National Clearance Rate Revels In Face Of Restrictions
Despite lending restrictions announced by APRA, the auction market continues to perform.
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National auction markets produced further strong results on Saturday despite the introduction of loan restriction from the financial regulator, APRA.
It comes as national auction numbers soar at the weekend, following last weekend’s holiday in most states. Melbourne was also bolstered by a sharp revival in listings following the recent easing of local covid restrictions on property inspections.
A total of 1858 homes went under the hammer national compared to the 254 auctions reported the previous Saturday – well ahead of the 948 listed this time last year. Of the properties auctions at the weekend, the national clearance rate recorded 86.1% – similar to the previous weekend’s 86.5%.
Sydney market continues to surge relentlessly recording an astonishing clearance rate at 86.6% at the weekend, just bellowed the previous weekend’s 87.1%. It is the 10th consecutive weekend the NSW capital has recorded clearance rates above 80% and six straight weekends above 85%.
In line with national trends, Sydney saw a rise in home’s listed, up to 611 homes compared to Saturday’s 455.
Further, Sydney recorded a median price of $1,712,500 for houses sold at auction at the weekend which was lower than the $1,870,000 reported over the previous Saturday but 22.3% higher than the $1,400,000 recorded over the same weekend last year.
Melbourne’s recent easing of property restrictions has seen a boost to the local housing market.
A wave of 932 homes were listed for auction at the weekend – significantly more than the 571 reported over the previous weekend and well ahead of the 57 auctions over the same weekend last year.
The boost in numbers saw the clearance fall to 76.6% – well below the previous weekend’s 80.1%.
Further, the easing of restrictions saw the auction withdrawal rate down to 12.9%, well below the rates seen through September which were well into the 20%.
Melbourne recorded a median price of $1,060,000 for houses sold at auction at the weekend which was slightly lower than the $1,100,000 recorded over the previous weekend but significantly higher than the $746,500 recorded over the same weekend last year
There is no end in sight to current weekend auction market results, although APRA has announced lending restrictions, this may only act to fuel runaway activity, bringing forward buyer demand.
Data powered by Dr Andrew Wilson, My Housing Market.
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The insurance premium gap between flood affected and non-flood affected homes is significant
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Climate change is already affecting home values due to the impact of more severe weather events and rising home insurance premiums, and the cost of building is likely to rise as regulatory changes designed to enhance climate resilience alter building codes and zoning laws, according to a new report.
The National Housing Supply and Affordability Council describes climate change as an emerging trend that is raising the cost and complexity of supplying more housing. In its newly released State of the Housing System report, the council discusses how climate change is reducing the value of some homes when major weather events cause flooding or other natural disasters.
“The price differential between flood-affected and non-flood affected homes has been estimated to be up to 35 percent a year after a flooding event,” the report says. “Furthermore, the RBA estimates around 7.5 percent of properties are in areas that could experience price falls of at least 5 percent due to climate change by 2050.”
More than one million households are struggling to afford home insurance, and rates of non-insurance are increasing due to the cost. For example, the Australian Competition and Consumer Commission estimated that 40 percent of homes in Northern Western Australia were uninsured in 2020.
“Climate change is causing home insurance premiums to rise across Australia, adding to already elevated housing costs. Homeowners in areas considered at–risk of natural disasters are expected to see insurance premiums rise further or have difficulty obtaining insurance due to heightened risks.”
More frequent and severe weather events such as cyclones and bushfires, as well as coastal erosion and flooding from rising sea levels, present risks to housing safety. More than 3,000 homes were lost in the 2019-20 bushfire season, causing $2.3 billion in insurance losses. The report says the predicted direct cost of natural disasters to the economy and housing will be $35.2 billion per year by 2050.
Climate change and net-zero targets could raise the cost of building new homes, the report says. “Regulatory changes to enhance climate resilience will alter building codes and zoning regulations.
Developers facing higher compliance costs may have difficulties meeting updated standards, potentially delaying or reducing housing availability.”
However, the report says the increased cost of building a home with climate-resistant materials and eco-friendly features is more than offset by lower energy costs over a property’s lifetime. The current minimum energy efficiency requirements within the National Construction Code are estimated to deliver a household–level benefit-to-cost ratio of 1.37, according to the report.
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