As highly anticipated and reported in our last newsletter, the number of new listings over the last week have increased off the back of restrictions easing. The industry after a long hiatus is back and in full swing as private 10 minute inspections are now allowed and being carefully monitored by agents state-wide. Restrictions however remain in force for travel to regional areas, limiting viewing options for metro buyers looking to make the move to the regions.
Over recent weeks, an increase in new listings have been recorded at a national level with the most uplift seen in capital cities where lockdowns have been more prevalent. This being said, the level of new listings remain below the five-year average and while new listings have since lifted by 9.8 per cent, the number of new listings is currently -21.6 per cent lower than the recent high in March and -3.9 per cent below the five-year average for this time of year according to CoreLogic data.
The largest lift in new listing numbers has been in Melbourne, where we saw slim pickings of only 3,320 new listings added to the market for the four weeks leading to mid-September, whereas since then a surge of new listings by up to 48.5 per cent has been recorded.
Sydney on the other hand hasn’t shown so much volatility partly due to fewer lockdowns and no restrictions placed on private inspections. New property listings since mid-August have increased by 31 per cent but also remains low compared to the five-year average.
New listings come as a relief for buyers and estate agents however the rate at which buyers are absorbing the new listings remains rapid. With more easing of restrictions on the horizon, vendors will be more inclined to list their properties over the next few weeks and months leading up to Christmas partly due to more confidence surrounding vaccination targets and rates. A lift in listings over Spring and Summer should bring a more balance to the market and negotiating table but how much is also highly dependent on stock levels.
Housing Turnover Reaches 12 Year High
There were an estimated 598,000 house and unit sales across Australia over the year ending August 2021 being the highest number of annual sales since 2004. Nationally, the number of dwellings sold over the past year was 31 per cent above the decade average and 24 per cent higher than the 20-year average.
A surge in such uncertain times and when overseas migration has stalled may have come as a surprise and many have attributed this surge due to varying reasons predominantly low interest rates and the pandemic, however the substantial rise in home sales comes by way of a lift in demand flowing on from previous low levels of stock going as far back as 2015 as credit conditions tightened, housing affordability became more challenging and transaction costs such as stamp duty became increasingly expensive as prices rose. A royal commission into banking practices in 2017 followed by the Victorian state election in 2018 and Federal election in 2019 have all had their role to play in causing an endless wave of uncertainty and consequently resulted in many vendors and buyers to press the pause button on their property plans
Since then, credit policies have loosened, mortgage rates have reduced to record lows and a pandemic hit our shores, encouraging more Australians to re-evaluate their priorities, housing needs, desires for a sea or country change and increase in household savings since March 2020 boosting deposit levels and mortgage serviceability all the while on offer were government incentives such as stamp duty concessions and deposit guarantees have been on offer.
By the end of August 2021, housing turnover has risen to 5.6 per cent, the highest rate since December 2009 with Queensland leading the pack in the highest turnover in property transactions since June 2008 as the Sunshine state saw a surge in interstate migration as well as offering more affordable property options in comparison to New South Wales and Victoria.
Public school catchments zones can influence property decisions and most often than not, property prices within a particular zone can surpass the suburbs price growth by over 10 percent. According to Dr Nicola Powell – Chief Economic at Domain, one in ten zones in Melbourne had a 10 per cent to 20 per cent additional house price growth.
We know that people are willing to pay a premium to be in a particular school zone and over the last twelve months sea or tree change buyers have not only accelerated the price growth of regions in general but also further boosted prices in school zones in outer Melbourne suburbs such as Mount Eliza where house prices in the Kunyung Primary School catchment jumped to 45.7 per cent adding $605,000 in value to the zones median price which now sits at $1.93m.
Inner-city postcodes popular for their school zones also fared well, particularly the Richmond Primary School zone which saw a phenomenal uplift in price of 39.6 per cent or $522,000 bring the median value to $1.842m.
CoreLogic data showed Australian dwelling values rose 15.8 per cent higher over the first eight months of the year and 18.4 per cent above levels a year ago and although housing values continue to record a rise despite lockdowns, the rate of growth is moderating and as previously discussed, affordability is starting to bite. House prices have risen 11 times faster than wages growth over the past twelve months creating a significant barrier to entry for those who don’t yet own a home.
To put this onto monetary perspective, the increase in annual increase dwelling values equates to approximately $103,400 or $1,990 per week. A considerable significance give the wage increase for Australians is approximately 1.7 per cent per annum.
According to Tim Lawless – Research Director at CoreLogic, this is the fastest annual pace of growth in housing values since the year ending July 1989.
We continue to see houses out perform units in terms of growth rat, however the gap appears to be narrowing as affordability becomes more challenging particularly in Melbourne and Sydney.
Melbourne dwelling values rose by 1.3 per cent in August with dwelling values increasing by 4.0 per cent in the quarter and once again remaining at the highest on record.
We’ve seen a steady flow of properties transact throughout lockdown by way of private sale and auctions with many of these properties being snapped up by buyers sight unseen while relying on walk through vendor assisted videos. The dangers here are many and varied and not one which we recommend as a video does not highlight the feel of the home, actual size of the rooms, natural light, overall condition of the property just to name a few.
There were 1,758 reported auctions in August and with 1,668 of these being sold representing a clearance rate of 94.9 per cent for the month of August 2021. With total of 31,705 reported auctions in Victoria in the past 12 months, this represents a clearance rate of 83.8 per cent. Twenty four suburbs across Melbourne saw a recorded 100 per cent clearance rate, led by Bentleigh East, Glen Waverley and Doncaster East.
At a suburb level, Reservoir continues the trend with the greatest number of reported auctions for the month at 30 followed by Bentleigh East (28) and Glen Waverley (26).
Property Management Update
We welcomed the arrival of Spring, as the lockdown in Melbourne continues.
Restrictions remain in place, providing many challenges with only private inspections permitted for vacant properties and urgent repairs.
Whilst we are not permitted to enter rented premises for routine inspections and non-urgent maintenance, we continue to focus on “controlling the controllables”.
To that end, our focus this month has been on:
1. Leasing vacant properties via virtual and private inspections, seeking pre-approval of short listed and fully reference checked applicants. As a team, we have achieved solid results and worked hard to assist those who “have to move” to do so in a Covid-safe manner. We have seen many relocations interstate this month, as families reunite. Others are moving simply for a change of scenery within Melbourne metro, due to the increasing incidence of “lockdown fatigue”.
2. Actioning lease renewals, to secure existing renters for another fixed term lease period. Whilst there has not been an upward tick in rent across the board due to the pandemic, ensuring continuity of income from an investment property is critical. Some insurance policies also require a fixed term lease be in place, another important factor.
3. Coordinating urgent repairs and the important gas, electrical and smoke alarm safety checks with our clients and contractors.
4. Embracing new technology to offer a streamlined, user friendly platform for prospective renters to engage with our business 24/7 and book a private inspection at a time that suits them. Our new software also allows for ease of rental application processing and inspection activity, providing increased reporting capability to our clients post inspection and throughout the reference checking and application approval process. Additionally, this software integrates with our partners in utility connections, making it easy for prospective renters to choose our office above our competitors.
Wishing you all continued health and prosperity over the coming weeks, stay safe and well and please reach out to the team if we can assist you in any way during lockdown.
The challenging market conditions continue just as we continue to deliver great results for our clients. Here are a few below:
Home purchase – Hawthorn
We bought a great property for a family looking to buy within a short stroll to the kid’s school. This restricted the number of opportunities available but we were able to secure a 3 bedroom house on over 330 sqm of land within 200 metres of the school. Advertised as a forthcoming auction we were able to negotiate an acceptable offer which triggered a boardroom auction within 24 hours which gave us a distinct advantage to secure the property without the normal competition for under $1.75m. A great result.
Tip Of The Month: 7 Fundamental Principles of a Successful Property Buyer
Whether you are a first home buyer or seasoned campaigner, research is key to any good property transaction and knowledge is power.
- Knowledge – Residential market across property types and suburbs.
- Valuation – Knowing what a property is really worth based on data not emotion.
- Insight to vendor behaviour – Why are they selling? Ability to use this knowledge to your advantage.
- Knowledge of the real estate agent selling for the vendor – This is the direct line to the vendor’s highest motivation to sell.
- Insight to buyer behaviour – real & hidden communication of the other bidders at auctions and understanding what it means. Ability to assess the competition.
- Negotiation skills – to achieve the best possible deal.
- Understanding the auction system – ability to create an advantage in the auction process and environment.