There are a lot of discussions about timing of Australian property bubble. It is impossible to predict timing of events such is bubble burst but to make this interesting I checked Google Insights for Search to see whether search for “property/housing bubble” can be used for predictions.
Findings are quite surprising – see charts.
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| Charts 1 House prices and Google Searches - Ireland |
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| Charts 2 House prices and Google Searches - Spain |
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| Charts 3 House prices and Google Searches - UK |
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| Charts 4 House prices and Google Searches - USA |
From charts you may notice that peak search for phrases “property/housing bubble” happened 2-3 quarters before bubbles bursted in these countries. This is very interesting and IMHO probably tells a lot about the fact that sentiment plays very important role in market movements. What is surprising to me is the fact that search for bubble information drops before bubble bursts and stays lower when most equity wealth disappears and most of people lose their homes.
Now, lets take a look at Australian search for "housing bubble"
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| Charts 5 Google Search "housing bubble" - Australia |
Search for "housing bubble" peaked in November 2010 - 8 months ago. Based on Google Insight for Search information for other countries with similar housing bubbles, Australian housing market is just at the turning point and future doesn't look good. Data that is being published these days suggests that Google might be right.
BTW. UK market also doesn't look promising after slight recovery in 2008, "search sentiment" is up again.
Nice. Google search trends are a pretty good real time substitute for traditional surveys of sentiment/investment intentions.
ReplyDeleteI covered this little before - my US overlaid graph is here
http://2.bp.blogspot.com/_Qh5svI3Dd2A/TJMTzt7uJhI/AAAAAAAAAXE/dz4U0jeXRIQ/s1600/CaseShiller+and+Google+Trends.png
What is particularly impressive is that the search trends seem to pick up the double peak of the UK market. To me that really confirms the power of this data.
Cam
Nice work, I have been periodically checking this myself you should see the split between the Qld, WA vs. the rest!
ReplyDeleteVery insightful.
Cheers, TM.
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ReplyDelete