It’s a ‘no-brainer’ that Sydney’s dwelling prices will show a massive collapse in growth rates for the year to June 2016, when the Australian Bureau of Statistics (ABS) releases its quarterly results at 11.30 am on Tuesday 20 Sept.
Sydney prices will plunge from the current 9.7% annual growth rate in the year to March 2016 to our forecast of a mere 2.8% growth for the year to June 2016, when the ABS data is announced. See below for tables for Sydney and other Australian cities.
It’s simply because the June quarter number last year of 8.9%, which was a huge record rise, will be dropped from the annual calculations tomorrow. Its simple mathematics.
STOP PRESS 11.31am ABS Stats announced –we were close to the mark 2.8% quarterly growth and 3.6% annual growth see ABS link
The ABS number highlights the risk of some settlement defaults in 12 -18 months time when foreign buyers, who bought off-the-plan apartments in the June peak last year, could see flat or possibly negative returns when it is time to settle in 2017 and 2018. However, see our previous analysis on why many will still continue to settle dispute lacklustre profits.
Meanwhile, buyers who bought in 2013 and 2014, and who are settling now, are seeing strong profits and are keen to complete their contracts.
Which is why non-bank lenders have surged into the gap created by Australian banks exiting this sector.
Our non-bank lending conference this Thursday (last chance to register) features speakers such as:
- Adam McKissack Principal Adviser, FIRB and a former senior Treasurer representative in the Australian embassy Beijing
- Vincent Lim, an executive director from SumoSIV who has just reached agreement with a wealth management group in Shanghai to set up managed funds in Australia to lend to experienced property developers
- Heads of six major (and some new) non-bank lenders active in Australia
- Michael McCormack the Australian Minister For Small Business, with his presence highlighting the importance of job creation and small business activity in the supply chain in the building and property sectors
- Any many others
Cost for the half day event is $450 plus GST. We have 260 registered delegates with doors closing on a 300 capacity at the Westin Grand Ballroom! Register now!
Sydney’s annual growth rate to March 2016 from the ABS shows an annual rate of 9.7% (8.9 plus 3.1 minus 1.6 minus 0.7).
We are forecasting a June quarter 2016 growth rate of 2% given the negative sentiment during that period as well as comments from the RBA in early August about moderating prices in Sydney in previous months, and overstated price growth in April and May by a major data-provider due to an index methodology change . This will mean the annual growth rate to June 2016 will be a mere 2.8% (being 3.1 minus 1.6 minus 0.7 plus 2.0).
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 we will see tomorrow when the ABS data is released.
Aus-China Non-Bank Lending Conference, 22 Sept 2016 | Westin, Grand Ballroom, Sydney Click here $450+GST half day event plus cocktails
Seminar on Site Acquisitions via NSW Strata Law Changes – when fairness meets fortunes, 28 Sept 2016, Doltone House, Hyde Park, Sydney Click here $148+GST lunchtime event
PS. I used the same analysis to ‘predict’ the inflation rate during the high inflation years in the 1990s when I 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 we’ve seen in the property market in the past year.
Meanwhile, statistics for other major Australian cities are below. As you will note, Melbourne will see 4.2% growth knocked off in the year to June 2016 calculations but the other capitals will see little change
Last chance to join 260+ delegates at the Aus-China Non-Bank Lending Conference, 22 Sept 2016 | Westin, Grand Ballroom, Sydney Click here
Site Acquisitions via NSW Strata Law Changes – when fairness meets fortunes, 28 Sept 2016, Doltone House, Hyde Park, Sydney Click here