Australian property values are set to slide, according to a respected Aussie economist, but there is still value in the market if you have the tools to help you look in the right places.

Warren Hogan, one of Australia’s preeminent economic voices, recently shared his perspective in conversation with Stockhead.

The managing director and founder of EQ Economics, who’s resume includes stints as chief economist at ANZ Bank and Credit Suisse and as a principal advisor to the Federal Treasury, Hogan’s voice carries significant weight when it comes to economic forecasting.

He’s also recently joined investment research and trading platform HALO Technologies (ASX:HAL), leading development on a newly launched property investment research product – HALO Property.

It’s an interesting time to launch a property product, with interest rates on the rise and doom and gloom predictions dominating headlines.

According to Hogan, those headlines are indeed warranted.

“My macroeconomic models are consistent with the bad news that’s going around in the Australian market at the moment, that there’s an overvaluation of residential property nationwide of almost 30%,” he said.

“It’s all about sky high prices driven by super-low interest rates through the pandemic. The question is how far interest rates have to go up. This is the main game for most markets across Australia as we enter 2023.

“If the RBA does what most economists think, and pushes the cash rate up to around 3.5%, then our analytical systems tell us that we’ll see a 20% fall in nationwide property values. But what happens if rates must go higher? What does a 4% cash rate mean for Australia’s property markets, what happens if the cash rate gets to 5%?

“The further the RBA have to raise interest rates, the more potential there is for large price falls. But that’s not to say there’s not value to be found. What is the long-term view on property prices? When will the Sydney housing market hit a new price high once again?”

Finding value is exactly the concept that underpins HALO’s new property offering – a subscription-based research product underpinned by data from CoreLogic Australia.

CoreLogic is one of Australia’s most comprehensive sources of property data, and Hogan said this allowed HALO users to take a deeper dive into the Australian investment staple than otherwise possible.

“What we’re doing with HALO Property is finding value in the market,” he said.

“Yes, Sydney houses, Melbourne houses, regional parts of Victoria and New South Wales, Hobart, Canberra – they’re all extremely expensive markets.

“But apartment markets, for example, even in Sydney and Melbourne, are not super expensive. They’re expensive, but not ridiculously so like houses.

“Our models suggest Perth is cheap, regional Queensland is not overvalued. It shows there is value even in this market.

“This platform is giving investors the ability to dig a little deeper than just saying ‘property is expensive’. It’s about identifying which parts of the markets are expensive and knowing where to look outside of those.”

“It also provides critical insights into market timing that will drive superior medium to long-term returns for property investors.”

A man’s home is his castle

The relationship between Australians and property is long held, with houses the traditional wealth accumulation channel of many families.

Hogan said the nature of this relationship with Aussie wealth made investing in analytics a logical step for HALO.

“It makes a lot of sense to put resources into both a bottom-up analytical capacity, as well as a top-down view of what’s happening in the economy and how that’s affecting property markets,” he said.

“This is what HALO’s doing – combining bottom-up and top-down approaches to create a unique and accessible property analytics function for investors.

“The other unique thing is that it treats property as an investment class, as you would at the institutional investor level. We are completely agnostic to market conditions and the direction of prices. Our relentless focus is giving customers an independent view of the economy and the property markets, combined with a set of tools to assist them in creating long-term wealth from property investment.”

“This is purely a research product where we will provide insights, analysis and forecasts independent of any other commercial activities in the residential property markets.
We are independent of the market.”

A strong move

Today’s announcement builds on significant momentum for HALO, which has taken a number of steps since listing on the ASX in late April.

Built on global equities research and trading execution software, the company has grown its funds under management considerably in recent months through a series of deals with Australian asset management advisors and firms.

HALO also recently announced an exclusive collaboration partnership with the Australian licence holder of global finance media brand Forbes and will present at the latter’s Business Summit on November 18.

HAL CEO George Paxton said the expansion into property was a significant move for the company which would significantly expand its addressable market.

“Our goal is to continuously expand the HALO’s product offering to appeal to the ever-growing cohort of investors searching for research and insights underpinned by data to inform their investment decisions,” he said.

“Our aim is to be the one-stop-shop for all investors by providing data solutions tailored to the specific markets they are interested in – be that Australian equities, global equities, and now – Australian property.

“History has shown that when we have launched new subscription products, our customers have supported us with a strong and rapid surge in adoption which in turn has delivered strong revenue growth for the company, and we have similar expectations of success to come as a result of this launch.”

 

This article was developed in collaboration with HALO Technologies, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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