… ON THE 2024 ‘KAVANAGH-PUTLAND RATIO’ UPDATE

Gavin says: –

“Interpreting them (the data) is more complicated than usual. The one-year decline in sales/GDP is in recession territory, but…

* the cycle calls for a peak in prices in late ’25 or early ’26, with
a recession later in ’26;
* prices are still going up;
* auction clearances are still high;
* as far as I know, the fall in turnover has more to do with supply
constraints (builders going broke, etc.) than with buyers calling BS
on prices;
* rental vacancy rates are at record lows and still worsening, and we know why.

Speaking of which, what exactly constitutes a recession these days?
We’ve already been in a per-capita recession for three or four
quarters.

Eventually we must get to that point where buyers call BS on prices,
causing a fall in turnover followed by a fall in prices. However, due
to the complications with supply, I’m not convinced that we are yet
seeing *that* fall in turnover.”

____________

By the way, I agreed with Gavin’s analysis. A 25% decline in the ratio of total real estate sales to GDP usually forecasts recession, but I also consider there are particular reasons on this occasion why we may still have two years of frenetic upside to real estate sales left.