Last week I mentioned that Louis Christopher from SQM research was on Channel 7’s sunrise show giving the real estate market a jolly good mauling with discussions of flakey real estate auction rates, bearish talk about increasing LVR’s and the fact that there was precedent for property prices to fall by 20%.
However, SQM research released their latest newsletter yesterday and the message was quite a bit more bullish than that presentation, even with the stock on market figures continuing to grow:
Figures released this week by SQM Research reveal that residential property listings have slightly increased during the month of November, rising by 5,631 to come to a total of 388,848 nationally. This figure represents a 16.7% increase since the corresponding period of the previous year (November 2010) as well a a 1.5% increase month-on-month.
For the most part, the majority of capital cities either experienced minor increases or remained steady, with Brisbane and Darwin being the only capital cities to post falls – decreasing by 0.1% and 0.5% respectively.
Canberra recorded the largest monthly increase in stock, rising by 5.8% during the month of November and coming to a total of 2,112. Sydney followed Canberra with a monthly increase of 4.2%, coming to a total of 37,172. Melbourne recorded the largest actual amount of stock out of all capital cities, rising by 2.8% and coming to a total of 52,710. Continuing rises for stock levels in Melbourne would obviously equate to further supply woes for this capital city and potentially some significant house price falls.
However, taking into account that November is usually the spring “peak” for online listings, if we do not see a rise in stock levels of December, it is fair to say that stock levels may have peaked for the time being and given today’s rate cut, may reduce over the course of 2012.
The managing director of SQM Research, Louis Christopher says, “At 388,000 properties, the market is generally considered to be oversupplied with listings at this point in time. It is enough stock to continue to put downward pressure on house prices. House prices started falling back in the September quarter of 2010 and that was when stock levels were at 307,000. That said, I think once we see stock levels peak and start coming down, we are likely to see the bottom in the market place, and in our opinion that could happen as early February. Much still depends on the events in Europe.
“A credit squeeze even would certainly postpone any recovery here and would cause a continuation of the current price declines right through 2012. Certainly for now it means those who are buying in this market, are taking a bet on Europe.”
Louis’s own message was even more bullish:
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A word from our Managing Director – Louis Christopher about today’s interest rate cut
“Putting Europe aside for one moment, today’s interest rate cut will stimulate the housing market for most capital cities and regions in 2012. It puts our more bullish forecasts, made in our Housing Boom and Bust Report into play (see below for forecast for each capital city). But this more bullish outlook does assume Europe muddles through its current crisis.
If we see a major credit squeeze where banks in this country are forced to ration lending in the form of loan to value restrictions, this would mean the housing market would continue to fall in 2012. However, readers should keep in mind that there is no credit squeeze for now, yet there are interest rate cuts. That is likely to immediately tip buyers into the market, particularly NSW First Home Buyers looking to capture the stamp duty concessions still in play until the end of the month.
We literally could have the market climbing into a wall of worry in 2012, in that while potential buyers will be fearful of full blown global recession and credit squeeze, they will also be fearful of missing out on a recovery in the housing market and so, will buy a property. ”
Median House Price Forecasts for 2012- Taking into Account a 25bp Rate Cut and Assuming a Europe Muddle through Scenario
Perth: +4% to 0%
Brisbane: +3% to -2%
Darwin: +3% to -2%
Melbourne: +2 to -2%
Sydney: +7% to +2%
Adelaide: +5% to 0%
Hobart: +5 to +2%
Canberra: +8% to +2%
Yesterday Louis appeared back on Sunrise with a slightly different message to the one he presented just 9 days ago:
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What a difference 25bps makes to property punditry.
