In May last year while commenting on the beginnings of what appeared to be in-fighting in the housing industry data providers I stated:
Back when the housing market was booming everyone got their slice of the pie there were no losers so no one needed to argue any particular point or methodology. As long as the cash was flowing in from the banks and shadow banks offshore borrowing the system grew and it was all smiles. Investors and home owners didn’t care either, as long as the perceived wealth had an arrow pointing north no one really cared how the statistics were delivered.
The issue now is that those arrows are no longer pointing in the right direction, owner occupiers and investors are now on tenter hooks about what the market is doing and are therefore getting very nervous about the data. Without the support of rivers of gold it was only a matter of time before the in-fighting began between the data providers.
An interesting fall out of that battle, as I said a little later, was:
… SQM, in the person of Louis Christopher, made a more consistent case for why prices are indeed falling. He was rewarded with the grandaddy of populist gigs, a spot on Sunrise with Kochie, and a piece in the Fairfax press staking out the case for why prices are falling, as well as pointing out the obvious, that the other providers seemed incapable of uttering the “f-word”.
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Louis Christopher then went on to appear with Kochie on Sunrise giving the Australia real estate market the first of many good maulings over 2011.
The reason I provided that short history is because since that time the relationship between Kochie and Louis appears to have blossomed and they now appear to be collaborating on a number of fronts.
One such front is mentioned in this week’s SQM Research newsletter:
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On the subject of the Queensland market, we’d like to point out that it was around this time last year when we discussed in detail our dismal outlook for the region, in spite of the fact that there were certain analysts who not only blatantly disagreed with us but even spoke about housing shortages occurring in Queensland.
Although this bleak forecast may have angered certain industry groups, it has indeed come to pass and Queensland- more specifically the Gold Coast and Sunshine Coast have posted dramatic house price falls.
David Koch from network 7’s Sunrise also appears to have irritated some real estate agents and journalists recently by sharing a similar view to ours on the state of the Queensland market. His rebuttal which includes extensive research and data from SQM Research can be read below –
Now, SQM Research does not intend to be harsh on agents and we know there are many great, honest and hard working real estate agents out there with whom we ourselves converse and work with, including those in the Gold Coast region. We are just saying it how it is when it comes to the market. After all, transparency and openess breeds confidence into the market over the long term.
I couldn’t agree more.
SQM also went on to talk about vacancy rates across Australia, but readers of MacroBusiness would already be well aware of the major story in that area:
Vacancy Rates Up for December
Figures released last week by SQM Research revealed that residential vacancies rose significantly during the month of December, increasing from 1.9% to 2.4% and coming to a total of 61,490 vacancies.
This spike in December’s national vacancy rates is predominately viewed by SQM as a seasonal increase and although the surge in listings does appear to be a bit steeper than in previous years, with significantly more vacancies in the market place than the months preceding, we are wary of pointing to any other possible explanation for the sudden increase besides the seasonal effect.
What is of particular concern however, is Melbourne’s seemingly ever increasing vacancy rate which has been recorded as a high 4.4% for the month of December, a figure that most definitely reflects an oversupply issue for the capital city. Over the course of 2011, a steady increase in vacancy rates has been recorded for Melbourne, peaking in December with 16,007 vacancies – an amount that goes beyond merely seasonal factors.
Our Managing Director Louis Christopher says “We expect for the month of January that vacancies will report a decline once again, to what levels, we are unsure of. Melbourne is looking ominous and we are expecting rental declines for this capital city for 2012. Melbourne has definitely become a renter’s market and landlords can no longer be expected to extract higher rents in Melbourne.
“But as for the majority of the rest of the country, it is still a landlord’s market and we are expecting rental increases overall to be within the 4-6% range and in some regions within Sydney -even higher, throughout the course of the year.”
That maybe so. But as The Unconventional Economist has illustrated, since 2008 vacancy rates have done little to improve rental returns for investors across the nation. And remember, these do not take account of inflation or costs (notwithstanding that there may some areas that still have capital gains):
