Australia’s official property price data tomorrow will show a collapse in the year to June 2016


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September 19, 2016

Australia’s property prices will show a collapse in the year to June 2016, according to Australian Bureau of Statistics (ABS) data to be published tomorrow at 11.30am especially Sydney prices.

Basis Point Consulting, a firm active in the Australia-China investment sector, has been telling its clients that its prediction of a price collapse is a ‘no-brainer’.

David Chin, Managing Director of Basis Point says ‘It’s simply because the June quarter number last year of 8.9% in Sydney was a huge record rise which lifted the annual rise to a near record 9.7%.

Tomorrow the annual numbers will fall off a cliff when the old quarterly data is replaced by the much lower price rises we’ve seen in the market lately. It’s really just mathematics.’

Mr. Chin speculated that the June 2016 quarter growth rate in Sydney will be under 2.0%, given the negative sentiment during that period. This means the annual growth rate to June 2016 will be a mere 2.8%. “Expect a reporting panic,” Mr. Chin said. “The headlines should be interesting.”

This plunge will make buyers and sellers recalibrate their outlook to expect more subdued growth in the year ahead.

David Chin used the same analysis to predict the inflation rate during the high inflation years in the 1990s when he was in the futures industry. ‘ It’s a no-brainer if the quarterly number that falls off the annual calculations was a large number relative to the other quarterly numbers, which is what we’ve seen in the property market in the past year’.

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Click to enlarge

Source: Australian Bureau of Statistics and Basis Point

NOTES

Sydney’s property price data for the year to March 2016 shows an annual rate of 9.7% (8.9 plus 3.1 minus 1.6 minus 0.7). (see above) The 8.9% will drop off these calculations tomorrow

The 8.9% rise in June quarter 2015 was the largest percentage quarterly rise since 2003, while the Dec 2015 quarterly fall was the fourth largest fall since 2003. This will add to the dramatic plunge in the annual growth rate when the ABS data is released tomorrow.

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Melbourne’s data is not as dramatic (below) as the 4.2% quarterly number will drop off the annual growth rates.

 

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Click to enlarge

Source: Basis Point Consulting


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