Our property markets keep bounding along with the five capital city index increasing 0.6% over the last week alone.
Over the past three months, property values have increased 6.9% in our major capital cities, yet we are just over a third of the way through the year.
Although our auction markets reported more boomtime results over the weekend, clearance rates are now clearly lower having been impacted by a continuing surge of sellers keen to take advantage of the strong by competition.
Ahead of the State Budget this coming Thursday, the Victorian Treasurer announced massive tax hikes which will affect Victorian home buyers investors, and property industry jobs.
The changes announced today were:
- A 19 per cent increase in land tax on properties valued at between $1.8 million and $3 million, with the rate to increase from 1.3 to 1.55 per cent;
- A 13 per cent increase in land tax on properties valued at more than $3 million, with the rate to increase from 2.25 per cent to 2.55 per cent;
- An 18.2 per cent increase in stamp duty on a property’s value above $2 million, with the value up to $2 million to be taxed at the current rate; and
- A new Windfall Gain Tax, which would apply from 1 July 2022, where 50 per cent of the value of uplift as a result of rezoning.
But in the meantime…prices continued on their merry way higher.
- Sydney properties increased 0.7% over the last week alone
- While Melbourne properties increased in value by 0.5% over the week
So far this year property values around Australia have increased 8.8%.
This surge in property value has caused all our major banks to forecast 20% to 30% rises in property values around Australia this cycle with strong growth continuing for some time and then slowing down over the next couple of years.
The number of properties for sale in Australia has peaked
An interesting period lies ahead with signs that there will be fewer new properties for sale entering the market in the coming weeks.
As you can see from the chart below, there are 6.1% fewer properties for sale this year than they were 12 months ago.
But as always property markets are fragmented and while Melbourne has significantly more properties for sale than 12 months ago – you can see what’s happening in some of the other states in the table below.
Clearly, strong demand at a time of limited supply must lead to continued property price growth.
To help keep you up-to-date with all that’s happening in property, here is my updated weekly analysis of data and charts as of May 17th provided by NAB, Corelogic, and realestate.com.au.
What’s happening in our property markets?
The REA Buyers Index
The REA Insights Buyer Demand buyer demand was unchanged last week, remaining at levels 7.8% below the historic peak recorded in mid-February this year.
According to Paul Ryan, demand was steady across most states and territories, although Tasmania saw a 2.5% increase over the week.
Year-on-year demand for units has increased by 30.5%, while demand for houses is up 15%.
Overall buyer demand is up 18.2% on last year, with the largest increases recorded in Victoria (25%) and the Australian Capital Territory (30%).
Demand rebounded strongly in 2020 following the end of country-wide lockdowns.
In 2021 demand has increased further, bouyed by government incentives and low borrowing costs.
Demand is likely to remain at elevated levels over the coming weeks and months as interest in the property market remains high.
However, more stock coming onto the market will likely lead to more buyers finding new homes, which in turn could weigh on the overall level of demand.
The REA Rental Demand Index
The REA Insights Rental Demand Index, edged slightly higher last week, rising 0.5%.
According to Paul Ryan, New South Wales and Queensland both saw rental demand increase by just over 1%.
Median property prices
Vendor metrics confirm we’re in a seller’s market with the number of days to sell a property decreasing (a sign of the tight supply situation), and vendor discounting (it’s easier for them to sell) at realistic levels.
The shortage of good properties on the market is seeing properties selling quickly with minimal discounting.
Our Rental Markets
The inner-city unit markets have struggled since borders were closed to international students, visitors, and those who would have sought holiday work, for example in hospitality, on farms, and elsewhere.
Melbourne and Sydney’s inner-city markets remain very weak with rents still falling.
Compared to pre-pandemic levels, Melbourne’s inner-city unit rents are down 27.7% as of April 2021, Sydney rentals down 18.2%. Inner-city prices for such units remain flat.
The absence of new international students and some pandemic preference for less congested and near-city living remain headwinds.
This week’s Federal Budget was built on the assumption that international borders will remain essentially closed until mid-2022 so little immediate relief on this front seems likely.
Inner-city rents in Brisbane have not been as soft as in the two larger cities but still fell a net 3.0% from pre-pandemic levels.
Perth though has tightened, even in inner-city markets that have shown a net rental increase of +2.1%.
While Sydney and Melbourne’s inner-city rental markets remain soggy, prices of units across these cities covering the broad array of suburban units, continue rising, evidenced by reports of demand from owner-occupiers, first home buyers, and investors.
Rental market conditions remain diverse, with significant differences between the regions and housing types.
From a geographic perspective, the tightest rental markets are Darwin and Perth, where both house and unit rents are recording double-digit annual growth.
Last weekend’s auction clearance rates
There were 2,401 capital city homes taken to auction this week and of the 1,923 results collected so far, a 94% preliminary auction clearance rate was recorded.
Both volumes and clearance rates slightly down from last week’s figure when 2,563 properties were auctioned across the capital cities and the preliminary auction clearance rate was 80.5%, later revising down to 78.7% by final collection on Wednesday.
Now is the time to take advantage of the opportunities the current property markets are offering.
Sure the markets are moving forward, but not all properties are going to increase in value at the same rate. And some sectors of the market will continue to languish.
Now, more than ever, correct property selection will be critical.
You can trust the team at Metropole to provide you with direction, guidance and results.
Whether you’re a beginner or an experienced investor, at times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s what you exactly what you get from the multi award winning team at Metropole.
We help our clients grow, protect and pass on their wealth through a range of services including:
- Strategic property advice. – Allow us to build a Strategic Property Plan for you and your family. Planning is bringing the future into the present so you can do something about it now! Click here to learn more
- Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $4Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment-grade property. Click here to learn how we can help you.
- Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
- Property Management – Our stress-free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.
Source of graphs and data: CoreLogic, NAB and REA
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