Based on CoreLogic’s House Price Index (HPI), it’s been 69 months since the US housing market peaked. Since the national index for ‘single family combined homes’ reached its high point back in April 2006, US home prices have fallen by 32.8%.
The first three years of US home prices coming down could be characterized as a reasonably steep downwards trajectory. Using a compounding growth rate, between April 2006 and April 2009 the annual rate of decline averaged 11.4% or 30.5% overall. Most of the home value destruction was over and done with in the first three years directly after the market peaked. Home values have come down a further 1.9% year on year (on average) since that time. Note, if you would like a complete run down on the US housing market, you can’t go past the ‘Market Pulse’ report from CoreLogic (January’s report was released last week).
Similarly, in the UK (based on the Halifax Index) the initial period of decline showed the steepest trajectory with home values falling by 10.5% per annum over the first 24 months post peak.
Using Property IQ’s House Price Index for New Zealand we can see a similar trend with the steepest trajectory of decline being recorded across the first 16 months after price peaked (down 9.6% over that period or 7.7% on an average annualized basis).
Looking at Australia, while there isn’t a long time series of data since the market peaked back in October 2010, values are down 3.8% in total (3.5% on an average annualized basis). The downwards trajectory in Australian dwelling values fits reasonably closely with the US trajectory over the same 13 month time frame (US prices were down 4.4% over the first thirteen months post peak compared with the 3.8% fall in the Australian market). Six months later the US market was recording falls of 1-2% month-on-month as the US banking sector imploded, unemployment and mortgage defaults rose swiftly and the GFC spread around the world.
If the November results from the RP Data – Rismark Hedonic Index remain consistent (November month on month result was +0.1% s.a.) and we see another flat result for December, it may provide the best indication yet that the Australian housing market is flattening out. The risk of a US style housing meltdown are looking increasingly remote. The key factors to watch will continue to be interest rates and the labour market data. With inflation tracking lower than expected, speculation about further rate cuts is likely to improve market sentiment. In balance, unemployment is ticking upwards and the banks are looking unlikely to pass on any cash rate cuts in full. Overall I think we can expect market conditions to remain reasonably flat over the first six months of 2012 at least.
Kind Regards,
Rashesh Bhavsar
Financial Planner
Book a no obligation consultation over the phone:
Call today on 03 9018 5534 or send an email to info@fortunewealth.com.au to book a no obligation consultation to find out your personalised wealth creation and wealth protection plans for you.
Fortune Wealth Creation Group
Ground Floor, 566 St. Kilda Road,
Melbourne VIC 3004
Phone no: 03 9018 5534
Email: info@fortunewealth.com.au
Source: http://blog.rpdata.com/2012/01/how-has-the-rate-of-decline-in-the-aussie-housing-market-compared-with-the-us-uk-and-nz/
The first three years of US home prices coming down could be characterized as a reasonably steep downwards trajectory. Using a compounding growth rate, between April 2006 and April 2009 the annual rate of decline averaged 11.4% or 30.5% overall. Most of the home value destruction was over and done with in the first three years directly after the market peaked. Home values have come down a further 1.9% year on year (on average) since that time. Note, if you would like a complete run down on the US housing market, you can’t go past the ‘Market Pulse’ report from CoreLogic (January’s report was released last week).
Similarly, in the UK (based on the Halifax Index) the initial period of decline showed the steepest trajectory with home values falling by 10.5% per annum over the first 24 months post peak.
Using Property IQ’s House Price Index for New Zealand we can see a similar trend with the steepest trajectory of decline being recorded across the first 16 months after price peaked (down 9.6% over that period or 7.7% on an average annualized basis).
Looking at Australia, while there isn’t a long time series of data since the market peaked back in October 2010, values are down 3.8% in total (3.5% on an average annualized basis). The downwards trajectory in Australian dwelling values fits reasonably closely with the US trajectory over the same 13 month time frame (US prices were down 4.4% over the first thirteen months post peak compared with the 3.8% fall in the Australian market). Six months later the US market was recording falls of 1-2% month-on-month as the US banking sector imploded, unemployment and mortgage defaults rose swiftly and the GFC spread around the world.If the November results from the RP Data – Rismark Hedonic Index remain consistent (November month on month result was +0.1% s.a.) and we see another flat result for December, it may provide the best indication yet that the Australian housing market is flattening out. The risk of a US style housing meltdown are looking increasingly remote. The key factors to watch will continue to be interest rates and the labour market data. With inflation tracking lower than expected, speculation about further rate cuts is likely to improve market sentiment. In balance, unemployment is ticking upwards and the banks are looking unlikely to pass on any cash rate cuts in full. Overall I think we can expect market conditions to remain reasonably flat over the first six months of 2012 at least.
Kind Regards,
Rashesh Bhavsar
Financial Planner
Book a no obligation consultation over the phone:
Call today on 03 9018 5534 or send an email to info@fortunewealth.com.au to book a no obligation consultation to find out your personalised wealth creation and wealth protection plans for you.
Fortune Wealth Creation Group
Ground Floor, 566 St. Kilda Road,
Melbourne VIC 3004
Phone no: 03 9018 5534
Email: info@fortunewealth.com.au
Source: http://blog.rpdata.com/2012/01/how-has-the-rate-of-decline-in-the-aussie-housing-market-compared-with-the-us-uk-and-nz/
Australia has fared a little better during the 2007-2009 financial crisis that begun in the US and the recession that followed in the next 2 years compared to the US and European countries. Now that it seems the US is getting out from a slump economy and Europe fixing its debt problems, the world's and along with that, Australia's economy is getting back to normal.
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The Bank's assessment remains, at this point, that inflation will be consistent with the target over the next one to two years.
DeleteUS is getting out from a slump economy and Europe fixing its debt problems, the world's and along with that, Australia's economy is getting back to normal.
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