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Australian housing market momentum continued to bound along this week despite lingering COVID infection wobbles in Melbourne and Sydney.
Major capital city property prices rose another 0.4% this week, up 1.2% so far in June, up 11.4% year to date.
All our capital cities in line for double-digit property price growth this year.
Since Stage 4 lockdowns were eased last year Sydney property values grew the fastest at 15.0%.
Even Melbourne prices rose 8.5% since then, including a 0.4% gain this past week as on-site auctions cranked up again with a preliminary auction clearance rate of 71.5%.
Clearly, buyers are still out in force – owner-occupiers, investors, and first home buyers – at a time when available supply is struggling to keep up, keeping pushes prices higher.
- Sydney properties increased 0.5% over the last week alone, up 1.7% over the month to date and 14.4% this year alone.
- Melbourne properties increased in value by 0.4% over the week and are up 9.2% this year alone, and
- Brisbane housing prices increased 0.5% over the last week and 10.9% so far this year.
Overall property values around Australia have increased 10.9% over the last 12 months.
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 is still in short supply
The supply of properties for sale just can’t keep up with demand.
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 below year-ago levels across the capital cities.
At the same time “time on market” continues to decline.
These are signs that property values will continue to rise.
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 June 21st provided by NAB, Corelogic, and realestate.com.au.
What’s happening in our property markets?
The REA Buyer Deman Index
The REA Insights Buyer Demand Index has remained broadly flat over the past month, at levels almost 50% above the average seen over 2019.
The level of buyer demand fell by 1.1% last week and is now just over 10% below the historic peak recorded in mid-February this year.
According to Paul Ryan, demand in Melbourne increased by 1.1%, despite continued lockdowns, showing that buyers are mostly looking past current restrictions.
Demand changes across the country were mixed, with disruptions to the market due to the Queen’s Birthday long weekend.
Demand is roughly at the same level as seen this time last year – but demand for units has been the stand-out, sitting 9% higher than a year ago.
While the number of high-intent buyers on realestate.com.au rebounded strongly in 2020 following the end of country-wide lockdowns, in 2021 demand has increased further, spurred by continued low borrowing costs and increases in stock coming onto the market.
Demand is likely to remain at elevated levels over the coming weeks and months as interest in the property market remains high.
However, this additional stock 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, was unchanged this week
Rental demand in Victoria increased strongly, and is now at a higher level than before the most recent COVID-19 lockdown began.
According to Paul Ryan, changes in other states were mixed, in a week that included the Queen’s Birthday long weekend.
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.
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
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 were 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 recent 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
Auction clearance rates remained strong this weekend despite a flood of properties being put on the market.
Dr. Andrew Wilson of My Housing Market was tracking 2,323 auctions in the major auction capitals this weekend, which was predictably well above last weekend’s Queen’s Birthday record of 1,413 and significantly higher than the 1,019 homes auctioned over the same weekend last year when Covide slowed things down.
All our capital cities delivered strong auction clearance rates with Brisbane being the stand-out performer with a preliminary auction clearance rate of 88.8% from the 107 auctions conducted (and that’s a big number for Brisbane.)
Other preliminary clearance rates (as reported by Dr. Andrew Wilson’s Auction Insider) were:-
- Sydney – 80.8%
- Melbourne – 74.4%
- Adelaide – 85.6%
- Canberra – 81.8%
Source of graphs and data: CoreLogic, NAB and REA and Dr. Andrew Wilson – My Housing Market 31st May 2021
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