TOL - 23rd Nov, 2022
Sydney house prices have fallen 11.1%, declining at a 17% annual rate, while Brisbane prices fall at 20% annual rate
So there is good news and bad news. The bad news is that national house prices are falling at a record 14% annual rate based on the last three months of data from CoreLogic, with a total draw-down of 7.4% since the 5 capital city index's May 2022 high watermark. And this is before a veritable tsunami of $500 billion worth of fixed-rate home loans see their interest rates more than double from 2.0% to 2.25% to 5-6% as they switch back to variable-rate next year. Our forecast for a record Aussie house price correction of 15-25%, which we published in October last year, remains unchanged.
The epicentre of what will likely become the biggest housing crash in modern Aussie history has shifted from Sydney to Brisbane, where prices are currently falling at an incredible 20.3% annual rate (Brisbane values have already shrunk 7.7% peak-to-trough thus far). Sydney dwelling values have fallen furthest, plunging a massive 11.1% since their peak in absolute terms (okay, it is nothing like Bitcoin's savage free-fall from US$69,000 to US$15,600). Sadly for homeowners, Sydney dwelling values continue to decline at a 17% annual rate based on the past three months of price moves.
The good news is that the pace of declines has generally slowed, although this could just reflect seasonality. The Melbourne market is faring a lot better than Sydney and Brisbane, with total losses of only 6.9% to date and a more orderly (albeit still chunky) 10.6% annualised rate of decline over the last three months. Adelaide and Perth are stronger again, experiencing very mild adjustments of just 1.1% and 0.9%, respectively, since their recent peak.
The second chart below highlights the positive news. It shows the change in the pace of three-month annualised house price declines, which have slowed, though they still remain sharply negative (observe how most lines are rising or stabilising).
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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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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...
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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
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