Strong Markets Hold The Line

The national auction market continued to record strong results at the weekend despite the usual increase in mid-spring listings which, this year, has been amplified by the end of lockdowns in major capital cities.

The national clearance rate was higher at the weekend – up to 84.7% from 83.9% and well above the 77.3% reported over the same weekend last year.

National auction numbers were higher again at the weekend, rising from the previous Saturday’s 1970 to 2048 – ahead of the 1083 auctioned over the same weekend last year.

Although the market continues to record boomtime results, Sydney’s weekend auction market was sharply lower at the weekend recording a clearance rate of 77.0% — below the previous weekend’s 83.6% and lower than the 78.8% recorded over the same weekend last year.

It marks the first time the NSW capital’s clearance has fallen below 80% for the first time in 12 weeks.

Higher auction numbers have impacted clearance rates with 721 homes listed for auction at the weekend – up from 677 the previous weekend and 637 for the same weekend in 2020.

Sydney recorded a median price of $1,685,000 for houses sold at auction at the weekend – marginally higher than the $1,675,000 reported over the previous Saturday and 22.5% higher than the $1,375,000 recorded over the same weekend last year.

With the city coming out of lockdown, Melbourne’s fortunes shifted with the city recording a clearance rate of 80.4% on Saturday – higher than the previous weekend’s 77% and the first time its result has eclipsed Sydney’s since early July.

A total of 994 homes were listed for auction at the weekend – similar to the 993 reported over the previous weekend and well above the 304 for the corresponding weekend in 2020.

Melbourne recorded a median price of $1,048,000 for houses sold at auction at the weekend which was higher than the $969,500 recorded over the previous weekend and 13.5% higher than the $923,000 recorded over the same weekend last year.

Data powered by Dr Andrew Wilson of My Housing Market.

Requiring more than 30 percent of household income to service a home loan has long been considered the benchmark for ‘housing stress’. Yet research shows it is becoming the new normal. The 2024 ANZ CoreLogic Housing Affordability Report reveals home loans on only 17 percent of homes are ‘serviceable’ if serviceability is limited to 30 percent of the median national household income.

Based on 40 percent of household income, just 37 percent of properties would be serviceable on a mortgage covering 80 percent of the purchase price. ANZ CoreLogic suggest 40 may be the new 30 when it comes to home loan serviceability. “Looking ahead, there is little prospect for the mortgage serviceability indicator to move back into the 30 percent range any time soon,” says the report.

“This is because the cash rate is not expected to be cut until late 2024, and home values have continued to rise, even amid relatively high interest rate settings.” ANZ CoreLogic estimate that home loan rates would have to fall to about 4.7 percent to bring serviceability under 40 percent.

CoreLogic has broken down the actual household income required to service a home loan on a 6.27 percent interest rate for an 80 percent loan based on current median house and unit values in each capital city. As expected, affordability is worst in the most expensive property market, Sydney.

Sydney

Sydney’s median house price is $1,414,229 and the median unit price is $839,344.

Based on 40 percent serviceability, households need a total income of $211,456 to afford a home loan for a house and $125,499 for a unit. The city’s actual median household income is $120,554.

Melbourne

Melbourne’s median house price is $935,049 and the median apartment price is $612,906.

Based on 40 percent serviceability, households need a total income of $139,809 to afford a home loan for a house and $91,642 for a unit. The city’s actual median household income is $110,324.

Brisbane

Brisbane’s median house price is $909,988 and the median unit price is $587,793.

Based on 40 percent serviceability, households need a total income of $136,062 to afford a home loan for a house and $87,887 for a unit. The city’s actual median household income is $107,243.

Adelaide

Adelaide’s median house price is $785,971 and the median apartment price is $504,799.

Based on 40 percent serviceability, households need a total income of $117,519 to afford a home loan for a house and $75,478 for a unit. The city’s actual median household income is $89,806.

Perth

Perth’s median house price is $735,276 and the median unit price is $495,360.

Based on 40 percent serviceability, households need a total income of $109,939 to afford a home loan for a house and $74,066 for a unit. The city’s actual median household income is $108,057.

Hobart

Hobart’s median house price is $692,951 and the median apartment price is $522,258.

Based on 40 percent serviceability, households need a total income of $103,610 to afford a home loan for a house and $78,088 for a unit. The city’s actual median household income is $89,515.

Darwin

Darwin’s median house price is $573,498 and the median unit price is $367,716.

Based on 40 percent serviceability, households need a total income of $85,750 to afford a home loan for a house and $54,981 for a unit. The city’s actual median household income is $126,193.

Canberra

Canberra’s median house price is $964,136 and the median apartment price is $585,057.

Based on 40 percent serviceability, households need a total income of $144,158 to afford a home loan for a house and $87,478 for a unit. The city’s actual median household income is $137,760.

Strong Markets Hold The Line

Sellers return to the housing auction market in significant numbers.

New research suggests spending 40 percent of household income on loan repayments is the new normal