This Week in Real Estate: Property news that you can trust
Prices Up 2.2% in May
Property prices have grown more than 2% in May. Most markets across the nation have experienced at least a 10% increase so far this year.
The latest price report from CoreLogic indicates that dwelling prices grew by 2.2% across the nation in May, with houses up by 2.4%, and units by 1.5%.
The national average is an 11.3% in house prices, and a 6.2% in units for the first five months of 2021. Among the four capital cities and four state regional markets, Sydney leads with a 15% increase, followed by Regional Tasmania with 12%, and Regional NSW with 12%.
According to CoreLogic reports, in May, 12 of the 15 market jurisdictions, (8 capital cities and 7 regional areas), lifted their house prices by at least 1.5%. This was led by Sydney (3.5%), Regional NT (3.1%), and Hobart (2.5%).
A good growth in unit markets was also reported, with all market jurisdictions except Regional WA delivery increases in May with Hobart leading the list with an increase of 5.2%, and Darwin by 4.9%.
In annual terms, the unit price growth was headed by Darwin (18%), followed by Hobart (17%), Regional Victoria (15%), and Regional NSW (13%).
Property Listings Continue To Drop
The number of buyers continue to outstrip sellers with property listings witnessing a 6.3% drop in May.
The figures released by SQM Research this week indicate the most monthly falls in listings were in Canberra, Melbourne, Brisbane, Adelaide, and throughout Regional Australia, with stock levels trending downwards.
Listings fell by 19% across the nation annually. SQM Research Managing Director, Louis Christopher, believes this puts an upward pressure on prices.
Listings over 180 days dropped 9.2% in May and are down by 44% over the year. The falls were recorded in all capital cities and in particular, in the smaller capital cities.
According to Christopher, “Property listings fell in May due to strong market conditions. We have also seen a big fall in old listings, indicating old stock is getting moved. This suggests strong absorption rates, so new listings are not completely offsetting the falls in old listings.”
15% Rise In Prices Forecast
Westpac Housing Pulse report says that house prices will rise 15% by the end of the year before it slows to more moderate growth in 2022. This is a conservative forecast given that prices have risen 11.3% in the first five months of 2021 alone based on CoreLogic data.
The Westpac quarterly report shares that all capital city markets are experiencing a full fledged boom. Matthew Hassan, Westpac’s senior economist, says all aspects of the market show strength with a 30% turnover above the national pre-pandemic peak.
“Everyone is out there looking for any hint of a moderation to this boom,” Hassan says. “So far, there is nothing really that convincing – auction clearance rates have come off slightly, but are still running at around 80%.”
According to Hassan, strong price gains are happening in all cities, setting it apart from other housing booms. “In previous price rises, 2-3 cities propelled the gains each time,” he says. “One cycle was Sydney and Melbourne, and the cycle before that was the mining states. That’s just not happening now because all cities are booming.”
Auction Markets Stay Buoyant
Last week, in the capital cities, there were 2,930 homes taken to auction. This is the third highest number this year, despite the Melbourne lockdown.
The preliminary clearance rate was 76%, compared to 78% the previous week (revised down to 76% at final figures.
Last week, in Sydney, 1,177 homes were auctioned with a preliminary clearance rate of 81%. This is in comparison to the 1,103 homes auctioned last week, and the 452 homes auctioned this time last year.
Canberra recorded a preliminary clearance rate of 85%, followed by Brisbane with 72%, Adelaide with 69%, and Perth with 35% of reported successful auctions.
Melbourne would have had its second-biggest auction weekend, however, this was postponed when lockdown was announced on the 27th of May, Thursday.
Banks Cut Some Rates, Lift Others
The ultra-low, four-year fixed home loan of Australia (below 2%) has been lifted by BankVic as lenders rush to cut variable rates amidst the lending boom. BankVic, the member-owned mutual bank has increased its four-year fixed home loan rate to 2.29% from the previous 1.95%.
There were 32 four-year fixed rates under 2% at the start of 2021. This includes three of the big four banks, according to RateCitycom.au.
This move by BankVic comes after 30 lenders have cut at least one variable rate over the last two months. Reduce Home Loan boasts the lowest variable rate of 1.77% in the market. BCU has the lowest one and two-year fixed rates of 1.67% and 1.78%.
Sally Tindall, research director of RateCity.com.au, says home lending is going through the roof and banks need to stay competitive.
According to Tindall, “While four and five-year rates have been on the rise, many banks are still trimming down their variable rates to attract new business, particularly on rates where there’s a bit of fat to cut”.