New ABS House Price Index Is Strong As Expected. Louis Christopher

There’s quite a lot of real estate data out today!

Let’s start first with the ABS Housing Finance Approvals series.

The one thing a find quite amusing is that there are so many different numbers in this series that almost anyone with a particular agenda can pull out a number that best suits them.

But the reality today was that the results for December were weak at the national level.

The total number of owner occupied housing finance commitments fell 1.9% (seasonally adjusted). Our preference is to look at the number excluding refinancing which fell a more moderate 1.0%.

Please see chart below:

Source: ABS

Interestingly, investor finance continued to rise with the value increasing by 2.9%.

Finance approvals for First Home Buyers fell again by 1.1%.

Still,no confirmation of any recovery for First Home Buyers –


Source: ABS

At this stage I am not reading too much into this fall.

It is just one month’s worth of data at a time where seasonal volatility is at its highest (Xmas).

I do note though, that our asking prices index appears to be having a dip at the moment.

Capital city asking prices are down 1% for the past 3 days. Units are up by just 0.1%

Once again, January should not be overanalysed due to the holiday period.

However, if our asking prices series still remains soft right throughout February, then there might be a story.

Speaking of house price indexes, the ABS released its new dwelling price series today.

What makes it so new?

They now have an index on units as well as houses. Plus a combined series. Previously it was just a house price series.

Overall, the results were very strong as expected.

Residential property prices rose by 3.4% for the quarter, to now be up by 9.3% compared to December quarter 2012.

House prices were up by 3.5% for the quarter, to now be up by 9.5% for the 12 month period.

While unit prices were up by 3.0% for the quarter, to now be up by 8.8% for the 12 month period.

Some of you may wonder what the weighting is for the combined dwelling series. You can find that here in the explanation. Overall, they are placing 74.1% on houses and 25.9% on units. However, the weighting varies significantly between cities. It appears the weightings have been based on the 2011 census data.

The ABS also released the total value of dwelling stock, which they estimated it to be just over Five Trillion dollars!

To give you a comparison, the ASX states on their website that the total market capitalisation of Australian equities is 1.5 trillion dollars

It certainly gives you some perspective on the influence of the housing market upon the greater economy and why accurately measuring the direction of residential real estate prices is critical.

Next week, I’ll go into some detail on the comparisons of the various residential property indexes with a comparison of the results for the year.



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Louis Christopher


Louis is recognised as one of Australia’s most respected and impartial research property analyst. He has extensive knowledge and experience of property and is regularly quoted in the media on his insights and is director of SQM Research.

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