Transaction volumes data delivered a lacklustre result to the market with the number of transactions now trending lower across the country’s combined capitals.
Based on settled sales over the 12 months to April 2016, CoreLogic estimated that 339,026 houses and 132,081 units sold nationally.
Using a year-on-year measure, house sales fell by – 3.7% over the year while unit sales are -9.7% lower.
- An estimated 208,345 houses and 96,915 units sold over the 12 months to April 2016 across Australia’s capital cities;
- Annual sales volumes were -5.7% lower over the year for houses and -12.2% lower for units;
- 61.5% of all house sales and 72.8% of all unit sales occurred within a capital city.
- Annually, the proportion of house sales in a capital city is at its lowest level since January 2013 while for units it is at its lowest level since May 2008.
A detailed look into dwelling sales across the individual capital cities revealed that most cities are seeing sales volumes trending lower.
While Perth and Darwin are the two cities where values fell over the past year, the trend line suggests that the rate of decline in sales is starting to flatten.
This change could indicate that the worst of the value declines have been experienced and a level of demand is now returning to the market.
It is difficult to gauge exactly how strong the downwards trend is in Sydney, Melbourne and Brisbane given how many units are under construction.
Keep in mind that those which are funded locally will typically need at least around 70% of the project precommitted in order to commence construction.
This would seem to suggest that the recent decline in sales is not quite as strong as represented here.
Nevertheless, affordability constraints, particularly in Sydney and Melbourne, following consistent value growth in recent years is likely leading to a decline in sales.
For the remaining capitals, Adelaide, Hobart and Canberra are seeing transactions trend slightly lower over recent times however; the trend is nowhere near as strong as that in Sydney and Melbourne.
This trend suggests a fairly steady demand in each of these cities and is reflective of their moderate increases in home values currently.
Despite home values rising, transaction volumes continue to languish well below their previous highs.
On an annual basis, sales volumes peaked at 633,904 transactions over the 12 months to May 2002.
With 471,107 sales over the past year, these are currently -25.7% lower than their peak.
The high costs associated with exiting a property such as agent commissions, and stamp duty at point of purchase, are both likely to be major deterrents to an increased level in sales activity.
Consider this, in June 2002, the national population was estimated to be 19.5 million persons compared to current estimates at 24.1 million, yet transaction volumes are currently much lower than they were in mid-2002.
With fewer transactions in the market and tighter mortgage lending conditions, we’re expecting to see less upward pressure on home values as we progress through 2016.
It’s important to note that property transactions are recorded at the time of contract however, they are not received until such time as they have settled.
For this reason, the numbers displayed for units over recent years are likely to be somewhat undercounted and may be revised over the coming years.
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.
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.