Christmas Rush Imminent As Auction Listings Double
More than 4000 properties are slated for auction this week.
More than 4000 properties are slated for auction this week.
The balance between home buyers and sellers is set to dramatically shift this week as a record number of homes go to auction across the country.
The number of homes set to go under the hammer has surged to 4354 this week as Sydney, Adelaide and Canberra posted their largest auction volumes ever, according to CoreLogic.
Auction listings have jumped by 17% nationwide over the week and have doubled the number recorded this time last year, as vendors want to get deals done before the Christmas break.
It’s also the first-time auction listings across the combined capitals will exceed 4000, overtaking the previous high of 3990 during the week ending March 25, 2018.
Melbourne is set to lead the charge with 1898 homes – a 14.5% rise over the week, more than double the number of auctions this time last year.
Sydney, Adelaide, and Canberra are set to host their highest auction volumes on record with 1656, 308 and 183 homes scheduled to go under the hammer.
Auction volumes bottomed out nationally in September and have climbed around 10% each week for a total increase of more than 200%.
The high number of properties for sale has dampened buying competition and has resulted in a falling clearance rate.
Since its peak of 83.2% in October, the clearance rate has dropped to 70.3% this week – similar to last year’s figures.
Across Sydney, the clearance rate for the week dropped to 68.7% — its lowest level this year.
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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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