The early indicators of Delta’s impact on housing according to Westpac.

How will the Delta Coronavirus impact our housing markets?

That was the subject of a recent Westpac Housing Pulse report.

Given the lags involved, both for impacts and data collection, Westpac believes it will be several months yet before we get a clear view of how the latest COVID disruptions have impacted our property markets.

However, Westpac believes we can glean some early guidance from the timeliest data available covering auction markets, listings, and prices.

In their report weekly auction market information was available up to Aug 22 and provides good coverage of the Sydney and Melbourne markets hit hardest by the latest outbreak – the latter also offering a useful point of comparison with last year’s ‘second wave’ lock-down.

Auction volumes are already showing a clear impact.

This Westpac chart shows these against total monthly turnover (including non-auction transactions) scaled to a consistent base so that auctions can be viewed as a guide to broad activity.

Turnover, auctions: Sydney, Melbourne

The latest weekly data suggests turnover in the Sydney market is down about 30% on its May level, a hefty fall but milder than the 50% slump seen during last year’s national lock-down and the further fall seen during Melbourne’s ‘second wave’ outbreak.

Remarkably, turnover is still above the avg levels seen in 2019.

Well over 500 properties are still going to auction each week in Sydney.

About half are selling prior with about 150-200 proceeding to auction online, the remainder being withdrawn.

Auctions: withdrawal adjusted clearance rates

Westpac believes that adjusting for auction withdrawals provides a useful clearance-based measure of market conditions.

These also show a marked cooling in Sydney, but again quite resilient reads overall, close to Sydney’s long run avg.

On this basis, the Melbourne market looks to have seen a more material weakening during its recent restrictions.

New listings: Sydney, Melbourne

Data on listings is also reasonably timely with figures available weekly (albeit as a 28-day rolling average) according to the Westpac report.

For Sydney, these broadly corroborate the picture from auction volumes, with new listings down 32% from their May level but still comfortably above last year’s lows.

Listings have shown a milder decline in Melbourne although the on-again-off-again pattern of lockdowns in recent months has generated big swings.

Dwelling prices: Sydney, Melbourne

Around prices, CoreLogic’s daily measure points to some moderation in prices gains in Sydney, albeit from a very strong starting point over the first half of the year and still running at a monthly pace in the 1.4-1.8% range – still a strong double-digit annual pace.

Evidence of a slowing is even more marginal for Melbourne with daily measures still showing gains running at a 1-1.4% monthly pace.

There is clearly considerably more inertia to prices according to Westpac.

Whereas market activity shows big swings during lockdown disruptions, prices look to be less affected.

Melbourne’s ‘second wave’ lock-down last year saw a slightly more prolonged period of price weakness compared to other Australian cities but did not prevent the city from entering a price recovery once restrictions eased.

Disruptions since then have had even less effect.

Much of this likely comes back to sentiment according to Westpac.

If disruptions are seen as temporary and medium-term prospects are still viewed as positive – as they are now – then prices are much less likely to be affected.

This notion will be tested as the ‘delta’ lock-down drags on, especially as household finances become more stressed.

However, with the availability of vaccines providing fundamental support to medium-term expectations, Westpac expects prices to remain well-anchored.

Consumer expectations for mortgage rates

Westpac Consumer interest rate expectation

Westpac says that consumers appear to be somewhat confused about the outlook for interest rates.

Every six months the bank asks respondents about their expectations for mortgage rates over the next year.

The August results show just over a quarter of consumers just ‘don’t know’ – easily the highest reading for this category and nearly double the 13.3% read back in Feb.

Amongst those with a view, 55% expect mortgage interest rates to rise over the next year, 41% expect no change, and 4% expect rates to decline.

Westpac’s general impression is that most consumers understand rates are at the bottom of the cycle but that there is a high degree of uncertainty about when they might start to move higher.

Now is the time to take advantage of the opportunities the current property markets are offering

Sure the markets are moving on, but not all properties are going to increase in value. Now, more than ever, correct property selection will be critical.

You can trust the team at Metropole to provide you with directionguidance, and results.

Whether you’re a beginner or an experienced investor, at 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.

We help our clients grow, protect and pass on their wealth through a range of services including:

Strategic property advice – Allow us to build a Strategic Property Plan for you and your family.  Planning is bringing the future into the present so you can do something about it now! Click here to learn more
Buyer’s agency – As Australia’s most trusted buyers’ agents we’ve been involved in over $4Billion worth of transactions creating wealth for our clients and we can do the same for you. Our on the ground teams in Melbourne, Sydney, and Brisbane bring you years of experience and perspective – that’s something money just can’t buy. We’ll help you find your next home or an investment-grade property.  Click here to learn how we can help you.
Wealth Advisory – We can provide you with strategic tailored financial planning and wealth advice. Click here to learn more about we can help you.
Property Management – Our stress-free property management services help you maximise your property returns. Click here to find out why our clients enjoy a vacancy rate considerably below the market average, our tenants stay an average of 3 years, and our properties lease 10 days faster than the market average.

Read More

Leave a Reply

Your email address will not be published. Required fields are marked *