Housing prices defy seasonal pattern

Garry Shilson-Josling, Economist
(Australian Associated Press)


This time last year, and the year before, and the year before that, housing prices were flatlining. But not this year.

In the past four weeks, CoreLogic’s measure of home values has risen 1.5 per cent.

In the corresponding four weeks of 2015, prices fell 0.5 per cent; in the matching period of 2014, they rose just 0.1 per cent; and in 2013, they rose 0.6 per cent.

So, what’s happening right now is abnormal.

And, it’s not the only abnormality in the housing market this year.

The usual late-autumn/early winter dip in prices – quite pronounced in 2013, 2014 and 2015 – has been so brief, and so shallow in 2016 that it arguably hasn’t even happened.

And now, as the number of auctions ramps up, as it usually does at this time of year ahead of the Christmas/New Year shutdown, prices are still surging ahead when they’d normally be struggling to make any headway.

This suggests predictions of an imminent sharp fall in prices are, at least, premature.

But the seasonal surge is only just beginning.

Late November and early December historically showing the highest number of auctions – and that may weigh on prices.

“As the number of auctions trends higher over the coming weeks, the larger stock levels will provide a timely test of the auction market’s strength,” CoreLogic said.

In its quarterly survey of property market professionals released earlier this month, National Australia Bank identified both supply and demand factors as helping to boost prices.

“The RBA’s (Reservve Bank of Australia) recent interest rate cuts have been a major source of support, while investor credit has also picked up again,” NAB’s economists said.

“On the supply side, there also appears to be a number of factors at play with auction and sales volumes down compared to a year ago.”

NAB’s economists stressed the uncertainty around the outlook for home prices, but said they expect a more subdued environment from late this year as supply conditions become less favourable.

“However, we continue to hold the view that residential property prices are unlikely to experience a severe price ‘correction’ without a trigger that leaves unemployment or interest rates sharply higher – which we are not anticipating.”

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