From FOMO to FONGO
Mr Oliver first raised this issue mid last year suggesting the fear of missing out would turn to the FONGO.
Last year UBS included the FONGO in its 4th housing scenario where house prices fall sharply, down 20 per cent (more in Sydney and Melbourne) unwinding much of the upside delivered through the housing bubble, forcing the RBA to cuts rates without a lot of it being passed through to the borrower, and forcing banks to cut dividends to preserve capital.
Macquarie chief economist Ric Deverell said that when house prices start falling “there is no doubt people start to think about selling”.
“These are big liquid markets so it’s not a case of not being able to sell, it’s at what price.”
However he said that much of the evidence in both real estate and equities markets points to people holding back from selling when prices fall.
“There is actually a conscious bias against selling for a loss and that’s why we get lower listings,” Mr Deverell said.
ANZ economist David Plank also notes that new listings are down sharply, following the usual pattern of new listings falling as the market weakens.
“I see no evidence of a rush to the exit at this stage.”
There is no panic
SQM’s Louis Christopher said that while he wants to emphasise there is no “panic” he does think listings will go up.
“Melbourne is likely to see listings up 20 per cent year on year over the next few months,” Mr Christopher said.
“Sydney maybe less than that. More like 15 per cent. But I stress I don’t think there is any panic in the market. It’s a big downturn, but not one where there is real panic.”
The number of successful auctions is poised to shrink in coming weeks and remain below 50 per cent though most of 2019, according to JP Morgan, putting further pressure on prices.
Westpac Melbourne Institute’s housing sentiment index released last week sank to its lowest on record while the percentage of people who thought the best place for savings was in real estate slipped to just 9 per cent – the worst level since 1974.
The bright spot was that the “time to buy a dwelling” index, which measures people’s expectations of bargain hunting, rose a further 3.5 per cent to 116.6 in March, which is a four year high.
That index has now risen 30 per cent from its mid-2017 low but remains below its long-run average of 120.
from Credence news https://ift.tt/2FdwIsa
0 Comments