Considering around 13 million Australians are now in lockdown, our property markets have held up remarkably well, even delivering strong auction results over the weekend.
With auctions being conducted online, overall clearance rates in Sydney and Melbourne were respectable given the circumstances.
Remember, properties withdrawn from auction are counted as “passed in” and therefore lower auction clearance rate.
The pool of properties being auctioned and even those available for private sale, particularly in Melbourne and Sydney, is shrinking steadily as lockdowns extend, although the appetite for homes has held up remarkably well.
Buyers are still out in force – owner-occupiers, investors, and first home buyers – at a time when available supply is struggling to keep up, keeping pushes prices higher.
Whether this just reflects a need to buy from those already committed to buy a property or a more enduring trend remains to be seen, but I suspect it is the latter
Despite the lockdowns to various degrees across the country this past month, residential property prices continue rising.
Across the five capital cities, for July to the 25th, prices have risen 1.3%. This is less than the 1.9% rise in June, all capitals seeing somewhat slower rates of increase, though not dramatically so.
Sydney house prices increased 0.4% over the last week despite being in lockdown and + 17.2% this year.
Melbourne house prices increased in value by 0.3% over the week and are up 10.8% this year, and
Brisbane house prices increased 0.4% over the last week and 13.4% so far this year.
Of course there are headwinds that will slow us down, including concerns about the economic impact that prolonged lockdowns will deliver.
At the same time the number of properties coming on to the market over the next weeks is likely to keep falling as vendors would not logically plan to list their properties for sale when they can’t get people through their property and the probability of conducting a public auction is low.
It is more like the vendors will hold off until we get to the other side of lockdowns.
Nevertheless, despite the disruption, property values are holding up well as there are more buyers than good properties for sale and this means property values will keep rising.
The number of properties for sale in Australia is still in short supply
The supply of properties for sale just can’t keep up with demand.
Capital city demand continues at a vigorous rate, with buyers out in force – owner-occupiers, investors, and first home buyers – at a time when available supply struggling to keep up.
The table below shows how the stock of advertised properties is well below year-ago levels across all capital cities.
At the same time “time on market” continues to decline.
These are signs that property values will continue to rise moving forward.
To help keep you up-to-date with all that’s happening in property, here is my updated weekly analysis of data and charts as of July 26th provided by NAB, Corelogic, and realestate.com.au.
What’s happening in our property markets?
The REA Buyer Demand Index
The REA Insights Buyer Demand Index fell 0.6% last week.
According to Paul Ryan, The level of buyer demand is now 8% below the historic-peak recorded in mid-February this year.
Buyer demand fell markedly in New South Wales, by 3.2%. As the lockdown in Sydney has drawn on, new listings have dropped off, which limits buyer engagement with the market.
Other states were broadly flat, with no effect of the lockdown in Melbourne seen on the Victorian market yet.
Tasmania saw a strong increase in demand of 3.9% in the week.
Demand for units has increased the most over the past year, by 10%, with demand for houses broadly flat. An influx of first-home buyers, as well and investors coming back into the market in 2021, has contributed to the increase in interest for units.
Demand is likely to fall over the coming weeks with lockdowns looking set to continue.
As sellers delay bringing new properties to market until conditions normalise, our measurement of buyer demand will fall, as we saw during lockdowns in 2020.
But later in the year, should this wave of the pandemic be brought under control, we expect a rebound in market activity and buyer demand.
The REA Rental Demand Index
The REA Insights Rental Demand Index, increased 2.3% last week.
According to Paul Ryan, COVID-19 restrictions in New South Wales appeared to have little effect on rental demand, which increased a further 2.5% over the week.
Rental demand grew strongly, by 5% or more, in Queensland as well as Western Australia.
Median property prices
Vendor metrics confirm we’re in a seller’s market with the number of days to sell a property very low (a sign of the tight supply situation), and vendor discounting (it’s easier for them to sell) at very low levels.
In general, houses are selling better than apartments, but the shortage of good properties on the market is seeing properties selling quickly with minimal discounting.
Our Rental Markets
While rental growth is slowing, we’ve still experienced the highest rental growth in over a decade.
Growth in rental rates eased over the second quarter of 2021, with the national rental index rising by 2.1% over the 3 months to June compared to a 3.2% rise over the March quarter.
While rental growth has slowed over the recent months and quarters, the latest figures take national rental rates 6.6% higher over the year; the highest annual growth in dwelling rents since January 2009.
Regional rents continued to outpace capital city rents over the second quarter of 2021, with regional dwelling rents rising by 2.7% against a 1.9% rise in capital city rents.
This was a 1.4 percentage point reduction in the rate of growth quarter on quarter for the combined regionals, and a 1 percentage point reduction for the combined capital cities.
Despite the easing in growth in recent months, regional Australia recorded an annual rate of rental growth of 11.3% in June 2021.
Last weekend’s auction clearance rates
Auction clearance rates remained surprisingly strong this weekend despite the fact that over 13 million Australians are in lockdown.
Dr. Andrew Wilson of My Housing Market was tracking 1,944 auctions in the major capitals this weekend, which was understandably less than last weekend’s 2,178 properties auctioned.
Despite the challenges, all our capital cities delivered solid auction clearance rates with Canberra being the stand-out performer with a preliminary auction clearance rate of 87.3% from the 69 auctions conducted.
Other preliminary clearance rates (as reported by Dr. Andrew Wilson’s Auction Insider) were:-
Sydney – 75.1%
Melbourne – 73.
Brisbane – 76.8%
Adelaide – 74.5%
Source of graphs and data: CoreLogic, NAB and REA and Dr. Andrew Wilson – My Housing Market 5th of July 2021.
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