SQM's Louis Christopher on the Aussie housing market

Interesting video on Switzer TV here featuring Louis Christopher of SQM, who tends to talk a lot of sense.

He notes that the Sydney market is very strong with stock levels plummeting (by more than 23% y/y), and this is being reflecting in housing data, with the Sydney market easily breaking new highs and rising. 

Price growth in Sydney has shown no real signs of slowing to date.

Perth has been on a great run thanks to the mining boom, but the housing market could begin to slow as the mining construction boom passes its peak, notes Christopher.

Christopher also believes that the Adelaide is likely to remain soft due to plenty of supply. 

Plenty have been tipping Adelaide as a hot market for many years now but price growth has been weak and dwelling values remain around 4-5% below their previous peaks. 

Quality investments in Melbourne would have represented an infinitely better selection since 2008 with prices booming dramatically. And, for that matter so would Sydney.

Unsurprisingly, the Melbourne market has calmed down since its meteoric rise, though inner- and middle-ring  suburbs seem to have remained robust enough.

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Stock on market property trends

Month to month figures can be a little confusing when it comes to the stock on the market.

However, the annual figures tend to tell a fair story:

Source: SQM

The tight markets are Sydney, Perth and Darwin. The two latter cities have already shown strong price growth and this data suggests that might continue for some time. Sydney's growth has been relatively moderate to date, and moderate growth may continue there too.

Louis Christopher of SQM said:

"While I laugh at the notion that house prices are falling as stated by only one of my competitors, it is clear that in some metropolitan locations, the market has continued to fall despite the interest rate cuts. As for the strongest cities out there – they are by far Sydney, Perth and Darwin, though I note from our recent survey earlier this week that we now expect Perth to slow down later this year.”

Meanwhile, RP Data reports the fastest selling cities as being:

"Across most capital cities, the current average time on market is lower than at the same time last year.  In fact, the time on market is lower across each capital city except for Brisbane and Hobart.

Time on market for capital cities:

• Sydney - 35 days
• Melbourne - 38 days
• Canberra - 49 days
• Darwin - 52 days
• Perth - 52 days
• Brisbane – 72 days
• Adelaide – 68 days
• Hobart  - 110 days"

There may be some trickier times ahead for Canberra as new plots are released. 

The Sydney market looks very strong.

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It will be a week day for stocks in Australia after US stocks (Dow) fell by 0.75% and the S&P 500 Index also sank lower for a second day, after the Bank of Japan Governor Haruhiko Kuroda said he sees no need to expand monetary stimulus immediately.

This is precisely the distorting effect on investment markets of QE that I have been discussing. Good news can be bad news and vice-versa. The outcome over time is likely to be stock markets flying when easing is in place and sharp corrections when it is taken away. Strange world we live in.

More lending finance data to come from the ABS - watch this space...

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