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%.
Aggregate rental demand is at very similar levels to a year ago, when the country was emerging from national lockdowns.
The Australian Capital Territory has been the strongest performer with rental demand up 23%, while demand in Queensland has dropped 11%.
Rental demand for units is up slightly year-on-year, while demand for houses has fallen by 8.3%.
While rental demand remains 20% below the peak recorded in January this year, the level of demand remains much higher than seen prior to the pandemic.
This is surprising given that foreign students – traditionally a strong source of rental demand in inner-cities – remain unable to enter the country.
First-home buyer activity remains strong, making up the highest share of new lending since 2009, so we may see rental demand continue to drift lower over the coming weeks and months.
Once border closures are removed, expect rental demand to return – particularly in inner-city areas previously popular with students.
Median property prices
NOW READ: Why Bluechip property will rebound strongly in 2021
Vendor Metrics
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.
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Source of graphs and data: CoreLogic, NAB and REA
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'This week’s Australian Property Market Update – Latest Data, State by State 17th May' have 29 comments
May 11, 2021 Vaughan Felton
What a great resource you are! I have a property in Bulimba that I am thinking of selling to free up some cash. I have had it for 6 years but I feel I am pulling the trigger too soon. Any thoughts maestro?
May 11, 2021 Michael Yardney
Property values in Bulimba are likely to keep rising for another year or 2, so it really depends on what you are planning to do with the cash – maybe it would be better to refinance and access your equity.
SO you needs to work the numbers carefully – that’s what we do when we build a Strategic Property Plan for our clients
May 4, 2021 Bahee
Our syndicate is a small time developer/investors. Lately I am focusing at St Marys, NSW.
The price of a townhouse yet to pickup even though with the Western Sydney airport and St Marys being the main interchange. Is there a reason for that?. We just bought a land to build 12 townhouses (yet to go through DA application).
May 4, 2021 Michael Yardney
There is no reason for property values to rise just because there’s a new airport coming up. No one wakes up in the morning and things “i want to live near an airport” I wouldn’t be investing in those locations that have always underperformed
March 9, 2021 Joe
Hi. Love your website, fantastic resource. I recently moved to Oz, so figuring out lay of the land and me and my partner are currently figuring out where we want to base ourselves. I have $200k in savings that I had earmarked for a property, and wondering if I can make this work for me in an investment sense. Not sure where I’d even start on this journey as I have no experience. Any advice very welcome. Thanks Michael. 🙂
March 9, 2021 Michael Yardney
Joe – since you’re new to Australia seek independent professional advice. Are you an Australian citizen or permanent resident – that makes a huge difference in the type of property you can buy
December 19, 2020 Lisa
Hi Michael, we’ve had a townhouse in Kedron for 5 years that we purchased for $520k and is only valued at $580k. It’s neutrally geared – would you suggest selling to look at land / something with more CG potential or better to hold for longer?
December 19, 2020 Michael Yardney
Lisa – Kedron is a good area but clearly your property has underperformed. There are a number of different neighbourhoods in Kedron some of which do not perform as well as others and obviously some properties in these locations will outperform others. There are too many variables to take into account for me to answer this correctly without a lot more information, but we have some spreadsheets and frameworks we can use to help give you the right answer.if you’d like help making the decision, please email me michael at metropole.com.au and I’ll set things up for you
December 2, 2020 Rod
Hi Michael,
I’m interested to get your thoughts on Newcastle and Hunter Region areas. Newcastle now has the 4th highest median property price in the country. Massive growth opportunity (area) or have people missed the boat?
December 2, 2020 Michael Yardney
Rod, there’s no doubt the Newcastle in the Hunter region great locations to live, but I have found in the past when locations grow too fast, they then revert back.
Just see what happens when Brisbane property prices were almost the same as Sydney a couple of decades ago and are now half of Sydney and similarly when Perth’s median property price was almost the same as Sydney’s and is now half of Sydney’s median price.
At the price you would have to pay to get investment great properties in Newcastle, I think they’re better long-term opportunities elsewhere.
November 17, 2020 Richard Jones
Hi Michael,
In the past couple of days it has been reported an increase of 18% in Perth’s property market 2021 – 2023. After years of negative growth and lowest house prices across the nation, could you provide some comments on why such a big % increase is expected and will it last? – Many thanks Richard
November 17, 2020 Michael Yardney
Richard, I didn’t make that forecast so I can’t really comment. Who did? Possibly “an expert’ chasing a headline.
Don’t believe all the forecast you hear. Think about it – did all those forecasts “experts” made at the beginning of this year come true?
October 13, 2020 Ben
I wish Core Logic would present current statistics, and not ones which are 2-3 months old. A lot has happened since August. I also appreciate that your focus is the big markets of Sydney and Melbourne, but perhaps these posts could improve with a contribution from expert writers who know something about the rebounding regional markets – not just the major state capitals?
October 13, 2020 Michael Yardney
Ben – thanks for your thoughts. Much of this Corelogic data is updated weekly.
You’re right – we don’t cover the the regional market much do we.
October 6, 2020 Linnet Marshall Joseph
I found this blog pretty helpful. It’s really sad to see the kind of impact Covid-19 has had on all the sectors and specifically the real estate sector. I personally feel that the sudden re-appearance of Covid cases in Australia may lead to a further decline in the property prices and may take a while to bounce back. The future is always uncertain and unreliable. Luckily, I came across a real estate agent Broadbeach who is a great advisor with excellent market knowledge. I will be taking his help in making my investment decision for the right property at the right time because the current scenario doesn’t seem to be going well for making investment decisions and without the proper guidance from a real estate advisory help, property investment may be risky.
October 6, 2020 Michael Yardney
Linnet yes it’s a shame what’s happened to our beautiful country – be careful, most Real Estate agents are great at selling properties but very, very poor at giving investment advice. They are not licensed to, nor trained to and should not even ventured down that path. In today’s very challenging market to be careful who you seek advice from
August 5, 2020 Philip
The spike in search for property listings is not due to interested buyers but by an increase in distressed sellers checking out what their failed investment is now worth on READ and how much they have lost. Winter should normally be quiet season for property sales. It is unusual to see an increase in property sales volumes in winter. Can only be explained by distressed sellers
August 5, 2020 Michael Yardney
I can see why you might come to that conclusion by looking at one stat in isolation – that’s why we look at the complete picture and Corelogic and independently Dr. Andre Wilson keep track of buyers and transactions – there ARE more genuine buyers around. REA believes so also becuase they keep coming back to the same property on search
July 21, 2020 Geoff Hadley
With the record levels of existing household debt, falling real wages, rising permanent unemployment, contracting bank credit, declining immigration, contracting GDP, depletion, of superannuation, ineffectiveness of the first home buyer and other assistance schemes (only leads to inflated prices) absence of investors, over supply of units (of dubious quality) abismal rental prospects, 1.2 million vacant properties and a persistent declining world economy, why would I expect the general property market to rise. Granted premium properties will hold up but what about the vast new estates and over valued areas like Perth and Darwin? What happens when the present support schemes finish in Sept or later next year. What happens when the supposed V shaped recovery turns out to be an L with stagflation and real unemployment/under employment >8%. We can’t all afford to buy in Middle Park? And what happens when interest rates rise in the next 5 – 6 years.?
Get real! I would appreciate an answer. Maybe I an wrong.
Geoff
July 21, 2020 Michael Yardney
Thanks for your comment Geoff- I agree with all the issues that you have mentioned – there are a lot of headwinds that will hold back your economy and our property markets.
But there isn’t one Australian property market, and interestingly there are still a number of suburbs where property values are increasing in value, well outperforming the averages (I guess that’s how averages work – some outperform and some are underperform)
I’ve always learnt taking a long-term perspective is important when investing, and I’m not really sure that in this particular blog I suggest of the property market is going to increase in the short-term – in fact I said the opposite.
With regard to your comment about interest rates. I really hope they will increase in a few years time, because the only reason interest rates are going to increase is because our economy will be booming, property values will be increasing, unemployment will be very low and wages will have risen considerably. So the RBA will need to raise interest rates to slow down the boom. that’s the economic cycle
June 2, 2020 Craig Poole
IN todays report you quote “Sydney house values increased by 0.3% last month (+15.8% over the last year)” however the reported data in the ear;y part of the report and the news states that values fell by 0.4%? Can you help me understand the difference between the two stats against the same apparent period.
Thanks
June 2, 2020 Michael Yardney
I update the top section of this blog weekly and the lower half, state by state section monthly
May 16, 2020 ANN HOME
Very informative. Thank you for sharing.
March 24, 2020 Michael
I think that’s about 27 State by State market updates in a row, where you’ve told us there will be a downturn in Tasmania.Which has still yet to eventuate. It’s all good and well that say that the growth has ‘dropped by 2%’ or what have, but when that’s 7% growth down to 5% growth, still out performing most of the country.
May 27, 2020 Long Time Fan Losing Faith
While once a massive Yardney fan, credibility is in question at the moment, and not because you’re not seeing the future (no one can), but for continually stating the boom is over, the markets on the slide, yet as Michael March 24 states, doesn’t eventuate. Surely self-analysing and learning from our errors makes us better at what we do moving forward? Instead of the cut and paste job for Hobart and to a lesser extent Darwin. Perhaps those areas are too far away for you to profit from their investors? It;s also interesting that you pick and choose which graphs some cities appear in. Come on mate, you’re better than that.
May 27, 2020 Michael Yardney
Thanks for letting me know your thoughts.
Yes I don’t comment a lot about Darwin and Hobart, because it’s really difficult to write something different every month about these very, very small market.
While no doubt the re are opportunities in most property markets around Australia, I have only been prepared to “risk” my money in the three big capital cities and that’s the only place we Recommend our clients invest.
Since we don’t have any properties for sale and my only interested in ensuring our clients don’t lose money, going with the big long term trends has stood us well for over 40 years. I’m happy to stand on that track record.
December 25, 2019 Rio Siva
Hi Michael,
I recently read that the Queensland government might bring the following laws which do not favor property owners. Is this true and how likely this is going to happen??
The Queensland Government has announced Stage 1 of its proposed rental reform, with changes to include:
– Forcing property owners to consent to pets
– Allowing tenants to modify properties without consent
– Forcing property owners to renew tenancies indefinitely
– Introduction of minimum housing standards requiring the rental property and its inclusions to meet prescribed standards and to be in a certain state of repair.
Thanks,
Rio
December 18, 2019 Tam
We have recently been looking at Boondall and surrounding suburbs in Brissy and have found that there seems to have been up to a 5% increase in basic entry level properties and even a bigger increases for some quality or well presented entry level properties.
December 18, 2019 Michael Yardney
Sure Tam – but be very careful – entry level properties in this location are NOT likely to be long term “investment grade” properties