Some housing bust predictions
I note in passing that the Australian population when Jenman made his first crash call, as recorded in the 2001 Australian Census, was 18.972 million, as compared to 23.115 million today. Demand for housing in capital city suburbs is rising with every passing week.
The property crash predictions have continued, yet prices in many areas have kept on climbing:
In fact, only Sydney's housing markets have broken through to new highs, with all other markets below previous peaks, which thus represents something of a decline in real terms.
Housing finance data
Prices declining in real terms?
However, you choose to define the word 'recovery', it's heartening to see the number of first homebuyer commitments picking up over the last few months, although the value of their commitments remains relatively low to date. I have long felt that FHBs will gradually come back into the market once they believe that prices won't fall further, but this is one data set to keep a close eye on.
Investors are leading the recovery
Sydney prices are up +8.5% in this cycle already, with the inner west markets running very hot (as I've been saying forever and a day now, it's the $500k-$1 million inner west suburbs which represent the hot markets).
It may not have been a bad strategy from 1993-2005 for those for whom servicing investment mortgages was an issue, but it's the wrong strategy today. If you are waiting for households to simply keep on taking on ever more mortgage debt in perpetuity and prices to magically keep increasing ahead of incomes you are likely to be very disappointed.
The recovery in property markets has been investor-led, which means that quality inner-city markets will be the likely outperformers - the regional markets/fringe suburbs look much more likely to me to struggle badly. If you want to outperform you will need to anticipate where the next huge wave of speculative investment capital is heading, and that is to the four main capital cities, and in particular, to Sydney suburbs close to the city.
Melbourne has already experienced a tremendous boom in prices since 2007. Perth is travelling very strongly again with its low unemployment levels of just 4.6% and booming population growth. And prices in Sydney seem set for more very strong growth. I'll be forced to change the broken record on Sydney's inner west at some point, but judging from the scorching auction clearance rates recorded on Saturday, not for quite some time to come yet.