TOL - 7th Feb, 2023
Aussie house price losses exceed 10%, Sydney losses breach 14%: 43 year record in sight
The great Aussie housing crash is about to best a 43 year record, almost certainly in the next month...
So it's official: as a result of the RBA's record interest rate hikes, the great Aussie housing crash has now racked-up a 10% cumulative price decline, just a touch below the all-time, 43 year record of circa 10.7% (between 2017 and 2019) based on data provided by CoreLogic through to 5 February 2023. (This analysis uses the 5 capital city index publicly reported by CoreLogic---one will get slightly different numbers using the 8 capital city index.)
The nation's largest city, Sydney, has suffered a cumulative loss that now exceeds 14%, also a shade below the biggest draw-down since the early 1980s, which was the 14.9% decline registered between 2017 and 2019 (technically, Sydney recorded a loss in excess of 20% in the early 1980s, although one would question the reliability of that data).
Losses in Brisbane have breached 10.8%---and are running at a 16% annual pace based on the last quarter of data---while Melbourne house price declines will soon pass 10% (they are currently sitting at 9.5% and counting).
Using the last 90 days of price changes to 5 February 2023, I have national house prices falling at a 12.2% annualised rate. Assuming the RBA hikes in both February and March, it is hard to see these unprecedented price falls attenuating in the next few months, especially considering that 1-in-4 Aussie home loans switch from fixed-rate to variable-rate in the next 12 months. These borrowers will suffer a huge increase in their mortgage rates from circa 2% to 6% pa.
In October 2021, we forecast a 15-25% peak-to-trough decline in national house prices exclusively as a function of the RBA's hiking cycle. It is likely that the lower bound of this forecast range will be penetrated in the next 5-6 months. I expect the national record for capital city losses to be trashed within the next month.
Never miss an update
Enjoy this wire? Hit the ‘like’ button to let us know.
Stay up to date with my current content by
following me below and you’ll be notified every time I post a wire
Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha Managers” based on his risk-adjusted performance throughout his career across. He previously worked for Goldman Sachs in London and Sydney, the Reserve Bank of Australia, and founded the award‐winning research/investment group, Rismark. He has regularly advised governments, developing unique policy proposals. Chris graduated with the University Medal (Economics & Finance) from Sydney University. He studied in the PhD program at Cambridge University in 2002/03, leaving to set up his funds business.
........
Investment Disclaimer
Past performance does not assure future returns. All investments carry risks, including that the value of investments may vary, future returns may differ from past returns, and that your capital is not guaranteed. This information has been prepared by Coolabah Capital Investments Pty Ltd (ACN 153 327 872). It is general information only and is not intended to provide you with financial advice. You should not rely on any information herein in making any investment decisions. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. The Product Disclosure Statement (PDS) for the funds should be considered before deciding whether to acquire or hold units in it. A PDS for these products can be obtained by visiting www.coolabahcapital.com. Neither Coolabah Capital Investments Pty Ltd, EQT Responsible Entity Services Ltd (ACN 101 103 011), Equity Trustees Ltd (ACN 004 031 298) nor their respective shareholders, directors and associated businesses assume any liability to investors in connection with any investment in the funds, or guarantees the performance of any obligations to investors, the performance of the funds or any particular rate of return. The repayment of capital is not guaranteed. Investments in the funds are not deposits or liabilities of any of the above-mentioned parties, nor of any Authorised Deposit-taking Institution. The funds are subject to investment risks, which could include delays in repayment and/or loss of income and capital invested. Past performance is not an indicator of nor assures any future returns or risks. Coolabah Capital Institutional Investments Pty Ltd holds Australian Financial Services Licence No. 482238 and is an authorised representative #001277030 of EQT Responsible Entity Services Ltd that holds Australian Financial Services Licence No. 223271. Equity Trustees Ltd that holds Australian Financial Services Licence No. 240975.
Forward-Looking Disclaimer
This presentation contains some forward-looking information. These statements are not guarantees of future performance and undue reliance should not be placed on them. Such forward-looking statements necessarily involve known and unknown risks and uncertainties, which may cause actual performance and financial results in future periods to differ materially from any projections of future performance or result expressed or implied by such forward-looking statements. Although forward-looking statements contained in this presentation are based upon what Coolabah Capital Investments Pty Ltd believes are reasonable assumptions, there can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Coolabah Capital Investments Pty Ltd undertakes no obligation to update forward-looking statements if circumstances or management’s estimates or opinions should change except as required by applicable securities laws. The reader is cautioned not to place undue reliance on forward-looking statements.
2 topics
Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...
Expertise
Chris co-founded Coolabah in 2011, which today runs over $8 billion with a team of 40 executives focussed on generating credit alpha from mispricings across fixed-income markets. In 2019, Chris was selected as one of FE fundinfo’s Top 10 “Alpha...
Expertise
Comments
Comments
Sign In or Join Free to comment
most popular
Equities
This recently triggered market signal has never failed to predict gains
Ophir Asset Management