The shift in the property market has caused some trepidation, according to The Agency CEO Matt Lahood, but he said that this moderation was not only anticipated but was necessary, as outlined by Australia’s key economic leaders.
In his The Agency Property Report for September 2018, Mr Lahood said that the market has officially entered 2018’s spring selling season.
He added that this year’s season has not only brought change to the Australian property market but to the finance and political sectors as well.
“The newly appointed Treasurer, Josh Frydenberg, spent his first days in the top job meeting with chief regulators to assess Australia’s current economic health, including RBA governor Philip Lowe and APRA chairman Wayne Byres.
“Mr Lowe has gone on the record several times throughout August impressing the adjustment in the property market on the eastern seaboard is needed, particularly in Sydney where home prices were fast outpacing wage growth.
“Similarly, Mr Byres described the housing market adjustments as ‘orderly’, with the general sentiment these market changes will protect a sustainable housing future.”
Mr Lahood said that across the nation, changes in home values have varied.
He said that CoreLogic data shows the combined Brisbane and Gold Coast values have increased by 0.89 of a percentage point year-on-year, and that Adelaide is up by 0.97 of a percentage point against the same time last year.
By the same token, Sydney, Melbourne and Perth have all experienced annual drops in home values, at 5.64 per cent, 1.67 per cent and 2.05 per cent, respectively.
“It is not surprising Sydney has experienced the greatest reduction, given its value increase of 75 per cent from 2012 to 2017,” Mr Lahood said.
“On the west coast, Perth has not experienced the same property uplift in recent years and the conditions have remained relatively unchanged. In good news though, the mining sector is picking up with strong economic forecasts; this sector traditionally has a knock-on effect to the housing market.
“Back to the east, we have returned to a normal market and this is reﬂected in the auction clearance rates that sit at a weighted national average of 55 per cent.”
Mr Lahood also made the point that in the recent boom, they may have sat consistently around 70 per cent nationally, but that this is not a historical norm.
Mr Lahood also said that auction clearance rates have been revealing.
“If you look at post-auction clearance rates, these are much higher than what is reﬂected on the day,” the CEO said.
“This is due to the continued divide between vendors’ lingering ‘boom price’ expectations and buyers’ cautious pricing approach. There are buyers wanting to make a purchase and vendors wanting to sell, but properties are unnecessarily passing in due to this pricing disconnect.”
Mr Lahood looked a little more closely at Sydney’s auction rates.
“Auction clearance rates in Sydney have been hovering between 50 and 60 per cent, but as highlighted in our June report, if you look at the 45-day clearance rate, it increases by 20 to 30 per cent.
“There are active buyers, and the average number of people coming through our open homes and bidding at auction is still high — these are not indicators of a tough market.”
Mr Lahood said that the top end of the Perth market is continuing to see a gradual increase in enquiries.
“We have sold a number of properties in million-plus suburbs, and there’s a confidence growing in this market,” the CEO said.
“However, it really is a two-speed market at this time, with mortgage belt properties still under strain.”
In Melbourne, he said, it is a case of the early bird getting the worm.
“With available properties down in the first part of the calendar year, and pent-up demand from the winter season, buyers and sellers who act early will reap the biggest rewards.
“People become more motivated as the weather starts to change, and this year is no different; we expect the middle of September to be a hive of activity prior to football finals and the last term break of the year.”
Mr Lahood said that while the Gold Coast market is steady right now, listing volumes are lower, stock levels are tighter and open-house inspection activity has dropped.
“This is likely to be driven in part by the decreased interest from investors and interest-only borrowers resulting from the significant changes to lending criteria, with pre-approved finance rates down.
“At the top end, strong interest continues in Gold Coast beachfront property and penthouse apartments despite the traditional market slowdown across the winter months.
“There are more cranes in the sky as high-rise apartment development occurs in tourist hubs like Surfers Paradise, Broadbeach and Mermaid Beach.”
He added that development blocks are becoming scarce, and that “many predict” a wave of quality over quantity in these new projects.