Today sees a lot of data releases on the performance of various markets and assets but we bet there will be nothing that attracts more publicity and noise than the monthly CoreLogic house price release first thing.
It’s awaited by the media, real estate agents, bankers, politicians and regulators, especially now as it tells a story of soaring values and shrinking affordability, with all the attendant social equity questions.
The June data on Australian house price rises will update the 10.6% jump in the year to May and forecasts are for another reading around the same or perhaps a touch higher.
House prices rose 2.2% in May from April and came after the 2.8% surge in March, which was the fastest month on month rise in 31 years.
Data yesterday from the Reserve bank revealed another rise in housing credit in May – up 0.6% from April when home lending rose 0.5%. Year on year housing financial grew at 4.8% compared to 3.2% in April.
At 10.6% the rises in Australia are generating considerable angst and raising questions about home affordability.
The ASX 200 is up nearly 24% in the same period and nearly 11% year to date in 2021, so on that basis the rise in house prices is part of the surge in asset prices generally.
But as noisy as the Australian comments are, just imagine if we were going through a market much hotter (we think our market is the ‘worst’ in the world with big price rises).
So for another month US house prices soared at a rate 40% faster than those in Australia in May.
And if you use the same month in Australia – April, when prices rose at an annual 7.8%, the difference with the US is astounding – a massive 6.8 percentage points.
According to the S&P CoreLogic Case-Shiller National Home Price Index, US home prices in April jumped 14.6% from the same month a year ago (when admittedly, they were weak because of Covid).
That was up from a 13.3% increase in March and the fastest annual growth rate in 30 years – which includes the run up to the GFC in 2007 and 2008.
Among larger cities covered by the index, the 10-city composite was up 14.4% year over year, from 12.9% the previous month. The 20-city composite was 14.9% higher, up from 13.4% in March.
America’s S&P 500 is up 38% in the past year and more than 14% year to date
Phoenix, San Diego and Seattle reported the highest year-over-year gains. All were up more than 20% from the year before.
“April’s performance was truly extraordinary. The 14.6% gain in the National Composite is literally the highest reading in more than 30 years of S&P CoreLogic Case-Shiller data,” said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices.
Not only did home prices rise in all 20 cities, but the price gains accelerated in all as well and were in the top quartile of performance historically.
Five cities – Charlotte, North Carolina, Cleveland, Dallas, Denver and Seattle – saw their largest annual gains ever.
Prices have been rising now in the US for the last 11 months, as buyer demand continues to outstrip supply.
The US National Association of Realtors says the inventory of homes for sale rose slightly in May compared with April, but was still 21% lower than May 2020.
Home sales have been falling for the past few months, due both to low supply, especially at the entry level of the market, and very high prices.
Single-family housing starts have also slipped, as homebuilders try to keep up with a heavy backlog of demand amid high prices for land, labor and materials.
So far as costs are concerned, there is relief in sight. The price of timber (lumber) has halved from $US1,600 per thousand broad feet to $US800 last week. That is still double the normal $US300 to $400 price, but increased supplies have emerged and depressed prices.
