Spring — A Stalled Seller’s Market
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Spring — A Stalled Seller’s Market

Does the roadmap out of COVID mean spring selling will finally get underway?

By Terry Christodoulou
Fri, Oct 1, 2021 4:37pmGrey Clock 4 min

Spring may have sprung — but Australian property’s most important residential selling season has yet to bloom.

Despite well-documented records tumbling across the country the past 12 months, all eyes were set on spring and what September would deliver, especially given the moving lockdowns that framed the key metro markets of Sydney and Melbourne.

Predictions are often fraught with miscalculations, however with the end of lockdown now in sight for Sydneysiders and the wider country pushing towards an eventual ‘reopening’, what’s in-store for the remainder of the so-called selling season?

Adrian Kelly, president of the Real Estate Institute of Australia thinks that history is bound to repeat itself.

“Last year when the lockdown restrictions were lifted, all markets bounced back with a vengeance due to all the pent-up demand from being unable to list,” said Mr Kelly. “The same will happen this year as demand is still incredibly strong, coupled with low supply.”

Demand, he adds, continues to drive interest on the back of diminished stock levels.

“Despite the low interest rate environment, we aren’t seeing the usual new properties coming to market. In fact, spring listings are down by a staggering 20% across the county.”

Dr Andrew Wilson, chief economist My Housing Market, also believes in a market reset.

“They’re [lockdown measures] a bit like pressing the pause button on the market. What we do is understand where markets were prior to lockdown, where they were heading, and then once we get over the speed bump, understand that they’ll take off from where they were when the interruptions occurred,” said Dr Wilson.

Dr Andrew Wilson, chief economist of My Housing Market.

Not all markets are created equal and while Melbourne faces a taller task in returning to a level of ‘normality’ — with agents only recently able to again show properties in person — signs are positive.

after a slow start to spring the Melbourne market, with listing numbers reaching a recent low in the first week of September, the trend has surged 48.5% in the last rolling four-week count, according to CoreLogic, with restrictions on property inspections lifted.

A look at last weekend’s auctions results further heralds an ascendent return.

Despite a dramatic halving of listings — 269 auctions compared to the previous weekend’s 434 — Melbourne’s clearance rate remained strong at 79.3%.

According to My Housing Market, Sydney claimed a clearance rate of 85.2% — its eighth consecutive weekend over 80% — across 641 listings with a median sale price of $1,744,000 for houses sold at auction.

Dr Wilson believes a true Sydney surge, like that in the early part of this year, will be seen as the markets open up.

“As a consequence of a lot of buyer demand having been satisfied and affordability falling, we won’t see the same surge that we’ve had previously this year, but we’ll still see prices growth nonetheless,” said Dr Wilson

“We’re heading, if we finally get there, to sort of more of a normalised environment for house prices, which I believe will grow over the long-term at 3% to 4% a year in major markets [Sydney and Melbourne] even though we’re going to see a 25% increase at Sydney median this year.”

Despite the positive spring predictions and recent upticks, both key metro markets remain prohibitive for first home buyers. It’s a situation Dr Wilson only sees worsening, his data from My Housing Market claiming the number of first home buyers down the last six months in a row, from March to August, for the first time since the 2009 GFC recovery.

“First home buyers are virtually collapsing at the moment and they don’t have a number of those stimulus packages which were also helping them last year. They’re not as significant, those support packages for first home buyers, either at the national level or at the state level,” added Dr Wilson.

As for the shadow cast by talk of a recession?  Mr Kelly points to such previously being overcome.

“There is a big difference with the recession we saw during the GFC to the recession we may see this year. And that is that the GFC at the time didn’t seem to have any end date, hence the uncertainty. This time around, we can see an end date approaching of sorts and that obviously revolves around vaccination rates and lifting of restrictions,” said Mr Kelly.

Adrian Kelly, president of the Real Estate Institue of Australia.

While Dr Wilson agrees in regards to the strength of the property market he concedes there’s little government intervention to offset the effect of an economic downturn.

“We’re certainly closer to a real type of recession over that because we’ve got two big economies in Sydney and Melbourne involved this time… We don’t have the same level of stimulus from the government to offset it [recession]. Economic downturns don’t really affect the housing market. Now, the reason behind that is because they’re usually offset by stimulus in monetary policy.”

For Mr Kelly, the advice upon entering what is the property market’s most important season is to research heavily, have finance approved and not fear looking further afield.

For Dr Wilson, a more cautious approach is recommended.

“It’s still a seller’s market. And the data continues to show us that … sure, there aren’t as many buyers around. But at the same token, there aren’t as many sellers around to force competition.

reia.com.au / myhousingmarket.com.au


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Ray White’s chief economist outlines her predictions for housing market trends in 2024

By Bronwyn Allen
Tue, Nov 28, 2023 2 min

Ray White’s chief economist, Nerida Conisbee says property price growth will continue next year and mortgage holders will need to “survive until 2025” amid expectations of higher interest rates for longer.

Ms Conisbee said strong population growth and a housing supply shortage combatted the impact of rising interest rates in 2023, leading to unusually strong price growth during a rate hiking cycle. The latest CoreLogic data shows home values have increased by more than 10 percent in the year to date in Sydney, Brisbane and Perth. Among the regional markets, price growth has been strongest in regional South Australia with 8.6 percent growth and regional Queensland at 6.9 percent growth.

“As interest rates head close to peak, it is expected that price growth will continue. At this point, housing supply remains extremely low and many people that would be new home buyers are being pushed into the established market,” Ms Conisbee said. “Big jumps in rents are pushing more first home buyers into the market and population growth is continuing to be strong.”

Ms Conisbee said interest rates will be higher for longer due to sticky inflation. “… we are unlikely to see a rate cut until late 2024 or early 2025. This means mortgage holders need to survive until 2025, paying far more on their home loans than they did two years ago.”

Buyers in coastal areas currently have a window of opportunity to take advantage of softer prices, Ms Conisbee said. “Look out for beach house bargains over summer but you need to move quick. In many beachside holiday destinations, we saw a sharp rise in properties for sale and a corresponding fall in prices. This was driven by many pandemic driven holiday home purchases coming back on to the market.”

3 key housing market trends for 2024

Here are three of Ms Conisbee’s predictions for the key housing market trends of 2024.

Luxury apartment market to soar

Ms Conisbee said the types of apartments being built have changed dramatically amid more people choosing to live in apartments longer-term and Australia’s ageing population downsizing. “Demand is increasing for much larger, higher quality, more expensive developments. This has resulted in the most expensive apartments in Australia seeing price increases more than double those of an average priced apartment. This year, fewer apartments being built, growing population and a desire to live in some of Australia’s most sought-after inner urban areas will lead to a boom in luxury apartment demand.”

Homes to become even greener

The rising costs of energy and the health impacts of heat are two new factors driving interest in green homes, Ms Conisbee said. “Having a greener home utilising solar and batteries makes it cheaper to run air conditioning, heaters and pool pumps. We are heading into a particularly hot summer and having homes that are difficult to cool down makes them far more dangerous for the elderly and very young.”

More people living alone

For some time now, long-term social changes such as delayed marriage and an ageing population have led to more people living alone. However, Ms Conisbee points out that the pandemic also showed that many people prefer to live alone for lifestyle reasons. “Shorter term, the pandemic has shown that given the chance, many people prefer to live alone with a record increase in single-person households during the time. This trend may influence housing preferences, with a potential rise in demand for smaller dwellings and properties catering to individuals rather than traditional family units.”


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