Auction Markets Ease
Make no mistake, it’s still red hot.
Make no mistake, it’s still red hot.
The country’s auction markets have eased slightly at the weekend, yet results clearly remain in favour of sellers as the spring boom rolls on.
The national weekend clearance rate was lower for the second consecutive weekend – down from 86.1% to 83.9% — but is still well above the 70.7% reported over the same weekend last year.
Higher auction numbers may be contributing to an easing of clearance rates with numbers up from the previous Saturday’s 1858 to 1970 – more than double the 916 auctioned over the same weekend last year.
The Sydney market was lower again at the weekend, down from the previous weekend’s 86.6% to 83.6%. This result is still higher than the 78.6% recorded over the same weekend last year.
It’s the first time in six weekends that Sydney’s clearance rate has fallen below 85%.
Auction numbers were up, with 677 homes were listed for auction at the weekend — higher than the previous weekend’s 618 and up on the 639 auctioned over the same weekend last year.
Sydney recorded a median price of $1,675,000 for houses sold at auction at the weekend which was again lower than the $1,712,500 reported over the previous Saturday but 22.3% higher than the $1,370,000 recorded over the corresponding weekend in 2020.
Melbourne’s market is on the ascent with the Victorian capital posting a clearance rate of 77.0% on Saturday — similar to the previous weekend’s 76.6%, and well ahead of the 63.0% recorded over the same weekend last year.
A total of 993 homes were listed for auction at the weekend which was up when compared to the 932 from the previous weekend.
Melbourne recorded a median price of $969,500 for houses sold at auction at the weekend which was again lower than the $1,060,000 recorded over the previous weekend but 16.4% higher than the $833,000 recorded over the same weekend last year.
Record-level clearance rates however may ease over coming months as the typical wave of late season listings hits the markets – amplified by the easing of lockdown restrictions.
Data powered by Dr Andrew Wilson of 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.
This stylish family home combines a classic palette and finishes with a flexible floorplan
Just 55 minutes from Sydney, make this your creative getaway located in the majestic Hawkesbury region.