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Residential Property Outlook(Dec 2008)
Jonathan Pain (Nov 2008):"...house prices in some regions in America, such as Florida and California have fallen by nearly 50% and hence we are close to the bottom and on a nationwide basis we might be only 10% away from some kind of stabilisation. In countries like Britian there is much more housing pain to come and here in Australia we are seeing widespread evidence of sharp declines in prices and my forecast of a decline of 25%, made at the beginning of the year, will prove to be very conservative"
Rosenberg/Mauldin (Dec 2008):" Housing market is not close to bottoming out Fifth, we learned that the housing market is nowhere close to bottoming out. New home sales dropped 5.3% in November to a 433k annualized rate - the worst since the 1982 recession. Even though sales are now down 69% from the July 2005 bubble peak of 1.39 million units, we believe builders have not been aggressive enough in curbing production because the most critical variable of all, the unsold inventory backlog, rose to 11.1 months' supply from 10.9 in September. Need to see inventory backlog drop to 8 months' supply The reality is that even though single-family starts have dropped to 26-year lows of 531,000, they are still running 23% above the prevailing level of new home sales. The worst the inventory-sales ratio ever got in the early 1990s real estate meltdown was 9.4 months' supply. We are currently 18% above that level and almost 40% higher than the 8 months' supply we would need to see before calling an end to the housing deflation phase. Another 15-20% decline in home prices likely from here As we saw last week, the Case-Shiller index fell 1.85% MoM or at a 20% annual rate. All 20 cities were down both sequentially and YoY. Home prices are now down a remarkable 22% from the 2007 peaks. With the unsold inventory sitting at the third highest level of the past three decades and mortgage approvals for new home purchases falling to their lowest level in nine years, we believe the laws of supply and demand point to a further 15-20% decline from here. So, of all the things that happened last week in the market, retailing stocks up 17%, the bank stocks up 26%, tech up 9%, the one development that probably has the greatest chance of being reversed is the 60% surge we saw in the homebuilding group." * Jeremy Grantham (July 2008):
And most critically watch the similarities between Australia and the UK as reflected in the following 2 graphs
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Steve Keen (Oct 2008):
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"The countries that had the largest 'house price gaps' were Australia, Ireland and Britain (20 to 30 per cent higher), followed by France, Italy, the Netherlands and Spain (10 to 20 per cent). [32]" * * * Full copies of these articles: The Mother of all Stimulations Nov 2008.PDF Meltdown The global competence crisis 300708.PDF Mauldin 6 lessons of the last weeks action Dec 2008.pdf IMF Oct 8 Dpression recession risk and cf 1930.pdf Housing Bubble Keen Oct 17 2008.PDF
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