Is Australian Property About To Decline? May 2020 Update

https://www.youtube.com/watch?v=lTnodAY84Oc With everything that's going on with the virus, the lockdowns and social distancing plus government stimulus, how is this going to affect the Australian property market moving forward? 0:00 - Introduction0:45 - Monthly change in dwelling values3:10 - Australia is NOT one housing market6:27 - Government bailouts7:35 - What kind of recovery will we have?8:30 - Decline in leading indicators11:05 - Higher than expected vacancy rates13:12 - What do I think? Recommended Videos: Core Logic May 2020 Property Update Pumped on Property's May Update Transcription: it's been a little while since I've done an Australian housing market update but with everything that's going on with the virus with the lock downs with the social distancing a lot of people out there are concerned about the market if you own a property you may be concerned about what's going to happen with that when's the best time to sell if you're looking at investing in the market you might want to pick your timing so I thought it would be a good time to sit down have a look at the data see what the data is telling us and have a think and a discussion about what may or may not happen in the future now obviously I don't have a crystal ball I don't know exactly what's going to happen all I can do is look at the data and make my own assumptions and own speculations and you need to look at the data for yourself and make your own decisions - so here we have the change in the monthly change in national dwelling values and this is provided by core logic and a link up to their main monthly update video in the description down below if you want to check it out that's where a lot of this data is coming from and so we can see that the property market actually showed some growth in April so even with the buyers happening even with the lock downs even with a lot of this stimulus not having come through yet into everyone's bank accounts we're still seeing the market grow which is really interesting but I do want to look at this trend and this downward trend so if we go back March February January December November we can see that growth rates peaked in November and we can start to see a bit of a downward trend here in the growth rates now I I actually kind of picked it which is really interesting and parries I want to do this update is just to have history of what's going on and so if we go back to June 2019 I did a video of has the market bottoms yet and so I was looking at it thinking has the market bottomed and that was one month ahead of schedule I think the next ones here is Australia prime for growth in July and so that was where we actually saw the last month of decline in July and then I think yeah August the market started showing some growth so if we go back to that core logic video we can see that August we had our first growth and then we ended up on this with trends so I actually kind of picked it there and I've been talking about it for a while since back in January February about this trend in the market was still declining but at a slower and slower rate and now we've got the opposite happening the market is still growing but at a slower and slower rate and if we go back and look at 2017 we can see this trend again we can see the market growing but at a slower and slower rate until it turned negative and then if we go ahead and go back to 2015 we can see that the market was growing but it had this downward trend at a slower and slower rate and then we saw a short period of decline before it grew again so looking at this trend and looking at the past it does look like we may be in in for a period of decline of the Australian housing market which i think is really interesting and will be really interesting to watch now I do want to note that Australia is not one housing market there is so many different housing markets and the capital cities all perform differently to each other I would say if I look at this and look at what has happened in the past you'd look at an area like Hobart Hobart has had extreme growth and a massive run-up over the last couple of years Hobart is also one of the more exposed cities with the impacts of this virus so call logic talk about the percentage of their population that kind of works in hospital hospitality in the arts and tourism and they're one of the more exposed cities and they've had a massive growth run-up Melbourne has actually hit its peak so remember Melbourne and Sydney peaked in 2017 then went through a period of decline of about 18 months Melbourne actually exceeded its 2017 values and actually peaked back in February I think it was and so Melbourne is actually higher than it was before we saw that big decline in 2017 and 2018 and so it's really interesting to see that and so I look at Melbourne I look at Hobart and I think okay they've had these run-ups Hobart's more exposed that's not necessarily a good sign for that City as well Sydney and Melbourne see the bulk of immigrants and migration into those cities from international obviously international migration is going to go down as a result of all of this so then that exposes those cities more but then you look at something like Brisbane or you look at something like Perth now I put the client for a solid five years basically and the last six months has shown consistent growth and so I would argue and speculate that Perth actually reached its bottom potentially six months ago and is unlikely to go lower than that and if you look at Brisbane as well Brisbane is the city that has the most interstate migration so whereas Sydney and Melbourne a super reliant on overseas migration to grow their population Brisbane not as much Brisbane gets a lot of interstate migration so people moving from Sydney to Brisbane moving from Melbourne to Brisbane so that's what puts Brisbane in a less exposed position Brisbane is also reported to be cheaper now than it was something like eleven years ago if you factor in for inflation so we didn't have the big run ups that Sydney and Melbourne or Hobart had either so as you can see looking at wildly different property markets here and so while we will talk about the Australian property market as a whole if you're an investor looking and getting into the market if you're someone looking at selling there's different markets with different risk factors and you need to take that into account so yeah I see the biggest risk in Sydney Melbourne Hobart and Darwin as well collage ik don't seem to speak very highly of Darwin and the fundamentals in there and then I guess I'd be more bullish on Brisbane and Perth and I wouldn't know enough about Adelaide in Canberra to really comment on that it's also really interesting to see how many global bailouts there have been now this video doesn't go through global bailouts but it does have a look at projected GDP somewhere in there but if you look at the globe bailouts things something about 10% of GDP if not more the Australian government has committed to these bailouts and to supporting people through things like the job keeper and the job seeker and so I was watching a really interesting interview with Ray Dalio who is a very famous and wealthy investor one of the most successful in the world and he was saying in this interview that markets often tend to bottom right before the government steps in and right before the government provides their stimulus packages that's when you see the bottom of the market now I'm not quite clear who's talking about the bottom of the economy the bottom of the stock market but I think it was really interesting too that he noted the impact of government stimulus on when a market will hit its bottom and obviously the Australian market has stepped in with a lot of different stimulus when it comes to the recovery period obviously that's still very unknown with how this virus is going to play out what was largely predicted previously was what they'd call a u-shape recovery so the market bottoms out kind of hangs around at the bottom for a while and then slowly declines versus what's called a v-shaped recovery which is a sharp decline and then a very quick bounce back there's also an l-shaped recovery which is something like the Great Depression where it declines and it just stays at that low point for an extended period of time so while everyone was previously saying the most likely scenario is a u-shaped recovery now you've got people coming out and speculating that we may go through a v-shaped recovery so it's still unclear at the moment how this is going to play out if we're going to get a second wave or what's going to happen there something really interesting to see is where is it a lot of the a lot of the indicators are down so number of valuation events you can see from March a massive decline in valuation events obviously you've got the ISA long weekend compared to east of 2019 over here but you can see that that trend is going downwards what other trends do we have to look at monthly sales as well has declined very sharply - really the bottom since back in 2000 going back before that so monthly sales are massively down which could have to do with not being able to open for inspections could have to do with that but also it seems like not as many people are actually going ahead and listing their properties for sale and so that's a good indicator that we're not gonna see a massively sharp decline in the property market because when you've got a flood of new properties for sale and no one to buy them then there's price competition and it gets down but if you look here at the number of new listings now if we go back 2019 is the green one and I remember looking at this and it was much lower than previous years look at 2020 you know we were kind of on the rise up or a bit below 2019 still but now you've got this massively sharp decline in new listing so people aren't flooding their properties onto t...