There was little in the way of data releases this week relating to the housing market, however the highlight of the week was the visit to Australia from Nobel Laureate Professor Vernon Smith.
The Professor, who is a legitimate expert on asset bubbles, made the point at a breakfast held by CoreLogic that Sydney and Melbourne were exhibiting signs that the housing market could be in a bubble, with values in Sydney tracking more than 40% higher over the past three years.
What is less clear, according to the Professor, is how dramatic the downside of the current growth phase will be.
Some factors that are likely to soften any downturn would be the fact that Australian mortgages aren’t as rigid as those in the US, with flexibility being provided by the fact that most mortgages are on variable mortgage rates.
Additionally, the recourse lending environment and the fact that banks continue to lend responsibly are other factors offer up some protection.
In other news, the weekly measure of consumer confidence from Roy Morgan has shown an improving trend in confidence levels after the index fell by 8% over the first two weeks of July.
The index has now lifted by 5% over the past two weeks which may be attributable to the calmer headlines around Greek debt and less global volatility.
The Australian dollar dropped below the US$0.73 mark this week, with the Governor of the Reserve Bank of Australia, Glenn Stevens, indicating in a speech to the Anika Foundation earlier in the week that the lower dollar was starting to have an expansionary effect on the domestic economy.
Next week CoreLogic RP Data will be reporting on housing market conditions through to the end of July.
Preliminary readings indicate another strong month of growth, once again being driven by Sydney and Melbourne where dwelling values were 3.2% and 4.8% higher over the first 30 days of the month.
The other major capital city markets are on track to record less growth over the month with dwelling values moving higher by less than 1% over the month to date.
CoreLogic RP Data was tracking 2,143 auctions last week; the biggest week for auctions since the last week of June.
The weighted average clearance rate continued to drift lower over the week, with 74.7% of reported auction results selling before, at or after the auction event.
This was the lowest auction clearance rate since the first week of March.
Melbourne and Sydney had almost the same number of auctions held, with 918 and 906 respectively.
Clearance rates across the two cities were recorded at 75.7% in Melbourne (the lowest clearance rate since the week ending March 8) and 79.9% in Sydney (the third week running where the clearance rate has been less than 80%).
The downturn in total listings numbers appears to have levelled since mid-March, where prior to this data the total number of homes being advertised for sale had been trending lower.
Despite the levelling in the trend, total stock levels remain 1.8% lower than a year ago nationally and 1.7% lower across the combined capital cities.
The number of newly advertised properties is moving higher though, up 11.7% compared to the same period a year ago nationally and 14.3% higher across the combined capitals.
Total stock levels across Sydney, Melbourne, Hobart and Canberra are all more than 8% lower than at the same time last year which is likely to be seen in stronger selling conditions for vendors.
At the other end of the spectrum, effective supply levels in Perth and Darwin are now around 22% higher than last year which is providing for tougher selling conditions in these markets.