THE ECONOMIST

The Economist house-price indices
Feb 9
Graphic detailCharts, maps and infographics
Our interactive guide to housing data across the world

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FINANCIAL media focus most of their attention on stocks and bonds, but the world’s biggest asset class is actually residential property. With an estimated value of about $200trn, homes are collectively worth about three times as much as all publicly traded stocks.

The charts above track housing-market indicators across 27 economies, as well as for 20 cities in America, in some instances going as far back as 1970. The first two metrics are price indices, one expressed in nominal terms and another adjusted for inflation. The second two measure valuation: one compares house prices with their long-run relationship with individual incomes, and the other with the historical ratio of home values to rents. If house prices climb faster than either earnings or rent payments for a long period of time, a financial bubble may be forming.

On this basis, house prices appear to be on an unsustainable path in Australia, Canada and New Zealand. Ten years ago they reached similarly dizzying heights against rents and incomes in Spain, Ireland and some American cities, only to endure a brutal collapse. Check back in three months’ time for our latest update.

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THE ECONOMIST
The Economist house-price indices
Feb 9
Graphic detailCharts, maps and infographics
Our interactive guide to housing data across the world

Graphic detail
FINANCIAL media focus most of their attention on stocks and bonds, but the world’s biggest asset class is actually residential property. With an estimated value of about $200trn, homes are collectively worth about three times as much as all publicly traded stocks.

The charts above track housing-market indicators across 27 economies, as well as for 20 cities in America, in some instances going as far back as 1970. The first two metrics are price indices, one expressed in nominal terms and another adjusted for inflation. The second two measure valuation: one compares house prices with their long-run relationship with individual incomes, and the other with the historical ratio of home values to rents. If house prices climb faster than either earnings or rent payments for a long period of time, a financial bubble may be forming.

On this basis, house prices appear to be on an unsustainable path in Australia, Canada and New Zealand. Ten years ago they reached similarly dizzying heights against rents and incomes in Spain, Ireland and some American cities, only to endure a brutal collapse.

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REAL ESTATE Buying off-the-plan property is going to get more complicated in July Outside of that Australia has thousands of smaller developers. They can be mums and dads That cottage industry is going to have to be very prudent with how they manage their cash flow.

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Feb 1, 9:00 AM

A federal government plan to plug a multibillion-dollar revenue hole will make life harder for off-the-plan buyers and mum and dad developers, property experts have warned. When GST (1/11th of the purchase price) is paid on a newly built property, it’s the developer’s responsibility to pay the Australia Tax Office some time after settlement. This leaves a loophole for unscrupulous developers to unnecessarily wind up a company and declare bankruptcy, freeing them of their obligation to pay the ATO the taxes it’s due. It’s nicknamed “phoenixing” and it’s thought to cheat Australian taxpayers of $3 billion each year. The plan to tackle “phoenixing”? From July 1, it’ll be the buyer’s responsibility to ensure the ATO gets paid. “New home buyers and off-the-plan buyers are going to become tax collectors, and the kicker is, it has to be paid before the property settles. “You’re going to still…

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https://www.mortgagebusiness.com.au/breaking-news/11896-property-values-fall-nationwide-in-january

https://www.mortgagebusiness.com.au/breaking-news/11896-property-values-fall-nationwide-in-january

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Brisbane

Brisbane is a great place to live, work and relax, and it’s the little things behind the scenes that make it a smart, connected city. Our innovative and cost-effective projects and services improve quality of life in our city now and into the future. Find out more about Brisbane’s Smart, Connected journey here:  http://bne.cc/2nky6QY 

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Auction clearance rates were down across all but two capital cities over the December quarter | http://bddy.me/2npoR2E

Auction clearance rates were down across all but two capital cities over the December quarter | http://bddy.me/2npoR2E

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Housing’s puzzling strength

Australian housing finance approvals beat expectations again in November, the number of approvals for owner occupiers up 2.1% vs expectations of a flat result. Approvals ex refi rose 2.4%mth to be up 9.2%yr.

The value of housing finance approvals to investors also posted a rise, up 1.5% but is down –8.3%yr.

The Nov detail showed continued strength in first home buyer loans (+4.5%mth, 36%yr) concentrated in NSW and Vic where state government stamp duty concessions are giving a big boost and activity is coming from a very low starting point.

Construction-related approvals were up 2%mth, 7.6%yr.

By state, gains in NSW (+1.9%mth), Qld (+4.3%mth) and SA (+2.1%mth) offset falls in Vic (–0.3%mth) and WA (–2.7%mth). Annual growth remains strongest in Vic (+16.8%) and NSW (+10.9%) bearing in mind that this is owner occupier approvals only (ex refi) and that the slowdown in investor activity has had a more material impact in these two states, NSW in particular.

Overall, the total value of finance approvals ex owner occupier refi was up 2.1%mth, and 1.7%yr. That compares to turnover, down around 16%yr, auction clearance rates, down over 13ppts, and an abrupt slowdown in price growth, down from a double digit pace mid-year to a sub-5% annual pace currently.

While the pull back in investor finance approvals is broadly consistent with macro-prudential tightening measures impacting this segment, the continued strength in owner-occupier activity has been surprising, particularly given material slowdown in wider housing market activity evident in other measures. Overall, the total value of loan approvals including investor loans and ex refi has firmed over the last year, up 1.7%yr.

The comparison with the previous macro-prudential tightening episode in 2015 is also intriguing. This resulted in a similar slowdown in wider market measures and a sizeable 10%+ decline in the total value of finance approvals.

The differences are puzzling but may be an indication that weaker foreign buyer demand – evident in the wider housing market performance but not captured by finance approvals – may have had a greater hand in the 2017 slowdown.

Matthew Hassan is senior economist with westpac

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The problem with economic forecasting is that there are so many variables, not least of which is the unpredictable nature of human behaviour

http://amp.abc.net.au/article/9336082?section=business&__twitter_impression=true

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