Spring Auction Markets Start On The Front Foot
Clearance rates rise given a lack of stock while Sydney goes on a tear.
Clearance rates rise given a lack of stock while Sydney goes on a tear.
The spring selling season commenced with most capitals continuing to record generally strong results for sellers.
The total national auction numbers fell sharply at the weekend as the market saw a steep decline in Melbourne listings. Only 1392 auctions were reported on Saturday – the lowest non-holiday weekend total since early February.
Auction listings were also lower in Adelaide (108, down from 114) and Canberra (64, down from 85) when compared the previous weekend.
As a result of a fall in listings, the national clearance rate was higher at the weekend – increasing from the previous Saturday’s 76.2% to 79.1%.
In Sydney, the auction market surged into spring with both higher clearance rates and auction numbers.
Recording a clearance rate of 85.5% at the weekend, Sydney was up on the previous weekend’s 83.3% result – ahead of the 67% recorded over the corresponding weekend last year.
Sydney saw a lift in auction number for the second consecutive week with 495 homes offered for sale compared to the previous weekend’s 488. The weekend auction listings were the highest reported opening of the spring selling season since 2018 – despite the lockdown measures.
Sydney recorded a median price of $1,635,500 for houses sold at auction at the weekend which was again lower than the $1,757,000 reported over the previous Saturday but 20.8% higher than the $1,354,000 recorded over the same weekend last year.
Melbourne’s auction market felt the strain of lockdown, recording a clearance rate of 72.6% – well above the previous weekend’s 48.2% but a reflection of significantly lower listing numbers.
The Victorian capital only recorded 624 listings, compared to the previous weekend’s 1427. The market saw a lower level of withdrawals – 32.5% of reported auctions were withdrawn compared to the previous weekend’s 62.2% – further boosting the clearance rate.
Melbourne recorded a median price of $918,000 for houses sold at auction at the weekend which was again lower than the $1,000,000 recorded over the previous weekend and 3.4% lower than the $950,000 recorded over the same weekend last year.
Data powered by Dr Andrew Wilson, My Housing Market.
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This may be contributing to continually rising weekly rents
There has been a substantial increase in the number of Australians earning high incomes who are renting their homes instead of owning them, and this may be another element contributing to higher market demand and continually rising rents, according to new research.
The portion of households with an annual income of $140,000 per year (in 2021 dollars), went from 8 percent of the private rental market in 1996 to 24 percent in 2021, according to research by the Australian Housing and Urban Research Institute (AHURI). The AHURI study highlights that longer-term declines in the rate of home ownership in Australia are likely the cause of this trend.
The biggest challenge this creates is the flow-on effect on lower-income households because they may face stronger competition for a limited supply of rental stock, and they also have less capacity to cope with rising rents that look likely to keep going up due to the entrenched undersupply.
The 2024 ANZ CoreLogic Housing Affordability Report notes that weekly rents have been rising strongly since the pandemic and are currently re-accelerating. “Nationally, annual rent growth has lifted from a recent low of 8.1 percent year-on-year in October 2023, to 8.6 percent year-on-year in March 2024,” according to the report. “The re-acceleration was particularly evident in house rents, where annual growth bottomed out at 6.8 percent in the year to September, and rose to 8.4 percent in the year to March 2024.”
Rents are also rising in markets that have experienced recent declines. “In Hobart, rent values saw a downturn of -6 percent between March and October 2023. Since bottoming out in October, rents have now moved 5 percent higher to the end of March, and are just 1 percent off the record highs in March 2023. The Canberra rental market was the only other capital city to see a decline in rents in recent years, where rent values fell -3.8 percent between June 2022 and September 2023. Since then, Canberra rents have risen 3.5 percent, and are 1 percent from the record high.”
The Productivity Commission’s review of the National Housing and Homelessness Agreement points out that high-income earners also have more capacity to relocate to cheaper markets when rents rise, which creates more competition for lower-income households competing for homes in those same areas.
ANZ CoreLogic notes that rents in lower-cost markets have risen the most in recent years, so much so that the portion of earnings that lower-income households have to dedicate to rent has reached a record high 54.3 percent. For middle-income households, it’s 32.2 percent and for high-income households, it’s just 22.9 percent. ‘Housing stress’ has long been defined as requiring more than 30 percent of income to put a roof over your head.
While some high-income households may aspire to own their own homes, rising property values have made that a difficult and long process given the years it takes to save a deposit. ANZ CoreLogic data shows it now takes a median 10.1 years in the capital cities and 9.9 years in regional areas to save a 20 percent deposit to buy a property.
It also takes 48.3 percent of income in the cities and 47.1 percent in the regions to cover mortgage repayments at today’s home loan interest rates, which is far greater than the portion of income required to service rents at a median 30.4 percent in cities and 33.3 percent in the regions.
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