As a share of the Australian dwelling stock, estimated annual property sales look to have bottomed-out in recent months (see graph below).On this measure, property sales are currently near the two decade-plus low reached in the June quarter and well below the peak turnover rate of 7.4 per cent in 2013.Based on the trend of the past 15 years, it seems the new “average” turnover rate is around 5.5 per cent (which implies a property is sold on average every 18 years).
Property sales should continue to rise, which will help the economy
In his article Wiltshire explains why the turnover of properties should now increase citing the recent speech by the RBA governor who identified that very low housing turnover has been a factor behind weak consumer spending,
“Another part of the explanation for weak growth in household spending is the adjustment in the housing market … With fewer of us moving homes, spending on new furniture and household appliances has been quite soft. So too, has expenditure on moving costs and real estate fees”.
So a turnaround in the number of property sales should give the struggling Australian economy a boost.
Rising property prices in Sydney and Melbourne should contribute to property sales increasing further.
With the market rebound underpinned by interest rate cuts and the expectation of more cuts to come, property sales are likely to rise further in the year ahead.