Aussie house prices suffer biggest monthly fall in August since 1983
The great Aussie housing collapse continues to break new records with CoreLogic's 5 capital city index losing more than 1.44% in the first 29 days of August, which is the biggest monthly decline in 39 years (or since 1983) according to CoreLogic data. The August plunge has just exceeded the 1.44% loss suffered in the prior month of July 2022. And there is worse to come given we have another two days of index data to collect prior to finishing the month.
The news is worse in Australia's third biggest city, Brisbane, which has well and truly capitulated with the biggest monthly fall in home values since CoreLogic records begin in 1980 (ie, over the last 42 years). According to the latest CoreLogic index results, the Brisbane market has lost more than 1.7% over the first 29 days of August. In the prior 42 years of Brisbane housing history, the worst monthly loss was 1.5%.
Sydney is also breaking records, registering the single largest monthly decline in house prices in the August month to date, which is a 2.1% loss, since 1985 if we exclude the record set in the prior month of July. With two days to go, the August losses may still yet beat July's draw-down.
The great Aussie housing market crash has been singularly triggered by the RBA's rate hiking cycle, which should deliver another 50 basis point increase in rates in September, hammering witless borrowers.
In Sydney, house prices are falling at a 19-20% annualised rate based on the last three months' of data. Nationally, dwelling values are shrinking at a circa 12.4% annual rate, although this has accelerated in more recent times.
Our October 2021 housing forecasts remain unchanged. That is, after the RBA implements its first 100 basis points of rate hikes, which it has now done, national home values will fall 15-25%. This forecast range was quite explicitly designed to capture the RBA hiking rates by more than 100 basis points. Most banks have embraced this projection in recent months.
Using the RBA's own internal housing model, we have previously shown (see here) that if the central bank hikes to a very extreme, 4.25% cash rate, the RBA's research implies that Aussie house prices would have to decline by 30-40%. This is not our central forecast, however.
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