Housing bears are becoming an extinct species
In the AFR today I write that Aussie housing bears are quickly becoming an extinct species, as we had previously predicted. Read the full column here (or try this twitter link here). Brief excerpt enclosed:
In terrific news for the post-COVID-19 recovery, house prices have started climbing again across six of Australia’s eight capital cities and throughout non-metro regional markets. This accords with our heterodox March 2020 forecast for the local market to suffer negligible losses of between zero and negative 5 per cent over a six-month period followed by capital gains of 10 per cent to 20 per cent.
Throughout Australia’s eight capital cities, the cumulative loss to date has been just 2.8 per cent according to CoreLogic, and would have been a lot less were it not for Melbourne’s entirely unnecessary second COVID-19 wave.
In September, dwelling values recorded capital gains in Perth (0.2 per cent), Canberra (0.4 per cent), Hobart (0.4 per cent), Brisbane (0.5 per cent), Adelaide (0.8 per cent), and Darwin (1.6 per cent). Home values also appreciated in all non-metro regional areas (0.4 per cent). The tide is similarly turning in Sydney, which registered its smallest capital loss (minus 0.3 per cent) since the market rolled over in May.
Given a jump in purchasing power care of lower mortgage rates and higher incomes, bullish auction clearance rates, and the advent of "positive gearing" (where rents more than cover mortgage repayments), we expect Sydney home values to start punching out capital growth again soon.
The laggard is the locked-down Melbourne metropolis where dwelling values dropped another 0.9 per cent in September, making for cumulative losses of 5.5 per cent since its March peak. Yet with Melbourne likely to come out of lock-down shortly, stability should return as the auction market comes online.
Australia’s resilient housing performance has again made a mockery of the consensus’s extremely bearish forecasts for large price falls of 10 per cent, 15 per cent, 20 per cent, or 30 per cent. Housing bears are becoming an extinct species with the likes of CBA and Westpac discarding their dire outlooks for much more bullish perspectives. The latest bear to drop is Capital Economics, which was anticipating losses of up to 10 per cent, but now predicts only a 3 per cent correction. And next year it believes home values will surge 7 per cent higher. Other bears like ANZ, NAB and UBS should roll-over soon.
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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.
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General 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 information may contain some forward-looking statements. 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. 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 rely on forward-looking statements.
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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
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