What a turnaround for our property markets | Property Insiders [Video]

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What lies ahead for our property markets now that our 2 biggest cities are working their way out of lockdown?

Almost anyone who owns real estate would give their second garage to know the answer to that as they’re currently receiving mixed messages.

On the one hand, 2 of our big banks have upped their forecasts for property prices for the rest of this year as well as for 2022.

On the other hand, our financial regulator APRA seems intent to slow our markets down.

So I’m keen to hear the views of Dr. Andrew Wilson, Australia’s leading housing market economist and Chief economist of My Housing Market what’s happening in our markets.

Booming Sydney Housing Market surges out of lockdown

The hot Sydney housing market has surged over the past month following the easing of lockdown restrictions, with waves of buyers and sellers now engaging Australia’s strongest and highest-priced capital city.

Sydney houses are selling like hotcakes with the average time on the market falling to just 23 days over the past month – the lowest monthly result for the year and well below the 27.6% reported during the lockdown over August.

Sydney also enjoys the fastest-selling housing market of all the state capitals and is well ahead of Melbourne’s 28.5 average days on market.

All Sydney regions have recorded sharp declines in the average time it takes to sell a house since lockdown restrictions eased.

The top performance of the northern Beaches was just 18.5 average days on market, closely followed by the city and east at 18.9% days on market, the lower Northshore 20.4 and up on Northshore 20.7.

Sydney Region

Sydney’s fastest-selling suburbs over the month with a minimum of 10 reported house sales are led by:

  • Seaforth with an average of just 11.4 days to sell, followed by neighbouring…
  • Allambie Heights 12.1,
  • Glenwood and Botany each 15.3,
  • Dover Heights 16,
  • Oyster Bay and French’s Forest each 16.4,
  • Roselle 16.7,
  • Paddington 17 and
  • Five Docks with 17.1 average days on market before selling.

Record buyer competition for Sydney houses will be tested over the coming weeks with a surge of post lockdown listings set to hit the market. Sydney Bellevue Hill

New listings in Sydney have remarkably increased by 30.3% since the beginning of October to clearly the highest weekly totals of the year – with nearly 7,000 extra homes for sale hitting the market.

Hungry buyers are now set to take advantage of significantly more choices in the Sydney housing market.

And the prospect of increased lending restrictions over coming weeks will motivate buyers to get him before home loans likely become harder to secure – and more expensive.

RBA’s minutes emphasise Australia is further from its goals on wages and inflation than offshore, will lag the hike cycle

The RBA October Minutes expanded a little more on why the RBA thinks Australia’s wage and inflation experience is quite different from other countries.

This comes in the context of markets having brought forward RBA rate hike pricing following moves offshore with a full rate hike now priced by August 2022 and 50bps of hikes priced by the end of 2022 against the RBA’s most recent guidance of not seeing the conditions for a hike until 2024, though the moves also appear to have been exacerbated by a lack of liquidity.

The 2024 guidance was again re-stated in the Minutes, as it was in the post-Meeting Statement “ The central scenario for the economy is that this condition will not be met before 2024”.

Payroll jobs stabilise in September ahead of re-opening

We know unemployment crept up a little over the last couple of months and the participation rate dropped, of course, this is not surprising considering at the two biggest economies Melbourne and Sydney were lockdowns, but now there are positive signs for our job market.

Weekly ABS payroll jobs rose 0.2% in the fortnight to 25 September 2021, a tentative sign that the large decline in jobs associated with lockdowns has come to an end. Payroll jobs should start to rebound sharply starting from mid-October given the lifting of stay-at-home orders in NSW, VIC, and the ACT.

This week’s auction results – another weekend of strong auction results.

Watch this week’s Property Insider video as we discuss how most cities continue to record generally strong results for sellers.

Sydney Auction Market

Sydney’s auction market is down to a three-month low as listings surge.Sydney Suburb

Sydney’s weekend auction market was sharply lower on Saturday continuing the declining trend of recent weekends.

Sydney recorded a clearance rate of 77% at the weekend which was well below the previous weekend’s 83.6% and also lower than the 78.8% recorded over the same weekend last year.

Sydney auction clearance rate fell below 80% for the first time in 12 weeks.

Higher auction numbers over recent weekends are impacting clearance rates, providing more choice for buyers.

721 homes were listed for auction at the weekend which was higher than the previous weekend’s 677 and well above the 637 auctions over the same weekend last year.

The following chart from Dr. Andrew Wilson shows the Sydney auction clearance trend:

Sydney Auction Trends

Melbourne Auction Market.

The following chart from Dr. Andrew Wilson shows the Melbourne auction clearance trend:

Melbourne now back to the Boom

The Melbourne weekend auction market reported its first boomtime clearance rate since May as buyers and sellers roar back following the end of the local lockdown

Melbourne recorded a clearance rate of 80.4% on Saturday which was higher than the previous weekend’s 77% and well ahead of the 66.9% recorded over the same weekend last year.

994 homes were listed for auction at the weekend which was similar to the 993 reported over the previous weekend and significantly above the 304 auctions over the same weekend last year.

Melbourne Auction Trends

READ MORE: Here’s how APRA caps could impact how much you could borrow

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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


'What a turnaround for our property markets | Property Insiders [Video]' have 28 comments

    Avatar for Michael Yardney

    October 6, 2021 Karen

    Mortgage insurance concerns me as it doesn’t only cover the banks and the borrower still has to pay the loan back? I see my kids now as very vulnerable!

    Reply

      October 6, 2021 Michael Yardney

      You are right, the banks are covered by mortgage insurance and the borrower is responsible for their debts.
      Having said that people should develop good money management skills and not borrow more than they can afford to repay.
      It’s unlikely the interest rates will go up for a while and hopefully your kids will not be vulnerable

      Reply

    Avatar for Michael Yardney

    September 29, 2021 Karon Cumner

    In all this covid mess its been reassuring that the property market has done well. People who own property make sacrifices to get into the market. I appreciate this blog for good solid information thank you.

    Reply

      September 29, 2021 Michael Yardney

      Thanks Karon – you’re right become financially free doesn’t just happen – you need to work for it and make sacrifices

      Reply

    Avatar for Michael Yardney

    September 15, 2021 Errol

    Are we still this optimistic about Australia and its future ?
    Australia has changed a lot since this blog post was submitted.
    Under “normal” circumstances, I would say “yes, Australia will bounce hardly”
    But we most likely won’t be under “normal” circumstances for the mid to possibly very long term anymore.
    I come from a communist country, and I lived the transitional period from full democracy to becoming a tyrannical regime.
    There are many strategical similarities to what’s happening in Australia, but with different colors.
    If we keep this path, we won’t be ok, things will change forever
    “Profits” from real estate will become irrelevant when there are no freedoms.
    Even if you get “vaccinated”

    Reply

      September 15, 2021 Michael Yardney

      This blog is updated every week Errol – and yes, we’re still optimistic

      Reply

    Avatar for Michael Yardney

    June 2, 2021 Mike Schwarz

    Dr Andrew Wilson – Question on Interest Rates
    It is said that the banks have been receiving cheap funding from the reserve and this ends in June. They will then need to source funding on the global market which is markedly higher. This would suggest they will have no option but to raise interest rates.
    Had you factored this into your view on interest rates?

    Reply

      June 2, 2021 Michael Yardney

      Great question Mike. I know Dr Wilson has taken this into account from our private discussions. The banks will have to borrow overseas, but look what interest rates are overseas. Of course the value of the Australian dollar will be a factor.
      Remember, the RBA is keen to keep interest rates low to stimulate the economy, increase business activity and jobs growth and eventually get unemployment down. They are not not going to pull the rug out from under us

      Reply

    Avatar for Michael Yardney

    April 25, 2021 Mark

    Its interesting to watch the FOMO effect on purchasing real estate at higher prices than they are worth as real estates are elevating prices during the demand. I also recently read an account of a person at auction in Sydney saying I felt like I had won lotto just because he secured the winning bid !
    Now the prices are rising so quickly and people are borrowing way to much to purchase at historically low interest rates its not difficult to work out what happens next when interest rates rise again !
    See household debt in Australia
    https://www.finder.com.au/australias-personal-debt-reported-as-highest-in-the-world
    Another concern is the misdemeanor of good debt and bad debt lets face it all debt is bad but it portrays a certain air of its ok because its good debt .. but good debt can turn bad too ie negative equity
    We see the occurrence every decade or so the debt delinquency increases this last happened when interest rates were increased
    I have been in a position where I have not only seen this occur but almost been burnt too .. not a good feeling but you learn by your mistakes very quickly
    The oracle Buffet says be fearful when others are greedy and greedy when others are fearful
    I am standing back and waiting for this supposed pandemic mayhem to cease ….

    Reply

      April 25, 2021 Michael Yardney

      What you say is correct – some people are making poor decisions driven my FOMO – but that doesn’t mean it’s the wrong time to make a wise investment decision

      Reply

      Avatar for Michael Yardney

      August 18, 2021 Bruce Mitchell

      Hi Michael,
      I don’t feel the question was answered, what’s GOING TO happen, up, down, you hint it’s not, but I agree with one of your comments above.
      Interest rates are going higher, people have overspent and it’s gonna crash soon.
      I’ve been wrong till now and hope I continue to be,
      Tho it’s a time bomb waiting g and it’s gonna be bad but with opportunities opened.
      You and all real estate keep talking it up, that’s your job, I just don’t agree.
      Cheers

      Reply

        August 18, 2021 Michael Yardney

        Bruce, with so many unknowns what’s going to happen in the short-term is very hard to forecast, but I tend to avoid forecasts and have expectations instead.

        I expect we will have some difficult times and some good times, but I don’t know when they will occur.

        I expect we will learn to live with the coronavirus, but I don’t know how long it will take, and I expect the underlying fundamentals will keep driving up our property markets, not because I’m in eternal optimist it because I’m a realist and I don’t fight the big trends.

        Reply

    Avatar for Michael Yardney

    April 2, 2021 Mary

    @Joseph
    Your comment about “Australia heading towards Japan” and being over 1T in debt

    Have you seen this link lately?

    https://www.usdebtclock.org/world-debt-clock.html

    Australia is doing AMAZINGLY WELL compared to the rest of the world.

    I suggest to try removing the lens of pessimism and looking at life in general with a more realistic and optimistic outlook

    People are angry when prices go down
    People are angry when prices go up

    Can’t seem to win either way eh?

    Reply

    Avatar for Michael Yardney

    March 3, 2021 Jennifer

    90% of jobs recovered? I I don t think so. The tourism and travel sectors have been decimated and the education sector is not far behind. It s a shame that 9-5ers forget that these sectors even exist. I personally have been getting by on menial casual jobs for over a year and it looks like that will continue for most of this year as borders remain closed. Some of us have had our lives turned upside down for the foreseeable future, so No, it is not back to normal. I m lucky as I had some money and a mortgage already but I can t even go to the bank to access a better rate through refinancing as I don t tick a single box right now. And I work for a very reputable company normally – stood down definitely through no fault of theirs or mine. Not all of us are back to normal!

    Reply

      March 3, 2021 Michael Yardney

      We quoted the Australian Bureau of Statistics latest figures. Of course for the many people like you who are still without a permanent job and the situation is terrible and we are not wanting to belittle that.

      Reply

    Avatar for Michael Yardney

    February 4, 2021 Raj Thakrar

    Hi Michael,
    It is too early to be generalist and say property prices will hike. There are number of factors in play here.
    1 Due to lock down some sales were on hold
    2 Government Incentive in play
    3 Relaxed lending rule
    4 Government incentive
    Cost of new build artificially inflated by builders and developers sending cost of new build to new level making house price higher. The buyers technically are not benefiting for these Government incentives they are going in to builder and developers pocket. Housing in Australia is still young growing market so bubble will burst scenario does to stack up. It is always demand and supply simple economics.

    Reply

    Avatar for Michael Yardney

    December 10, 2020 Philip Lee

    The property market didn’t collapse because the government is throwing everything at it to keep it afloat. Our property market is not a free market driven by market fundamentals. It is manipulated by the government cutting interest rates to zeo, stamp duty concessions plus first home buyer grants, and government guarantees for deposits all sucking in the financially unsophisticated into putting themselves into a life of mortgage stress. It’s just kicking the can down the road.

    Reply

      December 10, 2020 Michael Yardney

      Philip. You are correct, our property markets have never been a “free market”, they have been manipulated by the Reserve Bank and APRA. Remember a couple of years ago when investors were dominating the market pushing up prices, the RBA raised interest rates and APRA made it much harder for banks to lend to investors and this slowed down the markets.
      Currently intervention has supported our markets and that’s good. It’s the government’s job to protect its constituents – you and me and one way of doing that is providing stability to our housing market. They are too big to fail and no one will let them fail.

      Reply

    Avatar for Michael Yardney

    October 16, 2020 Joseph Battaglia

    Michael your optimistic views irrespective of the true underlying data is disconcerting.
    The government is covering up the reality of the situation, throwing money against the wall at all costs (hoping some will stick) and falsely propping up the economy whilst kicking the can down the road. The rhetoric from parties with bias/interest in the real estate market are also contributing to the propaganda that “things are ok and sentiment is up” – whilst reality is different.
    We are not leaders on the world stage, for our real property obsession, in fact we are almost ridiculed that we are a nation that increases their wealth through selling properties to each other increasing the price at each transaction.

    Its fiscally clear, we should allow the reset button to deflate this overvalued bubble and get back to reality. I mean seriously, some of these prices are ridiculous!

    Are we going the way of Japan?
    This QE is just irresponsible on all counts.
    Over $1T in debt for such a small economy… come on, who are we kidding.

    Reply

      October 16, 2020 Michael Yardney

      You are right Joseph, many of our industries are on life support from the government at the moment. And while the property market was being supported by loan deferrals, they seem to be cleaning themselves up nicely. What is the alternative? Do you really want to see businesses go broke and people go hungry? Our government and those around the world have learned how to handle economic downturns. And spending our way out of a downturn is a valid economic argument

      Reply

    Avatar for Michael Yardney

    October 2, 2020 Dave

    Dear Michael. Your articles are interesting
    and usually very well written . However this one is full of a lot of spelling and sentence construction mistakes that in parts make it hard
    to follow . Take a look at where it says sh-t (Let me know if you need a proof reader ) 😉

    Reply

      October 2, 2020 Michael Yardney

      Thanks for the heads up Dave – you are right lots of errors in this one. As I can talk faster than I can type I usually use voice to text, and it is pretty accurate. But clearly I missed a couple of bad bloopers this time.

      Reply

    Avatar for Michael Yardney

    July 24, 2020 Martin

    The RBA will print money. And has printed plenty of it already to fight covid-19. It just doesn’t give the money directly to the government. It prints new money and uses it to buy government bonds on the secondary market so that institutions can take a cut as they buy the newly issued bonds from the government So that the government can pay for jobkeeper and Then these institutions onsell them to the RBA for a markup.

    Reply

      July 25, 2020 Michael Yardney

      There has been a lot of discussion recently about Modern Monetary Theory, which suggests central banks should print more money and then give (lend) it to the government, to help pay for it debts.
      This week RBA governor Philip Lowe said that he won’t do that (print extra money) instead the banks should borrow on the open market at the prevailing low interest rates because they can afford it.
      Rather than print more money he gave the Morrison government the green light to increase debt levels and lock in a larger budget deficit to support the economy during its recovery from the virus crisis

      Reply

    Avatar for Michael Yardney

    June 26, 2020 Alex P.

    While Dr Wilson may say that more sellers entering the market is an expression of confidence, the flip side is that it may be the smart money taking the opportunity to exit while prices are still holding up. If you drill down in the data is there a way to differentiate whether these are investment properties or owner occupied properties being sold and how does that relate to historical data. Second point is that government intervention has done a good job of addressing short term liquidity over the crisis but there have been no measures on a similar scale to address solvency, and solvency is what really matters after the liquidity tap has been turned off.

    Reply

      June 26, 2020 Michael Yardney

      Alex, you are right on both counts.

      Our experience on the ground speaking to buyers, sellers and estate agents, is that there are very few distressed properties coming on the market at present.

      Similarly we do not believe the government is going to pull the rug out from under us in September after he’s gone to such an effort to support the economy and our markets

      Reply


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