Andrew Harvey from Business Spectator has a superlative rundown on The Housing Crash That Wasn’t: Another year has passed with portents of doom and gloom regarding residential property prices yet again proving incorrect. The latest information available for 2011, RP Data-Rismark’s seasonally adjusted hedonic price series for November last year, shows that median dwelling prices returned to growth. Price gains, albeit extremely modest ones, were posted for capital city home values (up by 0.1 per cent) and for regional home prices (up by 0.3 per cent) in the month. While one data point does not a trend make, it does represent the first increase in dwelling prices since December 2010. As the November 2011 result follows a period of controlled price moderation that has been in place since the middle part of 2010, it provides some hope that the worst of the residential property market slump may now be behind us. Over the year to November 2011 house prices in the capital cities declined by 4.3 per cent (year on year) and unit prices in the capital cities fell by 1.1 per cent.
A key measure of future economic activity slipped in October, suggesting the pace of growth may ease in the next quarter. The Westpac-Melbourne Institute Leading Index forecasts the likely pace of economic activity in the coming three to nine months.
The annualised rate of growth fell to 2.6 per cent from 2.8 in the month, which is below its long-term average of 3 per cent. Westpac chief economist Bill Evans says a mid-year surge which saw growth of 4.4 per cent in August has faded. Corporate profits rose 0.6 per cent. In line with this, productivity was up 0.5 per cent and overtime worked rose by 0.3 per cent.
“These positives were more than offset by bigger drags from manufacturing prices, the All Ordinaries Index and dwelling approvals,” Evans said. “The remaining components, US industrial production and real money supply, were broadly neutral.” Evans expects the economy to grow by 3 per cent next year.
Commercial loans soared 16.5 per cent in the month on a seasonally adjusted basis, driven by a surge in revolving credit, the Australian Bureau of Statistics says.
But investment property loans partially offset those gains, down 2.9 per cent after rising the same amount in September.
In a further sign of weakness in the property sector, home loans to owner occupiers also shrank, down 1.2 per cent after gaining 0.7 per cent the month before.
Personal finance commitments rose 5.2 per cent and lease finance fell 2.4 per cent.