Are lower auction clearance rates the beginning of the end? | Property Insiders [VIDEO]

Perhaps it’s a reflection of how old I am, but as I keep seeing the stories in the media about rapidly rising house prices and what’s ahead for our property markets, I simply think: here we go again.

There are those telling us that auction clearance results being a little bit lower than prior to Easter at the beginning of a major turn on the property market.

Others are out there telling us we are already in the housing bubble that’s going to crash. Wooden Figures Of People A House In A Supermarket Agb2cbg

Then there are others who are warning us how the Reserve Bank or APRA are going to interfere and slow things down.

And then the banks that only 12 months ago forecast house prices would fall 10, 15, or 20 per cent are now suggesting house prices could rise by 10, 15, or even 20 per cent in this year alone in some areas.

Of course, no to property titles of the same, and I’m saying that from the perspective of having invested in real estate for almost 50 years now.

Over the long term house prices are affected by the availability and cost of finance, the wealth of our nation, and our population growth.

In the short term house price growth essentially comes down to the forces of supply and demand, each sprinkled with varying quantities of irrational exuberance, and boy are we seeing that at the moment.

Fear and greed are driving home buyers and investors to take shortcuts and make compromises just to get into the market.

So let’s get an informed perspective of what’s happening in our market property markets at present, as well his views on some of the most recent property-related statistics in this week’s Property Insider chat with Australia’s leading housing Economist Dr. Andrew Wilson.

Australia’s housing market is in the midst of a broad-based boom

The Sydney housing market delivered another strong weekend for sellers although the auction clearance rate was the lowest recorded over autumn so far.

Auction numbers remained reasonably strong however with 785 listings which, although well down from the record of 1227 auctioned over the super Saturday a fortnight ago, was nonetheless significantly higher than the Easter resumption of previous years.

Sydney Auction Trends

The Melbourne weekend home auction market recorded the lowest Saturday clearance rate for the year so far, following the resumption of activity from last weekend’s Easter holiday break.

905 homes were listed for auction on Saturday which was well below the 1593 auctioned over the super Saturday a fortnight ago, but higher than the Easter resumption of previous years.

Sydney Auction Trends

Job vacancies at a record high

The number of job ads on SEEK increased 10.3% in March to be 24.3% above pre-pandemic February 2020 levels.

The strong increase in job ads in recent months suggests there continues to be strong demand for labour at a time of record-high labour force participation.

That combination suggests the unemployment rate will continue to decline in the months ahead, even with the headwind that the end of the JobKeeper wage subsidy may bring.

Our unemployment rate is falling much faster than most people predicted.

Job Vacancies At Record High

House Vacancy Rates Still Falling – and Rents Naturally Keep on Rising

Rental vacancy rates for houses remained low in most capitals over March, continuing to put upward pressure on rents as tenants desperately scramble to secure available properties.

The latest data from My Housing Market reveals that capital city house vacancy rates, with the exception of Melbourne, remained below 2.0% with Adelaide, Perth, Hobart, Darwin, and Canberra remarkably all below 1.0% – and Brisbane just above.

Melbourne remains the exception with clearly the highest capital city house vacancy rate – and continuing to rise.

Vacancy

Reflecting low vacancy rates, all capitals, again with the exception of Melbourne, have recorded increases in house rents over the past year.

Canberra, where annual house rents were flat, however, remains clearly the most expensive capital for tenants.

Vacancy2

First Home Buyers Down but Not Out – Yet

Although first home buyer activity has waned recently, levels remain strong – but the outlook nonetheless is problematic for realising the Great Australian Dream.

Latest ABS data reveals that national lending seasonally adjusted for first home buyers fell by 3.3% over February – the first monthly decline since May 2020 at the height of the autumn coronavirus shutdown.

Despite the monthly fall, 16,167 first home buyer loans were approved over the month, the second-highest result since June 2009.

Lending to first home buyers has surged by 68.3% over the first two months of this year compared to the same period last year.

Fhb1

Fhb2

Are Investors Finally Moving Back into Booming Housing Markets?

Australian housing markets continue to record boom-time conditions generally, with strong buyer demand now pushing up house prices at the highest rate in years.

Lending for home purchases remains at record levels overall with all states reporting ongoing strong results.

While home lending one new home loan approvals fell slightly in February, I’ll be out of record highs, invest lending increased 4.5% over the month the highest result since February 2018.

Investor activity increased in all states over February with the exception of TAS, with VIC the significant contributor to overall growth, rising by 13.1%

Abs

Now is the time to take action and set yourself for the opportunities that will present themselves as the market moves on

Metropole Team

If you’re confused about the mixed messages in the media you are not alone.

However, you can trust the team at Metropole to provide you with direction, guidance, and results.

In challenging times like we are currently experiencing you need an advisor who takes a holistic approach to your wealth creation and that’s exactly what you get from the multi-award-winning team at Metropole.

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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


'Are lower auction clearance rates the beginning of the end? | Property Insiders [VIDEO]' have 16 comments

    Avatar

    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

    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

      Michael Yardney

      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

    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

    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

      Michael Yardney

      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

    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

      Michael Yardney

      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

    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

      Michael Yardney

      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

    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

      Michael Yardney

      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

    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

      Michael Yardney

      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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