Australian property sales are around the lowest point in two decades, primarily driven by plummeting property prices and tighter lending condition, according to Domain.
Domain economist Trent Wiltshire said that sales have fallen most dramatically in Melbourne and Sydney, but other capitals have also seen a fall over the past year.
“Fewer properties being bought and sold has significant impacts on the real estate industry, but also reverberates through the broader economy, notably via less activity for builders, tradespeople and retailers.”
He said that falling property prices are closely linked to fewer property sales.
“Combined capital city house prices are 9 per cent below their December 2017 peak, with more significant falls in Sydney and Melbourne. Falling prices can discourage people from selling because people are fearful of making a loss, or struggle to access credit to buy a new property,” Mr Wiltshire said.
“While lower prices are the main reason for the current meagre rate of property sales, other factors have also contributed to declining property turnover over the past two decades. These factors include higher stamp duty, more off-the-plan apartment sales, lower rates of migration around Australia and slowing economic growth.”
Mr Wiltshire said that an estimated 98,000 properties were sold in the three months to March 2019.
“This was 17 per cent below the same period in 2018 and well below the peak of 163,700 sold in the three months to July 2003,” he said.
“Property sales are 35 per cent below the most recent peak in mid-2015, which occurred when price growth was in double digits.”
He also said that in the year to March 2019, 442,000 properties were sold.
Mr Wiltshire said that house sales in the three months have fallen by 16 per cent, while apartment sales have fallen more substantially by 23 per cent.
As property sales are highly seasonal, with few properties sold in January and some markets also slowing during winter, it is also useful to look at “seasonally adjusted” sales.
“When sales are adjusted for these seasonal effects, the current plunge in sales is less severe, but sales are still approaching the low points hit during the GFC,” the Domain economist said.
Mr Wiltshire said that property sales aren’t keeping up with Australia’s growing population.
“While the number of sales is near the lowest points over the past 20 years, sales volumes are even lower when considered as a share of the total number of dwellings in Australia.
“Annual property sales as a share of Australia’s dwelling stock has fallen to 4.2 per cent, which is the lowest sales rate on record. This shows that property sales have not kept pace with the growing number of dwellings. The number of dwellings has grown by about 1.5 to 2 per cent each year since the 1990s.”