Where is the Aussie Property Market Headed? Here’s Your Answer…

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Where is the Aussie Property Market Headed?
Where is the Aussie Property Market Headed? Here's Your Answer…

Aussie property is well off its highs from 2017. And the correction in house prices brought all the property bears out of hibernation.

Out came all the sweeping statements. House prices to plummet 50%. Academics predicting a housing bust led recession, and on it went.

It just seems calling a housing bust is the easiest thing in the world to do. And it guarantees one front page press.

Remember academics can say anything and usually do. That’s because they have no skin in the game.

If they had to back up some of their sweeping statements with a little money, well…they might just hesitate a little.

Because when there’s money blowing in the wind, you’ve got to be a bit more sure of things. Money often gets to the truth of the matter, more on that a little later…

But first, keep in mind, our housing correction was largely credit related. It was localised and peculiar to events in Australia. It wasn’t due to some systemic weakness in housing and the broader economy.

It followed the fallout from Banking Royal Commission, and APRA’s then, stringent loan criteria. That made it so much harder to get a loan. And you’ve got to understand that had a big impact on house prices.

And prior to all that, house prices doubled over an eight year period. They were due a pause. So that puts the housing correction into a bit of context.

Anyway, that’s old news. APRA’s restrictive loan criteria and the Banking Royal Commission are behind us now.

The Future of the Australian Property Market

More importantly, what does the future hold for Australian Property? Where are house prices headed from here?

Well, it seems everyone has a view.

And then, they’ll give you all the reasons (opinions) why property is headed higher or lower.

But listening to opinions will only lead you astray. And I include my own opinions in that as well.

Ahh…

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But the opinion of the stock market, is a little different. Serious money invests on a bit more than just a hunch.

The market rarely misleads because when people get some leading information, they act on it. With hard earned.

And you can’t hide the buying and selling. It must show up on the chart. It almost gets you on the inside.

Which is why you must learn to read one.

So my advice…

If you want to know where Aussie property is headed, follow the weight of money.

It often gets to the truth of the matter.

Not only can the stock charts help you make profitable trades, they also often tell you what’s really going on in the world.

You don’t need to go to the latest property update from CoreLogic, to know where property may be headed.

Just bring up a relevant stock chart.

So, to that end, we might be able to gauge property sentiment from mortgage applications. Are they softening?

Let’s bring up a couple of ASX mortgage stocks, to find out. If Aussie property is set to collapse, it might show up here in these charts.

Let’s see what the charts are telling us:

Source: Optuma

On the left, we have Mortgage Choice, to the right, Australian Finance Group.

It doesn’t suggest people are heading for the exits on Aussie property. Not yet. Don’t expect a major housing bust whilst this is happening.

See how the charts free you from all the nonsense you might read?

Sceptical? Not convinced?

Let’s bring up a couple more charts.

In my last update, I used some real estate sensitive stocks, such as REA Group Ltd [ASX:REA] and Domain Holdings Australia Ltd [ASX:DHG] as examples.

This was to highlight what was going on around the time of the Aussie election in May. And how the charts (despite all the polls showing a Shorten win) were suggesting a Coalition victory.

Let’s update those charts.

Source: Optuma

These stocks like REA Group and Domain, make money on property listings. They thrive on property sentiment. Or, die through the lack of it.

What’s it telling you?

Don’t listen to opinions on the Aussie property market. Not mine or anyone else’s. Make up your own mind.

I just think though…

If you’re bearish on Aussie property, you might just be on the wrong side of the chart for now.

Regards,

Terence Duffy Signature

Terence Duffy,
Contributing Editor, Profit Watch

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