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Property sales should continue to rise which will help the economy - featured image
By Michael Yardney

Property sales should continue to rise which will help the economy

Australian property sales have increased over the past six months

In the three months to the end of August, an estimated 117,300 properties sold around Australia (see graph below from Domain).

That’s an increase of just 1 per cent compared to the same period one year ago (recent months are estimates as official sales data does not include all recent sales).

Over the year to August, an estimated 433,500 properties changed hands.

According to “seasonally adjusted” property sales data, turnover reached a low point in the three months to February 2019.

Since then, property sales have increased by 15 per cent.

Increased property sales

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

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.

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.
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