One dissenting voice is Bill Evans at Westpac, although he appears to have rather erroneously relied on the APM house price results to lend support to his 50 basis point call (Matthew Hassan at Westpac knows better).
The problem for Bill is that the APM median price numbers tend to lag the hedonic RP Data-Rismark outcomes by a good quarter or so over in addition to being afflicted by dramatically higher revision volatility (aka "noise" arising from compositional biases that affect median price measures). This is why investment banks like UBS and others no longer publish APM's numbers and prefer to use the RP Data-Rismark benchmark.
Contrary to what Bill has suggested, there is no evidence that the third quarter of 2009 resulted in "record" house price growth (although we expect the ABS median price numbers on Monday to be similarly strong). Regular readers will know that consistent with the first quarter housing finance data, auction clearance rates, Westpac's own "time to buy a dwelling" index results, and the impact of the first time buyers' boost, the three months to end March 2009 has been by far the strongest (+2.8%) in the year-to-date.
Of course, you will not find any 3-4% quarterly outcomes in the RP Data-Rismark Index time-series as we have been recording consistently solid growth since January this year (whereas the ABS and APM have had to play catch-up since the second quarter).
Rory Robertson, on the other hand, has once again proven that he is amongst the sharpest of all the Australian analysts:
RBA Watch - 30 October 2009
House-price uptrend starts to flatten-out in September
by Rory Robertson
*Australian house prices rose by 7.9% over the first three-quarters of 2009, according to today’s RP Data-Rismark update for September. Monthly increases in house (not unit) prices this year thus have averaged 0.8% per month. The main news today is that the outsized 1.7% jump in August has been followed by a tiny 0.1% rise in September (see first chart below)...
*Taking next Tuesday’s 25bp hike as a given (see attached RBA Watch), today’s weaker house-price result for September will help the RBA to think harder about pausing its “policy normalisation process” in December, before resuming its rate hikes in February. There is, of course, a great deal of water to flow under the bridge before that 1 December Board meeting.
*Coming months will tell us something about the dampening effect of higher mortgage rates on the uptrend in house prices. For today, however, note that the RBA’s back-to-back 25bp hikes in October and November - to be confirmed at 2.30pm on Tuesday– came after the period spanned by today’s news on September house prices.
*Also today, the RBA’s credit data again featured 10% annualised growth in housing credit to owner-occupiers, while investor demand for housing credit has strengthened to 5% annualised (see fourth chart). Overall, growth in housing credit was running at 8.5% annualised in September, up from a generational low near 6% late last year. (Almost paradoxically, housing credit may accelerate in coming months as higher mortgage rates mechanically reduce the rate of principal repayment by many existing borrowers.)...
*Finally, my old mate Dr Steve Keen looks set to lose our bet on house prices, when the ABS publishes its index for Q3 on Monday. The official update seems likely to show national-average house prices punching to a new all-time high (the black line in the first chart below needs to rise by 2.3% or more).
*For the record, the ABS house price index fell by 6.2% from peak (Q1 2008) to trough (Q1 2009), a small fraction of Dr Keen’s silly forecast of a 40% drop.
*As a result of his poor judgment, Dr Keen looks set to walk – at his leisure - from Canberra to the top of Australia’s highest peak, Mt Kosciuszko - a distance of 200km or so - wearing a tee-shirt saying “I was hopelessly wrong on house prices! Ask me how”. For those interested, here’s the map:
Source: Google (click to enlarge)
