Monday, February 1, 2016

Bullion Baron's Australian Property Chart Pack

Residex updated their property indices to December 2015 on Friday. I have created some charts with the latest data which may be of interest to readers. Those who follow me on Twitter may already recognise a few of them. Click on any of the charts for a larger size.

Sydney's mental house price growth over the last few years. Is the peak in? I think at the minimum we have a cyclical peak forming (aka: Sydney late 2003/early 2004, expecting perhaps a 10%+ fall in the Sydney median and a nominal peak not being surpassed for 4-6 years), but Australia's expensive property market has not really been tested by a sizable economic downturn, we could see much larger falls in event we had one.

What juiced house prices? A variety of factors, but the RBA cutting interest rates to very low levels certainly didn't help any, you can see the booms follow each rate cut cycle and growth slows or prices correct with each rate hike cycle.

It would seem that interest rates are winning out versus the unemployment rate, Adelaide house prices have risen despite a rising unemployment rate in South Australia.

I wouldn't call Adelaide house prices 'cheap', but compared with Sydney they are looking far less expensive (& the rent vs buy cost comparison isn't looking too bad). This ratio shows we are back at levels when Sydney last peaked. That suggests to me that price growth is likely to be higher in Adelaide (compared with Sydney) for the foreseeable future...

And here is a chart showing the last major cyclical correction in Sydney versus Adelaide's prices since its peak from 2011.

Adelaide house prices have passed their previous peak, while unit prices are still languishing around the same price they were back in 2010.

Sydney's house price ratio with Brisbane shows Brisbane is also comparatively far less expensive.

When comparing Brisbane and Adelaide using a ratio we can see they trade within a much smaller range and the ratio suggests Adelaide is less expensive than Brisbane, though very close to the middle of the range.

Growth in these cities (Brisbane and Adelaide) has trended quite closely with the data that's available.

Likewise growth in Sydney and Melbourne track quite closely. I expect both will see their AAGR (Average Annual Growth Rate) roll over to the downside in 2016.


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