House prices have continued to rise and as we hit the middle of the month we’re well on track for double-digit growth this year with some markets likely to achieve this much sooner than the end of the year.
And while our auction clearance rates remain strong and ositive market momentum was not stifled at all by a lift in auction numbers to the busiest weekend for a number of years.
Sydney’s auction clearance rate remained very punchy at 89.1%, clearly remaining at if not even higher than the trend seen over recent weeks.
Melbourne’s preliminary auction clearance rate moved a tad higher at 83.8%.
A sense of FOMO — fear of missing out — continues to be a major factor in spurring housing markets across the country, as buyer demand well outweighed available housing supply.
Property prices in our 5 Capital Cities have risen 1.0% this month but, as always, results vary around Australia.
Sydney property prices rose 0.6% in the last week alone – up 6.7% in the last quarter and Sydney’s auction market remains strong clearing well over 90% of auctions in many parts of the city.
Melbourne property prices rose 0.4% last week, up 4.9% in the last quarter and weekend auction clearance rates remained strong over the weekend.
Brisbane, Adelaide, and Perth prices all made strong gains over the last month.
The number of properties for sale in Australia has seasonally peaked
New supply that might act to quell property price inflation, in Sydney, Brisbane, and Adelaide new property listings are not showing signs of lifting materially.
Listings in Melbourne and Perth have lifted, Perth especially.
The chart below from NAB shows that the supply of new properties coming on to the market was following the seasonal pattern and levels of new listings of recent years, with the notable exception of Perth and partly Melbourne.
At annual year-to-date growth of 1.4% for the 28 days to 19 April, new Melbourne property listings are hardly breaking any speed records.
In the case of Perth, listings are up a sizeable 34.3%, but from a low base from what was the tail end of a property market on the back foot for almost a decade.
It will be interesting to see how potential sellers respond to the higher prices and if this increases the number of new property listings.
Maybe sellers are holding back wondering if they can get more for their properties later on down the track, while other sellers are probably keen to buy first in this fast-moving market and therefore holding back putting their properties up for sale.
Either way…strong demand at a time of limited supply must lead to 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 April 19th 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 increased by 2.3%, with most states recording a rise.
According to Cameron Kusher, Victoria (3.6%) and New South Wales (3.3%) have seen the strongest uptick in buyer demand over the past week, while Western Australia (-1.8%) and the Northern Territory (-0.7%) were the only states to continue falling.
Rising buyer demand was seen across both houses and units, with a slightly stronger pick-up in units (3.3% versus 2.3% for houses).
Buyer demand is expected to continue rising over the next week as we move past the seasonal impact of Easter and the school holidays come to a close.
The REA Rental Demand Index
The REA Insights Rental Demand Index, increased by 5.8% over the past week, with growing demand seen in every state and territory.
According to Cameron Kusher, compared to 12 months ago, when the rental market was only just beginning its recovery following the first wave of COVID-19 restrictions, demand is up 24.1%.
Median property prices
Vendor metrics suggest we’re into 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
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.
Tim Lawless research director of Corelogic explains…
“Rents are rising at a record-setting pace across both Perth and Darwin, with the quarterly trend up 5.9% and 7.7% respectively.
Rental prices in Perth and Darwin started surging higher in September last year.
The monthly growth in rents across Perth quickly accelerated from an already high 1.1% in September 2020, to 2.0% by March 2021.
Darwin rents have risen by an average 2.1% per month for the past seven months, including a 2.4% lift in March 2021.
Both these markets have seen a recent history of low housing investment which has kept rental supply low at a time of rising demand.
Although rents are surging in these cities, it is off the back of a long period of rental value declines. Perth rents remain -16.0% ($80/week) below the 2013 peak and Darwin rents remain -24.6% ($150/week) below their 2014 peak.”
Weaker rental conditions can be seen in the unit sector, both at a macro level and across the sub-regions of each city.
Overall, unit rents have been showing weaker conditions relative to houses throughout the COVID period to-date.
Since March last year, capital city house rents are up 5.2% while unit rents are down -3.8%.
The biggest drag on unit rents are Melbourne and Sydney, where unit rental conditions have been much weaker due to the demand shock caused by stalled overseas migration and international border closures.”
Sydney unit rents have posted a subtle rise over the past three months, while unit rents in Melbourne have held firm over the same period.
With housing values rising faster than rents, gross rental yields have been trending lower.
Most regions are still showing a gross yield higher than typical mortgage rates, implying some opportunity for positive cash flow investments.
Sydney and Melbourne stand out as having a much lower yield profile.
Both cities have seen gross yields fall to new record lows in March, with Sydney recording a gross yield of 2.7% and Melbourne dropping below the 3% mark for the first time on record.
Auction clearance rates
This week the combined capital city preliminary clearance rate saw a slight improvement compared with last week, as the number of auctions held continued to bounce back from the Easter slowdown.
There were 2,448 homes taken to auction this week, returning a preliminary auction clearance rate of 80.5%.
Over the week prior, a lower 2,199 auctions were held with preliminary figures showing 79.4% of homes sold, later revising down to 76.8% by final collection on Wednesday.
Over the same week one year ago, confidence was still quite low over this period as restrictions around onsite auctions and physical home inspections were still impeding activity with only 30% of homes selling over the week across 1,922 auctions.
In Melbourne, 1,204 homes were taken to auction across the city over the week, returning a preliminary auction clearance rate of 78.1%, which was higher than last week’s preliminary figure of 77.2%, later revising down to 72.5% and last year’s 27.9%.
Last week, 1,059 auctions were held and last year 1,016 auctions took place.
Sydney returned a preliminary auction clearance rate of 84.8% this week as volumes increased.
There were 913 auctions held over the week, up on last week’s 821 and also higher than last year’s 735 auctions that took place.
This week’s preliminary figure is higher than the 82.8% recorded last week, which revised down to 81.4% at final figures.
One year ago, only 33.3% of homes sold across the city.
Across the smaller cities, Canberra continued its strong performance, with 87.4% of homes selling at auction this week, the highest of the capital cities.
Following with 82.8% of auctions successful was Adelaide, Brisbane (72.7%), and then Perth (50%).
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.
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- 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
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Source of graphs and data: CoreLogic, NAB and REA
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