Weekend reads - Must read articles from the last week

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Sales rise as property activity rebounds in locked-down markets
House prices to rise 22 per cent this year, and grow further next: Westpac
The pandemic is pushing Australia’s hot property market to a whole new level — and the regulator is watching closely
Victorian building boom hits new record for starts in financial year
Be Inspired

There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.

Each Saturday morning I like to share some of the ones I’ve read during the week.

The weekend will be over before you know it, so enjoy some interesting reading.

Sales rise as property activity rebounds in locked-down markets

As lockdowns begin to come to an end, property activity rebounds.

This article from Realestate.com.au looks at what this means for the property market.

More properties are being sold as activity rebounds in Australia’s two biggest markets of Sydney and Melbourne with an end to COVID lockdowns in sight, amid record buyer demand nationally.

The latest PropTrack Housing Market Indicators Report showed market activity picked up in September, with measures of buyer interest reaching new highs despite the long lockdowns in Sydney, Melbourne and the ACT.

The turnarounds in activity in locked-down states drove an increase in national sales volumes last week, realestate.com.au senior economist Eleanor Creagh said.

“Overall, we have a clear picture that coming out of lockdown with freedom in sight, activity is turning a corner and is beginning to pick up,” Ms Creagh said.

Wednesday’s report showed demand based on views per listing of properties for sale on realestate.com.au hit a new high in September, while email enquiries to agents and developers also reached record levels.

“We’ve been seeing buyer demand rise over recent months and what we’re starting to see now is this interest translate into sales,” Ms Creagh said.

“It’s particularly promising for Australia’s largest markets, Sydney and Melbourne, where we are seeing big jumps in market activity as freedom for both cities is now well in sight.

“The momentum should continue in October as restrictions ease further and mortgage rates remain low.”

Property prices have surged during the pandemic as record-low interest rates drive huge buyer demand, although Ms Creagh said the hot pace of growth is expected to slow.

“The runaway price growth we’ve seen is likely to ease, given the benefit of lower mortgage rates appears to have already been baked into prices,” she said.

“We’re also facing new macroprudential headwinds. While these changes will only marginally impact borrowing capacity for now, the Australian Prudential Regulation Authority has left the door open to potential further tightening.”

APRA last week told banks to lift the minimum interest rate buffer they use when assessing whether borrowers could still meet their repayments if rates rise, which will reduce the typical borrower’s maximum borrowing capacity by about 5%.

Ms Creagh noted there was an ongoing imbalance between buyer demand and the supply of properties for sale.

While the spring selling season is underway outside locked-down states, it has been delayed in NSW and Victoria, as well as the ACT.

“We’re seeing that those states are now turning a corner and that is contributing to the uptick in weekly sales that we are seeing nationally,” Ms Creagh said.

National property prices increased by 21.5% over the 12 months to September, according to realestate.com.au data.

Activity picks up in locked-down states

The report showed sales volumes rose 12.1% last week to their highest level in 13 weeks.

Preliminary weekly sales were 32.1% higher than the same week last year despite more states being in lockdown in 2021.

“This turnaround in sales volumes at a national level is being driven by an uptick in weekly sales in the ACT, Victoria and NSW,” Ms Creagh said.

Sales volumes climbed 60% last week in Victoria and 68% in the ACT, after COVID restrictions were eased last month to allow one-on-one property inspections during the Melbourne and Canberra lockdowns.

Sales volumes were up by 4% in NSW last week.

Read the full article here.

House prices to rise 22 per cent this year, and grow further next: Westpac

House prices are set to rise 22% according to a report from Westpac.

This article from Domian.com.au looks at what’s going on.

Westpac has tipped property prices to rise by more than 20 per cent this year, increasing its price forecast yet again as the market continues to boom despite extended lockdowns.

The bank expects property prices to climb 22 per cent this year, up from a forecast of 18 per cent, and has also lifted its outlook for next year from 5 to 8 per cent.

However, it has warned the property boom is entering trickier territory, with a correction expected from 2023.

Senior economist Matthew Hassan said the property market, fuelled by record low-interest rates, had blasted past price expectations – going well above earlier forecasts for 15 per cent growth this year – with only a slight dampening effect from the latest COVID lockdowns.

Prices rose across the country another 1.5 per cent in September, taking the nation’s median dwelling price to almost $675,000, according to the latest CoreLogic figures.

Values are up 17.6 per cent since January, and more than 20 per cent over the past year, marking the fastest annual growth seen since 1989.

Mr Hassan expects prices in Sydney to jump 27 per cent before the end of the year, with values in Brisbane and Hobart also expected to climb more than 20 per cent.

Annual price growth of 18 per cent is forecast for Adelaide and Melbourne, and 15 per cent growth is tipped for Perth.

Westpac price forecasts
ANZ also expects national growth of more than 20 per cent, revising its forecasts upwards in recent months, while CBA increased its forecasts to 20 per cent, and NAB forecast 18.5 per cent growth back in July.

“As lockdowns ease it’s reasonable to expect a continued lift in sales in those areas over the coming weeks,” Ms Creagh said.

Ms Creagh said the inability to conduct in-person inspections had reduced market activity in Melbourne in particular, with buyers and sellers now taking advantage of the eased restrictions.

“There have been sellers who would have held off listing, particularly in Victoria as one-on-one inspections weren’t able to happen,” Ms Creagh said.

“The easing of restrictions has been welcomed by sellers and they are more confident to list, and buyers are ready to take advantage of that.”

Read the full article here.

The pandemic is pushing Australia’s hot property market to a whole new level — and the regulator is watching closely

Australia’s property market continues to heat up.

This article from abc.net.au looks at what’s going on.

You could argue the Australian property market has never been “hotter”.

That is, property price growth is at or near record highs, repaying a mortgage has never been cheaper and buying a first home has never been harder (in terms of the size of the deposit required).

But what is it actually like selling property right now?

We just sold our two-bedroom apartment in Sydney and I was genuinely shocked by the market’s appetite for a new listing. The speed at which it sold — in just 10 days — points to a once-in-a-generation property market phenomenon.

An already existing property boom has been raised to a whole new level with the aid of the pandemic — and the supply shortfall that came with it.

It’s in a time like this you can learn a thing or two about how the housing market, and its participants, operate — because otherwise subtle or niche developments become more obvious.

Lesson one: Demand is strong

The pandemic has revealed the strength of the demand for both apartment and detached houses, especially when supply is constrained.

We prepared ourselves to move all the clutter from our place to and from the garage at least four or five times so prospective buyers could move through the open home inspections without tripping over a toy or two.

As it happened, we did that just twice: Our property was on the market for 10 days in total.

The statistics were extraordinary.

Within the first 48 hours of the property being advertised there were 80 inquiries.

The first Saturday open home saw 21 people move through the apartment (one at a time), and seven of those asked for contracts. Within the first week our online property listing had clocked up 1,000 page views.

There was a second open home on Wednesday.

An offer was made on Thursday and a bidding process began over the phone and on email. It was finalised on Friday evening with an exchange of contracts.

Due diligence was done; all parties had lawyers in tow, and strata and building reports were requested and downloaded.

However, apart from all parties concerned abiding by Real Estate Institute and Department of Fair Trading guidelines, there were no rules.

The bottom line was a property was for sale in an area where supply was low — very low — and both investors and owner occupiers were waiting to snap it up.

The demand in the market was so strong that the idea of a Saturday street auction — once the norm in Sydney — was never really entertained. Indeed, an auction date was never set.

Our experience, it turns out, was a microcosm of the greater Sydney market.

According to CoreLogic there were 841 auctions held in Sydney last week, compared to 786 over the previous week and 812 over the same week last year, overtaking the previous week as the busiest auction week for Sydney since late June.

Lesson two: Limits are being stretched

There’s evidence some agents are also acting as auctioneers, stretching the limits of the market.

Janice Andrews recently sold her mother’s Dingley Village unit in Melbourne.

She chose Kevin Chokshi as her agent because he pitched the benefits of being both an auctioneer and agent simultaneously.

What’s the advantage of this?

Well, it gives the agent plenty more work to do but the idea behind it is that it prevents an in-person or online auction from slowing down.

Read the full article here.

Victorian building boom hits new record for starts in financial year

The Victorian building boom has hit a new record.

This article from news.com.au explains the detials.

Builders started work on more new Victorian homes in the past financial year than ever before, but the construction sector has only had a “measured return” since its two-week shutdown ended.

Victoria’s building boom has soared to unprecedented levels with new figures revealing construction started on a whopping 46,287 homes in the past financial year.

The data released by the Australian Bureau of Statistics this week includes 14,200 detached homes that builders commenced in the three months to June, which is also a quarterly record.

The remarkable number equates to a third of all houses under construction around Australia.

The previous record for a financial year was set more than a decade ago at 39,249 home starts, while a quarterly record has stood since the 10,653 notched in March 2010 — after government stimulus to bolster the market following the global financial crisis.

However, the surge predates the two-week shutdown for the construction industry at the end of September.

Housing Industry Association Victorian executive director Fiona Nield said the remarkable boom appeared to have been spurred by the federal government’s HomeBuilder scheme, which offered qualifying homebuyers between $15,000 and $25,000 in grants to build a new house.

However, sales have remained strong since the program ended earlier this year and building approvals for new houses in recent months have continued at near record levels.

“At this stage it seems HomeBuilder has been particularly influential — though of course we’d love to see the trend continue,” Ms Nield said.

“And it might just be the case that some people have saved some money during Covid-19 and are potentially looking at buying a new home.”

But it’s the next data release from the ABS that has the industry’s attention, as it will capture most of Victoria’s two-week construction sector shutdown from September 20-October 4.

Ms Nield said despite the building ban ending over a week ago there had only been a “measured return” to home construction.

A three-site-a-week cap on most trades as well as an ongoing barrier to regional workers entering Melbourne meant work was continuing at a “reduced pace”.

Read the full article here.

Be Inspired

Find a little inspiration during this uneasy time from thegoodnewsmovement.com.

Read the full article here

About Michael Yardney

Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au