Welcome to the Spring Property Report 2021.
The annual growth in Australian median property values is tracking at its fastest pace since the financial year ending June 1989. CoreLogic’s national home value index rose another 1.5% in September, meaning national dwelling values have now climbed 20.3% over the past 12 months.
Lockdowns did little to hamper strong sales activity in the winter and early spring months across The Agency, with multiple suburb records broken in the most competitive markets in the whole country.
We are seeing increased supply coming onto the market. However, total active listings remain low, reflecting the rapid rate of absorption seen amidst high buyer demand. Every capital city is recording a below-average number of advertised properties, while the number of home sales is well above average.
While this means selling conditions are skewed towards vendors for now, this will level out coming into spring and summer selling months and into 2022, with an injection of supply creating greater opportunities for buyers. Although growth conditions remain positive, it is becoming increasingly clear the housing market has moved past its peak rate of growth and is coming into equilibrium.
An extended spring selling season
To some extent, the lockdowns in Sydney and Melbourne have delayed the traditional spring selling season. Now, as we return to in-person property inspections, we’re seeing strong selling conditions and elevated auction clearance rates. By the end of September, the combined capitals clearance rate had returned to above 80%, the highest it has been since late March 2021.
These strong conditions are expected to continue over the final quarter of the year, with many buyers wishing to move into a new home before the festive season. One trend to come out of this is the spring selling season being pushed into summer, as many buyers may not be able to put their homes on the market until the new year. Once these homes start to add to supply levels, the market will begin to enter an equilibrium phase where supply will loosen up and demand will be satisfied.
As stock levels move higher, we are likely to see a shorter than usual Christmas break in the real estate industry, with activity forecast to remain strong through summer and through until Easter.
Strength across national market
The lifestyle trend we have seen throughout the pandemic will continue to drive up values in sought-after pockets of NSW and Victoria, including areas such as the Southern Highlands, Central Coast and the Mornington Peninsula. In fact, many of our agents are reporting a recurrent trend of Sydneysiders and Melburnians downsizing their homes in the city to purchase both a city base and a lifestyle property in a tree or sea change location. We expect price growth will continue in Sydney and Melbourne’s property markets over the coming quarter, albeit at a slower pace. Market momentum in these cities remains strong, with monthly growth in housing values nearly four times the decade average of 0.4%.
Queensland was not affected by lockdowns in the same way and our team has seen consistently strong sales results. This has been driven by strong migration from the southern states, as well as a return of investor activity. Our team is reporting that some developments are selling out within days, due to the hunger of Sydney-based investors, many of whom are buying sight unseen.
Perth has also performed strongly over the last 12 months, recording 18.1% growth in dwelling values, according to CoreLogic figures. Perth remains attractive to buyers, offering commutability, liveability and affordability, especially when compared to the property markets in Sydney and Melbourne.
Positive trends
As our borders open up, and the federal government indicates it will prioritise returning Australians, we will see an influx of buyers flooding the market. This should particularly impact the upper end of the market, which will be driven by ex-pats who see Australia as a safe economy where the pandemic has been well managed. We are seeing strong interest and buyer inquiry from overseas buyers and ex-pats, facilitated by online auction services and virtual property inspections. I predict these services to remain even after buyers return on site, given the ease and anonymity they allow.
Rental yields have reached new record lows across most regions, though so have investor mortgage rates. International students are set to return to our shores at some stage in the near future, which will kickstart the investment market back into gear. Apartments and high density dwellings in the inner city areas will present ideal opportunities for investors, particularly near universities in Sydney and Melbourne. Low mortgage rates are also providing plentiful opportunities for investors to capitalise on positive cash flow properties outside of Sydney and Melbourne.
Overall, housing trends around the country are positive, and expect to see the national property market coming into balance in the final quarter of the year. This will be healthy for the market going forward.
Please download the complete report from the download button, inside you will find:
Introduction to the Spring Property Report by Geoff Lucas
Brisbane overview by David Price
Perth overview by Stuart Cox
Melbourne overview by Peter Kakos
Sydney overview by Matt Lahood
Property management overview by Maria Carlino
Projects overview by Steven Chen
Finance overview by John Kolenda
