February home values
Cotality reported the latest home values index for the month of February, with Sydney and Melbourne going slightly backwards over the quarter, and new sales listings picking up in the largest capitals.
On the other hand, Perth and Brisbane prices have blazed higher by +6.8 per cent and +4.8 per cent respectively over the 3 month period, with Adelaide prices also up by +4.3 per cent.
Source: Cotality
Within the recent data it's become quite clear that the bottom price quartile has been outperforming, as a direct result of the 5 per cent deposit scheme for first homebuyers.
Thus while Sydney house prices were down by -0.4 per cent over the quarter, unit prices were up by +0.8 per cent over the same timeframe.
There was also an equivalent disparity between affordable houses, where prices rose, and expensive houses, where prices fell.
Source: Cotality
Similarly, regional housing markets have picked up some pace, partly thanks to relatively more affordable prices.
Rental prices have re-accelerated to rise by +1.7 per cent over the quarter, to be +5½ per cent higher over the year, though Cotality noted that rental inflation has eased in some cities.
Source: Cotality
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In this context, it's interesting to reflect on Australia's capital city price-to-rent ratios.
I remember reading similar ratios in a book published by The Economist perhaps 25 years ago, and they were all doom and gloom at the time flagging massively overvalued markets - but they seemed to take no account of the change in inflation targeting policies and lower nominal interest rates.
In any case, on a relative basis houses and attached dwellings in Victoria look to be better value now, as do attached dwellings and units in New South Wales.
Not sure what's going on here with Perth - maybe the statistics are lagging? - but that market has well and truly sailed over recent years.
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In other news, it looks like energy ETF bets are about to pay off bigly, for obvious reasons.
It seems that a drone strike has impacted the Saudi Aramco refinery in Ras Tanura - the world's largest oil export terminal - while ships are reportedly unable to secure insurance or access the Straits of Hormuz, which will likely lead to oil supply issues.
An oil supply shock may lead to a nasty inflation surprise for the central bank, even if it does prove to be a temporary issue.
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