….forget your perfect offering,
There is a crack, a crack in everything,
That’s how the light gets in.
To borrow an over-used adjective from the good Doctor Wilson (he’s a doctor of property! No, really!), predictably, the various completely unbiased non-vested interests have called the bottom of the Sydney housing price crash.
Everywhere one looks there are gushing articles about the green shoots of recovery in the clearance (successfully sold) rate at auctions, or the simply wonderful news that the Reserve Bank of Australia, RBA, is so bullish about the economy that they may consider lowering interest rates from the current historical lows and now the sniff of a suggestion of a hint that the Australian Prudential Regulation Authority, APRA, may ease the current safety checks on lenders that ensure loans can still be repaid if rates were to rise to above 7%.
In the words of Winston Wolfe, “let’s not go sucking each other’s dicks just yet, boys“. Let’s have a sober look at the facts, shall we?
Auctions – sure, the published rate is creeping above 50% but look at the volumes; half of the previous year. Also, the auction clearance data is about the most easily-manipulated and therefore least believable of all housing data points in Australia.
The RBA – haven’t actually lowered rates yet and anyway, if they did lower the cost of borrowing, does that signify confidence in the economic trend or perhaps the opposite? Also, how much of these banks’ mortgage funding is procured at domestic rates versus the (rising) international rate? Anyone? Bueller?
APRA – haven’t changed their policy yet. They simply are considering it.
Sentiment is difficult to measure. In fact, given that most of the data points for sentiment are likely to be heavily skewed by the vested interests of those reporting them, I’d suggest completely avoiding any newspaper or similar media commentary.
In this internet age, we can become our own data analysts with very little effort. Transactions such as lending volumes (a lead indicator) and house prices relative to previous levels (a lag indicator) are published frequently and have methodologies we can apply a reasonable level of trust to.
These two metrics are about as solid and tangible as we need to determine when that mythical beast, the market top or bottom has arrived.
What, therefore, is our updated “Are we there yet, Mum” index telling us this month?
Now this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.
This just popped up on my Creepbook for Business timeline, just to prove my point;
Thanks Elvis, is that financial advice you’re offering?