The latest SQM research newsletter came out yesterday and as usual it contains some interesting data and predictions:
Figures released this week by SQM Research reveal that residential sales listings decreased during the month of January 2012, coming to a national total of 368,510. This is the second consecutive monthly decrease in sales stock, coming off recent steady increases throughout the course of 2011 and represents a 4.3% monthly decline.
All cities experienced a monthly drop in sales stock, Adelaide experiencing the most marginal decline, falling by 0.3% month-on-month.
Year-on-year, national stock on market has increased by 13.5%, with both Hobart and Melbourne continuing to record excessively high yearly increases – 40.9% and 33.2% respectively.
Although those numbers are still high the trend appears bullish. But there is a catch:
The managing director of SQM Research, Louis Christopher says “Once again there is seasonality in these numbers, though I do note the falls in January have been far greater than recorded this time last year. We expect a bounce in listings in February as the season opens again. However if the bounce is marginal or there is no bounce at all, then it will be clear to us that something else is going on in the market, such as listings being absorbed by an increase in buyer activity.”
Advertisement
Interesting observation but there’s another problem. There is no evidence of increased credit activity of the magnitude required to make this kind of dent in the stock on market statistics so my own conclusion is that this is seasonal. As usual, the January housing market is always subdued so making any assessment of the coming year based on statistics from that month is fraught with danger. As Mr Christopher states, best wait for February.
However, that call for prudence on the stock on market data certainly isn’t matched in Mr Christopher’s predictions for the coming year:
“Today’s hold on rates is in our opinion good news for all. While no doubt it would have given further relief to mortgagees and further stimulated the housing market, it is in our opinion that the rate cuts of late last year are already having an impact upon the housing market and so, the potential for over stimulating the property market and the greater economy was there.
“Cutting rates today literally could have brought a rate rise sooner to the table, possibly as early as the December quarter. Instead, for now, the most likely future is a long period of interest rate stability and a modest property recovery where capital city dwelling prices are likely to rise between 2-8% for 2012, depending on the city in question. This outlook remains consistent with our scenario published in the September 2011 Housing Boom and Bust Report.”
Advertisement
I repeat, there is nothing at all in the latest credit statistics to suggest house price growth will meet those expectations. The only real above trend data I have seen over the last 4 months has been due to the “front-loading” effects of stamp duty changes in NSW. If anything I interpreted yesterday’s rates hold, and now the uncertainty about bank moves, as likely squash any momentum that the market may have had (but I can’t find!)
Although I usually agree on with Louis Christopher’s analysis on the housing market, I consider this call very brave.
