYDNEY (6 months December 2014)

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson 

Monday, 16 February 2015

The Wilson Curve housing market model

The Wilson Curve – a model of housing market dynamics

House prices typically rise and fall in an underlying cyclical pattern.

The house price cycle also typically follows the business cycle with local supply and demand factors determining its characteristics

The house price cycle, as with the business cycle, consists of growth and decline phases.

The Wilson Curve describes the growth and decline phases of the house price cycle in relation to its price peaks and price troughs.

The Correction Phase  
House prices are below the previous price peak of the cycle but above the previous price trough of the cycle.

The Contraction Phase
House prices are below the previous price trough of the cycle

The Recovery Phase
House prices are above the previous price trough of the cycle but below the previous price peak of the cycle

The Expansion Phase
House prices are above the previous price peak of the cycle

Saturday, 14 February 2015

First home buyers still scarce on the ground

Latest ABS home loan data reports that first home buyers remain at or near historical lows.  This is despite recent changes by the ABS in the estimation process for this group designed to adjust perceived under-reporting of the series.

The home loan (excluding refinancing) national market share for first home buyers fell to 10 percent over December - the lowest proportion reported by the ABS series since April 2004.

New South Wales remains the clear underperformer of all the states with a market share for first home buyers of just 7.1 percent recorded over December. This is just above the all-time low recorded in June 2014 of 6.9 percent. 

First home buyer numbers however increased to 2000 over December – the highest monthly total since December 2013. Surging investors and strong changeover buyer activity combined to lower the market share of first home buyer despite the increase.  

High and rising prices in the booming Sydney market will continue to sideline local first home buyers over the foreseeable future who will nonetheless continue to trickle back into the market.

Dr Andrew Wilson is Domain Group Senior Economist Twitter@DocAndrewWilson