As we predicted; Australia’s real estate markets shoot higher

Could it be? Australia’s real estate markets are now booming

Since January, we expected the unexpected and told our readers to prepare for a market rebound

• The Australian Government and RBA would not tolerate a protracted housing downturn.
• The world is awash in trillions of new U.S. dollars, sovereign debt securities and, Treasuries. Australia is an attractive dumping ground for these dollars. High-end global real estate is effectively priced in U.S. dollars.
• The Australian dollar is near its cycle low against the USD.
• The global central banking cartel is in complete control and is not ready to give up on its system. Low rates would prevail.

National property values jumped 1.7 per cent last month, the largest gain since 2003, according to data from CoreLogic Inc released Monday. Sydney and Melbourne continued to lead the rebound, with prices up 2.7 per cent and 2.2 per cent respectively.

Annualised gains over the past three months in both cities are tracking in the mid-20 per cent range, CoreLogic said. At that rate, home values will recoup all their losses from the recent downturn and be back at record highs early next year.

“The Australian housing market is now five months into an unexpected period of rapid recovery,” CoreLogic research director Tim Lawless said in a statement. “The question is, how long can such a high pace of capital gains be sustained?”

The housing rebound is a complete about-face from just six months ago when economists were debating how much further prices could fall.

In addition to record-low interest rates and a loosening of lending curbs, prices are being driven higher by a shortage of properties on the market. That’s led to a renewed fear among buyers that if they don’t jump in now, they could miss the chance to buy.

Australia home frenzy back as prices surge most in 16 years, Bloomberg, December 1st

Recall the propaganda articles from ZeroHedge like this one titled, Australia’s Imploding Housing Market Now Threatens To Unleash Nasty Recession. The alt-financial media were pumping out this garbage as recently as this Summer. This particular article was dated May 15th.

Recall this July 19th article from ZeroHedge, titled These Two Charts Reveal The Extraordinary Collapse In Australian Homeownership.

All year long, I had been advising Australians to take advantage of that slowdown and bid at the subdued auctions and to start deploying cash, because the malaise would not last. Even Australian TV was pumping out this gloom of contraction and misery. However, my conclusions differed from this simple “analysis” for four reasons:

• The Australian Government and the Reserve Bank would not stand for a protracted housing downturn; they would begin to soften monetary policy to achieve this objective and had plenty of room to make it so.
• The world is increasingly awash in trillions of new sovereign debt securities every year, mostly in U.S. dollars, and these dollars need to find a home. I suggested that Australia would prove to be an attractive dumping ground for these dollars. Global real estate, especially in the cities of influence, is effectively priced in dollars.
• The Australian dollar is near its cycle low against the USD and those with the U.S. dollars view Australian house prices as attractive.
• The global central banking cartel is in complete control and is not ready to give up on its system.

Why fight the trend? As an American, I view much of Australia’s housing stock as being relatively attractive when priced in U.S. dollars. How long will this comparative attractiveness last? It’s all up to the U.S. Fed’s dovishness and I am banking on more of the same.