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Despite the fact that over half of Australia is in lockdown our housing markets having taken Spring in their stride and just keep rising.
Despite what is now more than an 12-week lockdown in Sydney and Melbourne still in lockdown number 6 – in fact with more Australians in lockdown than are not – our real estate markets are still in good shape.
Melbourne buyers and sellers are pleased that one on one inspections are now allowed and this should bolster the local housing markets.
Overall consumer confidence is holding up and many of us can see a light at the end of the tunnel, with roadmaps in place for easing restrictions once vaccination levels are higher.
Corelogic reports that there were 796 auctions held in Sydney this week, compared to 661 over the previous week and 667 over the same week last year.
Of the 693 results collected so far, 82.3 per cent were successful, making it the 8th consecutive week where the city has recorded a preliminary auction clearance rate above 80.0 per cent.
In Melbourne, 565 homes were taken to auction this week, down 10.2% from the 629 originally scheduled. Of the 383 results collected so far 39.3% will withdrawn and a preliminary auction clearance rate of 56.4% was recorded by Corelogic.
With one on one property inspections now permitted to cross Melbourne, the withdrawal rate fell to the lowest level since the weekend in August 15.
The lower withdrawal rate was a key driver in the higher clearance rate, and it’s likely the Melbourne withdrawal rate will continue to fall as vendor confidence improves in line with the eased restrictions.
Here’s what happened to property prices…
- Sydney property prices have kept moving higher, up another 0.4% in the last week alone and up 22.5% over the last year.
- Melbourne house prices also rose 0.2% this past week and up 14.4% over the last 12 months
- Brisbane house prices increased 0.6% over the last week and 19.1% over the last year.
Of course, there are headwinds that will slow us down, including concerns about the economic impact that prolonged lockdowns will deliver.
Nevertheless, despite the disruption, property values are holding up well as there are more buyers than good properties for sale and this means property values will keep rising.
The number of properties for sale in Australia is still in short supply
The supply of properties for sale just can’t keep up with demand.
For every new property coming onto the market for sale, 1.4 properties are being sold around Australia.
Capital city demand continues at a vigorous rate, with buyers out in force – owner-occupiers, investors, and first home buyers – at a time when available supply struggling to keep up.
The table below shows how the stock of advertised properties is well below year-ago levels across all capital cities.
At the same time “time on market” continues to decline.
These are signs that property values will continue to rise moving forward.
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 September 13th provided by NAB, Corelogic, and realestate.com.au.
What’s happening in our property markets?
The REA Buyer Demand Index
The REA Insights Buyer Demand Index increased 0.5% last week.
According to Paul Ryan, the level of aggregate buyer demand has remained stable for several months, at levels within 10% of the historic-peak recorded in mid-February this year.
However, demand across the country continues to be affected by lockdown measures to contain COVID-19 outbreaks.
Demand in all regions except Victoria recorded small increases over the past week.
Demand for units has increased the most over the past year, with demand for houses broadly flat.
An influx of first-home buyers, as well and investors coming back into the market in 2021, has contributed to the increase in interest for units.
Demand is likely to fall over the coming weeks, with lockdown restrictions looking set to continue in New South Wales and Victoria.
As sellers delay bringing new properties to market until conditions normalise, our measurement of buyer demand will fall, as we saw during lockdowns in 2020.
But later in the year, should lockdown restrictions be lifted, we expect a rebound in market activity and buyer demand.
The REA Rental Demand Index
The REA Insights Rental Demand Index, increased 0.5% last week.
According to Paul Ryan, lockdowns to contain the most recent COVID-19 outbreaks make weekly changes in rental demand more volatile than usual.
Displaying this volatility, rental demand increased in regions beset by lockdowns – New South Wales, Victoria and the ACT – and decreased elsewhere over the past week.
Aggregate rental demand is a bit below a year ago, when we saw a strong period of housing demand after national lockdowns were lifted.
While rental demand remains about 20% below the peak recorded in January this year, the level of demand remains 25% higher than the average over 2019, before the pandemic.
This is surprising given that foreign students and other migrants – traditionally a strong source of rental demand in inner-cities – remain unable to enter the country.
It shows many Australians are still reassessing where they want to live, and what they want to live in, as the pandemic rolls on.
Median property prices
Vendor metrics confirm that despite the lockdowns, we’re in a seller’s market with the number of days to sell the property very low (a sign of the tight supply situation), and vendor discounting (it’s easier for them to sell) at very low levels.
In general, houses are selling better than apartments, but the shortage of good properties on the market is seeing properties selling quickly with minimal discounting.
Our Rental Markets
While rental growth is slowing, we’ve still experienced the highest rental growth in over a decade.
Growth in rental rates eased over the second quarter of 2021, with the national rental index rising by 2.1% over the 3 months to June compared to a 3.2% rise over the March quarter.
While rental growth has slowed over the recent months and quarters, the latest figures take national rental rates 6.6% higher over the year; the highest annual growth in dwelling rents since January 2009.
Regional rents continued to outpace capital city rents over the second quarter of 2021, with regional dwelling rents rising by 2.7% against a 1.9% rise in capital city rents.
This was a 1.4 percentage point reduction in the rate of growth quarter on quarter for the combined regionals, and a 1 percentage point reduction for the combined capital cities.
Despite the easing in growth in recent months, regional Australia recorded an annual rate of rental growth of 11.3% in June 2021.
Last weekend’s auction clearance rates
While ‘delta’ disruptions are clearly having an impact on the number of transactions happening in our property markets, there seemed to be no impact on the auction markets.
Dr. Andrew Wilson of My Housing Market was tracking 1,150 auctions in the major capitals this weekend, considerably less than last weekend’s 1,392 and the previous weekend’s 2,209 properties auctioned.
As lockdowns and difficulty inspecting properties persist we can expect the number of properties going to auction to be lower moving forward.
Sydney was the stand-out performer with a preliminary auction clearance rate of 85.2%.
Other preliminary clearance rates (as reported by Dr. Andrew Wilson’s Auction Insider) were:-
- Brisbane – 81.5%
- Melbourne – 79.3%
- Adelaide – 79.6%
- Canberra – 76.9%
Source of graphs and data: CoreLogic, NAB and REA, and Dr. Andrew Wilson – My Housing Market 30th of August 2021.
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