The latest in the state of the property market and its outlook
Known to be one of the busiest periods in the property calendar, the cooling of the property market after the recent boom has seen a potential shift from sellers to buyers leading into and during spring.
Thanks to these conditions, buyers are now presented with an excellent opportunity to hop onto the property market ladder.
The current housing cycle marks a change in the influential factors that determine pricing and clearance. Where interest rates have always been a staple in influencing the market, credit availability has now taken the reigns as a chief influencer.
This has been affected by the recent Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the uncertainty that it has caused within the financial sector.
Mortgage rates increased slightly in September, with the average discounted rate for an owner occupier rising from 4.50% to 4.55%. Mortgage demand though is trending lower with the tightened restrictions on investment lending causing a foreseeable drop.
The housing market’s weakening condition has continued its slide into spring, with national dwelling values falling 0.5% in September. This follows the trend of the previous 12 months that has seen values consistently fall.
Many of the capitals have seen values lowered in this time period with the same happening across most state regional areas too.
Annual dwelling prices of Sydney and Melbourne, who hold roughly 60% of Australia’s national value for housing, have decreased 6.1% and 3.4% respectively. This has caused a significant drag on the overall performance of the national housing market, slowing growth across the nation.
Brisbane home values at this time last year were tracking at 2.9% but now sit at just 0.8% for the last 12 months.
Home values in Hobart continue to increase with a rise in values of 9.3% compared to this time last year. This price growth is down from 14.3% though in the previous year, due to the drag of the larger Australian markets.
The drag in prices has even been extended to regional markets. Traditionally more resilient against falling values, the current difficult conditions have caused values to slow to a near stop.
Auctions around Australia
Lowered confidence from sellers has been caused by the declining values of housing and consistently decreasing clearance rates. When compared with the previous year’s corresponding quarter, the three months leading to September 2018 have produced poor results for vendors.
20,653 homes were auctioned across Australia. This is the lowest result since the March quarter of 2017, only confirming that the housing market has continued to slow. It is also down on the June quarter of 2018 where 25,824 homes went under the hammer.
When looking at auction clearance rates, the property market paints a poor picture for any prospective sellers. When examining all capital city clearance rates, the combined rate was just 53.6% for the quarter, down 4.2% from the previous quarter. This was the poorest performing quarter for clearance rates since December 2012 (a meagre 50.9%).
Sydney saw a clearance rate of 50.9% from 7,497 auctions with Bondi being the suburb with the highest clearance rate at 80.6%. The suburb that saw the most auctions held was Randwick with 99.
The clearance rate at auction in Brisbane was 42.7% from 1,401 auctions. Calamvale was the suburb with the highest clearance rate at 47.8%. In the suburb of Sunnybank Hills 46 auctions were held, making it Brisbane’s most auctioned suburb.
Melbourne had a clearance rate of 56.6% for the quarter with the best performing suburb at auction being Wheelers Hill with a clearance rate of 81.4%. Reservoir saw the most homes go under the hammer for the quarter with 175 auctions being held in the northern Melbourne suburb.
The future of the housing market
The potential for further decreases seen by Australia’s two property market staples, Melbourne and Sydney, maintains a threatening presence despite strong population growth and a continued shortage of supply. As investment prospects, both cities have the potential to deliver capital growth over the longer term to owners and investors.
This may potentially cause on flowing stability to other markets across Australia, both capital city and regional.
For the short term though these markets seem highly unlikely to bounce back to the heights that they have previously achieved. A continued slow decreasing or even lack of change is what may be seen in the coming quarters.
All data used in this article has been sourced via various reports from CoreLogic.
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