Recent research from RP Data reveals property sales across the country have slumped to their lowest level in 10 years will come as no surprise.
Speaking to the ABC, research analyst Cameron Kusher said last year’s unit and house sales fell blow those recorded at the height of the global financial crisis in 2008, dropping by 20% in 2010 following a succession of interest rate rises.
“The market’s been cooling since about May of last year,” he said.
“We’ve also seen a 100-basis-points worth of official interest rate hikes during 2010, which clearly put a dampener on the market in the second half of the year.
“We saw a lot of properties advertised for sale on the back of a period where we’d seen quite strong growth in property sales for 17 or 18 months.”
Darwin recorded the most significant decline in sales, followed by Brisbane and Hobart, while Sydney took the lead in the number of transactions, followed closely by Darwin.
Mr Kusher says with the ongoing issue of housing affordability, people are not really in a position to cough up the current prices expected by vendors.
“We are expecting with so few first homebuyers active in the market, and obviously affordability an issue as well, that we’ll start to see some increases in rental rates,” he said.
“So you may see a return of investors at some point this year, but it’ll be a different type of investor. It’ll be those chasing rental return rather than those capital gains.”
According to the Housing Industry Association’s Harley Dale, the continuing undersupply of homes across our major cities is set to worsen, leading to further tightening in the rental sector.
“The signal we’re getting from a weak housing finance figure released today is that we’re going to see further short-term pressure on rents and on housing affordability as a result of Australia continuing to build considerably fewer homes than we need to.”
The number of owner-occupier home loans taken out has fallen more sharply than expected in January, with figures from the Australian Bureau of Statistics showing a drop of 4.5% from December 2010.
The value of loans for investment housing slumped 6.8% in January, while new home construction loans are at their lowest level in more than two years after plummeting by more than 9%.
“Unfortunately most of the improvement has been wound back in one hit,” Dale said.
“We did see encouraging signs in the December quarter last year with a bit of a lift in new home lending, but that’s all but been wiped out with the January result.”
Subscribe & don’t miss a single episode of michael yardney’s podcast
Hear Michael & a select panel of guest experts discuss property investment, success & money related topics. Subscribe now, whether you're on an Apple or Android handset.
Need help listening to michael yardney’s podcast from your phone or tablet?
We have created easy to follow instructions for you whether you're on iPhone / iPad or an Android device.
Prefer to subscribe via email?
Join Michael Yardney's inner circle of daily subscribers and get into the head of Australia's best property investment advisor and a wide team of leading property researchers and commentators.