Hello Friends, Clients and Associates,

Another update hot off the press for your perusal, information and empowerment from Linda and Carlos Debello:-

RP Data Research Blog - Housing market reaches bottom of the cycle… maybe.

---

Housing market reaches bottom of the cycle… maybe. Posted: 09 Aug 2012 05:34 PM PDT The Australian housing market peaked during October 2010 and since that time dwelling values have fallen by 5.9% (7.4% to the May 2012 trough) across the combined capital cities index based on the RP Data-Rismark Home Value Index to the end of July.  Over the same twenty month ‘post peak’ time frame, the US housing market had recorded a 10.2% fall, UK prices were down 22.5% and New Zealand had seen a 9.1% fall. Tracking the path of decline from the market peak paints an interesting picture and highlights the differences in the speed of decline and path of recovery across each of these markets.  After home prices peaked in the UK (August 2007) the rate of correction was much more rapid than what was experienced in the United States where the market peaked much earlier (April 2006). Based on the Halifax index the market reached its trough 20 months after the market peak.  Values were down 22.5% overall and fell at the compounding annual rate of 1.3%/month.  The UK market staged a short lived recovery over the second half of 2009 into early 2010, however prices have remained fairly stable since then and as at June 2012 were 19.4% lower than the 2007 peak. The US housing market, on the other hand has seen a more gradual and prolonged decline.  House prices started slipping backwards way back in April of 2006 setting off a chain of events that ended up throwing the world into absolute financial chaos.  Based on the CoreLogic House Price Index, US house prices fell by 30.8% (1.0%/month) over 35 months before the decline trend showed some comparative stability.   The next 35 months saw US home prices fall by 0.6%/month on average reaching the lowest point on record over the month of February 2012, a full 33.7% lower than the market peak. The trend across New Zealand has been similar to that of the UK in the sense that the market reached the bottom of the cycle 19 months after the market peak, down 7.4% from peak (October 2007) to trough (April 2009), based on the PropertyIQ House Price Index.  Since that time prices have risen a further 8.4%. The local ‘peak to trough’ trend line is of course much shorter.  The Australian market peaked in October 2010 and if we continue to see values remain either stable or increase, the bottom of the market would have been May 2012 which is 19 months after the market peak.  That’s a similar time frame to what was experienced in both the UK (20 months) and New Zealand (18 months). Potentially June 2012 will be the signpost that pointed to a market stabilisation with the RP Data-Rismark index recording a 1% rise in home values over the month of June and 0.6% rise in July.  June also marked the month where a variety of other indicators showed a positive result; retail sales, dwelling approvals and housing finance commitments all showed better than expected outcomes.  The labour force data released yesterday showed unemployment remained stable at 5.2%, interest rates are low and potentially might move lower and consumer confidence has shown a mild improvement and is expected to move higher. Other market metrics are also pointing in the right direction.  Homes are taking a shorter number of days to sell, vendors are discounting their prices less and the auction clearance rate has been averaging above 50% across 2012. Of course it’s early days yet – another positive Home Value index result for August should firm up the notion that the market exited the correction and his moving into recovery.  Based on the daily RP Data-Rismark index movements over the first ten days of August (up 0.2%) August is on track for another rise.

Best Regards,

Linda & Carlos Debello

LJ Gilland Real Estate Pty Ltd

http://twitter.com/GillandDebello

http://au.linkedin.com/lindajanedebello

http://www.facebook.com/pages/LJ Gilland Real Estate Pty Ltd

Confidential email:- The information in this message is intended for the recipient named on this email.  If you are not the recipient please do not read, copy, distribute or act upon the message as the information it contains may be privileged.  If you have received this message in error, please notify the writer by return email.  Thank you very much for your assistance in this matter and your co-operation.  Should you wish not to received research and interesting subject which the writer has contained in the email for your empowerment, please notify the writer of that as well as he/she only has your best interests at heart with thanks.  Have a great day!