Part 1 - Demand: Demographics
For reasons I haven't really gotten a handle on, Nine News Adelaide once again chose to report that Adelaide had recorded the biggest housing market gain in September, with values "increasing by almost 1 percent" - somewhat misleading given that it was already evident that those supposed 'gains' had been more than reversed out by a 1.1 percent 'decline' through the month of October.
If we really want to cherry-pick data, imagine the returns from $100,000 lobbed into 3500 CBA shares in late December 2008. Not only would those shares today be worth north of $286,000, shareholders would have collected a romping 70 percent return from the dividends alone, some $70,000 of tax-favoured income.
In any case, the latest round of Housing Finance data showed that underlying owner-occupier demand for housing is generally stronger and strengthening in other markets, but has actually been declining in South Australia over the past five months.
Next year looks to be a brighter one for Brisbane, following a slow half decade.
Part 3 - Supply: Stock
Part 4 - Supply: Approvals, Commencements and Completions
And over the past three years, the same has also become true of attached dwellings, with much of this supply being inner city high-rise stock. The end game here is oversupply and vacancies.
Sydney unit and apartment approvals have been declining for many months - the peak was way back in September 2013 - and is trending back towards a 22,000 or fewer unit approvals on a rolling annual basis, a volume which can comfortably be absorbed by Greater Sydney population growth.
The divergence of the fundamentals of the Sydney and Melbourne housing markets therefore continues. In New South Wales the population is exploding higher, yet to date in this cycle the number of new dwellings completed has continued to lag versus rapidly increasing underlying demand quite diabolically.
There have been record numbers of auctions in both Sydney and Melbourne in recent weeks, but the low ratio of dwelling completions to population increase in Sydney looks set to keep momentum in the harbour city rolling into the new year, as does the volumes of new mortgages written, with records tumbling by the month.
Part 5 - Dwelling Prices
Later this week the ABS will release the State Accounts data for 2013-14, a subset of the National Account data which we expect to reveal some interesting trends in respect of Gross State Product (typically led by the mining states) and State Final Demand (a measure which excludes exports and which we believe will be led by New South Wales).
The State Accounts data will also reveal some key trends related to Gross Household Incomes and Gross Household Disposable Incomes by state and per capita.
The calculations of household incomes can be a little crude, but the trends can also be compelling, so watch this space.