Wow! This chart blows my mind

The property boom is moving at an incredible pace.

It’s actually getting hard to describe how big this property boom is.

You know I’ve been in the game a decent while now. I’ve definitely never seen anything like it.

Westpac released their property outlook the other day, and there was one chart that really popped out at me.

It’s this one here. On the left hand panel there’s the turnover rate in Australia. What is shows is that the turnover rate has spiked to the highest level in over a decade. We’re selling a huge amount of properties right now. Things are moving.

And when the market is hot like this, price growth is inevitable. But check out the price growth. The right hand panel in the chart above looks at the 3-month annualised rate.

So that says, if the pace of growth we’ve seen over the past three months continued for the rest of the year, what kind of annual growth rate would we get.

And look at what it’s saying for Sydney and Melbourne – 32%!

32%! Are you kidding me? That’s blistering!

Again, never seen anything like it.

The thing to note here though is that Australia’s not alone. The whole world is in an epic property boom right now.

This chart looks at global house prices, again on a 3-month annualised basis. And as you can see, it’s really ramped up in recent months – to the highest levels in over a decade, possibly ever.

Things are moving very, very quickly.

Part of that is a demand story. The RBA has been on a money printing spree since October last year, and at last count, they’ve added over $200bn to the system.

That’s a lot of cheese.

So all that money is creating a surge in demand.

And that’s chewing through the available stock.

That’s the thing about property. When prices lift and demand soars, you just can’t go an easily add a few months supply to the market. Supply is very inelastic – it barely reacts at all.

And so what we’ve got, with the current pace of sales, is a collapse in the total listings available on the market – the right hand panel of this chart here.

It would take a little over 2 months to sell every property on the market in the country right now, at the current pace we’re going.

We’ve only got 2 months worth of supply – the lowest level on record.

So do you see what I’m saying here?

Demand is surging because money is abundant.

That’s seeing us chew through the available stock, and there’s a shortage of homes on the market.

That is also pushing prices higher.

We’re in a boom loop of epic proportions.

Who knows where this ends up.


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