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A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Jun 17 2014

Australian Home Price Outlook

Earlier this month, the International Monetary Fund reported that Australian home prices are amongst the most expensive in the world, according to two widely watched measures of housing prices. Around that time, the RP Data-Rismark Home Value Index showed monthly home prices falling by 1.9% in May. While RP Data attributed this decline in part to seasonality, they also mentioned the possibility “that the housing market is at or approaching the peak of the growth cycle.”

Thus, concerns are growing that Australian home price growth may have reached an inflection point. In this context, it is useful to monitor the growth rate of ECRI’s Australian Leading Home Price Index, designed to anticipate cyclical turning points in Australian real home price growth, since it has already issued a clear cyclical directional signal.

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