Housing going nowhere...

Consistent with our forecasts for around 12 months now, the second half of 2010 looks like it will see little-to-no capital growth. Last weekend's auction clearance rates were weak. Rismark successfully projected the modest downturn in 2008, the robust rebound in 2009, and the cooling in 2010 (albeit that we were anticipating a slowdown a little earlier--in Q1 2010 as opposed to Q2 2010--than actually transpired).

This can be contrasted against the lunactic housing fringe, who forecast 20-40% house price falls in 2008 (cf. with realised dwelling price declines of just 3-4%), and, amazingly, the same again in 2009 and 2010. It must get awfully frustrating when you are proven relentlessly wrong by real world outcomes. Going forward, we are bearish on asset price growth over 2010-11 as a function of the RBA's base-case interest rate story.

As an interesting aside, the housing nutters out there used to criticise the best-in-class RP Data-Rismark Hedonic Dwelling Price Indices, which in 2008 reported slightly lower dwelling price declines than the simpler--and less representative--ABS measure. Unsurprisingly, this practice ceased when the market recovered and RP Data-Rismark reported far and away the most conservative capital growth rates over 2009-10. Indeed, the loonies started relying on RP Data-Rismark's numbers when we were the first to disclose dwelling price declines in the month of June 2010, well in advance of the ABS and APM.