Market Update – March 2020
Core Logic have just released their February data. The headline says it all: ‘Housing values surged’.
Recall that rather than just looking at dwelling values, I prefer to look to the fineprint of the data to see what’s happening to house prices, given they’re the biggest component of what’s driving property prices.
February 2020
January 2020
Source: CoreLogic Home Price Value Index Tables (www.CoreLogic.com.au)
Note:
Red indicates a negative value, green indicates a positive value and white is neutral.
↑ represents an improvement, and ↓ represents a deterioration from the last month’s results.
Interpretation
It’s nearly a sea of green, which can only mean one thing… property prices are up and investors are happy.
Indeed, following on from my comments about debt bubbles, lending across the board is up, including to investors where the decline seems to have well and truly reversed.
The price recovery party should continue for the foreseeable future, notwithstanding extra volatility from the corona virus, because easy finance and low interest rates have the effect of inflating values.
However the time will come when the debt binge of today will need to be repaid. I suspect this will be when unemployment and interest rates start to rise, or if there is panic selling because of other events and people want to dump assets at any price. When that day comes, property prices will fall – hard and fast.
Comments
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From what I hear and see a lot of QE money will be and already is being thrown at this in order to stop the inevitable. The inevitable might be dragged out for another few years with ever bigger bubbles forming!
We are in a one way street with no way out other than forward towards the abyss.
A reset should have happened in 2008.
The bad boys got bailed out and they even got rewarded for their criminal behaviour. So what have they been doing over the last ten years or so….more of the same except with multiplying factors of a size, I am sure, no one even knows! History always repeats when humans are involved! For we just do not learn.
I think we are going to start to see a lot more red over the next few months.
The price recovery is still a long way out.
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