If it feels like this month’s update to the “Are we there yet, Mum” Index has come around early, it’s because last month’s was late. Sue me.
Since the Federal election and yesterday’s decision by the RBA to
cave in to the noise prudently lower interest rates to yet an even lower historical low, the Legacy Press (c) and social media has been awash with vested interests talking up their own book.
Notable characters included in this description are Doctor Andrew Wilson (he’s a doctor of property!), the usually mildly sober Pete Wargent and practically every estate agent left solvent and trading. Apart from offering tangible data about “da feelz“, sorry, “market sentiment“, an increase in the auction clearance rate (i.e. the ratio of properties sold against those put up for auction) is presented as evidence for this ding dinging of the bell calling the bottom.
Now, it may well be that the nadir of the Sydney market has been and gone. That data point is, thankfully, a relatively objective measure. We can probably confirm this in about 2 month’s time when this month’s sales information has washed through the databases.
Our updated index (presented below), isn’t suggesting the trend has reversed, however. The relative change in the RBA lending data is still bouncing along at the lowest it’s ever been (before 2017, one could count the months it had been at 0.3% or below on the fingers of one hand) and the CoreLogic price index is still showing “negative growth”, i.e. prices are still falling.
It could be credibly argued that the CoreLogic data is a lag measure, so Wilson, Wargent, et al, could be correct in their bottom-calling, but the RBA data is almost certainly a lead indicator. Awkward…
The index suggests we’re still about 2 to 3 months from a possible bottom in the Sydney property market, and that’s likely to be the continuing situation until we’ve seen a quarter of a year’s worth of lending figures above 0.3% increases.
For those who pay attention, I’ve switched the trend line from linear to moving average as it seems more useful now we’ve reached a (low) plateau.