The housing rally to have, when you’re not having a rally

In October last year, when the first signs that Australian nominal house prices were rising again after falling since June 2010, I argued that this was going to be a “suckers’ rally” (Riding the great debt elevator, October 8, 2012).

I stuck with that call (Where to for house prices in 2013? December 17, 2012) even when the data appeared to be showing a revival in my key indicator, the “Mortgage Accelerator” (Don’t look for high-rise house prices, February 11), largely because I couldn’t see mortgage acceleration being maintained when mortgage debt was stillwithin cooee of its historic high.

But last week’s ABS House Price Index was surprising even to a bona fide housing bear like myself: nominal house prices rose a whole 0.1 per cent over the March quarter. In inflation-adjusted terms, it appears that the recent house price rise ran out of steam in January, and resulted in prices being a whole 1.8 per cent higher, in real terms, than at the nadir in September. They are now just 1.6 per cent higher.

Read more: http://www.businessspectator.com.au/article/2...y#ixzz2TYHXM2Nd