Confidence Puts a Spring in the Market Step
While the Spring season is renowned as the strongest period for property transactions, 2020 has certainly created enough turbulence to disrupt even the most tried-and-true assumptions. Thankfully, the real estate market is showing encouraging signs of recovery across the nation which should bolster the confidence of property owners, buyers, renters and investors alike.
Recognising that the macro- and micro-movements of the property sector – and how they affect you as a consumer – can be hard to digest, Nick Boyd, Head of Growth for Hockingstuart, has produced a snapshot of key market indicators for the month of October, as researched by CoreLogic, that signal a positive uplift:
House values increase
The national home value index posted a 0.4% rise in October, moving back into positive month-on-month growth for the first time in six months. This trend was reflected across all states enjoying an increase in values, with the exception of Melbourne which saw a drop of only 0.2% – the smallest since April.
Nick identified two emerging trends within the property value data, both driven by COVID-19, that may prove to have longer term ramifications on the direction that the property market takes in years to come.
Firstly, with work-from-home opening up city-dwellers to the possibility of regional living, there has been a surge in interest amongst regional areas which has supported an 1.7% increase in regional dwelling values since March.
Secondly, a decrease in international migration has weakened rental demand for inner-city units, particularly in Sydney and Melbourne, which may have contributed to a 0.2% fall in unit prices.
Sale rates increase
Looking to trends in the sale of properties, there has been a marked uptick in consumer confidence across Australia as the uncertainty around COVID-19’s impact on the country has begun to lift, supported by Government stimulus initiatives and low interest rates.
This has been reflected in two complementary patterns backed by key metric within the real estate sector, says Nick.
Firstly, we have seen the increase in the number of houses listed for sale as people feel more assured to sell their most valuable asset in strengthening market conditions, and secondly the number of houses sold as people are confident in the market supporting their purchase with the support of ample government stimulus.
The month of October has seen overall property sales increase by 7%, now nearly on par with the results this time last year.
Clearance rates, which measure the proportion of properties sold at auction over a given week to the number of properties on auction, have shown that of 1433 results collected from auctions week concluding November 1st, 77% were successful. This marks the highest preliminary clearance rate since the week ending 1 March that shortly following saw the effects of COVID-19 come into play.
The ‘absorption rate’ of real estate points to the level of supply and demand, and is a key marker of any healthy economy.
While the number of new listings added to the Australian housing market remained low over the six months from March, there was a marked uptick of 25.2% in the month of October yet the total number of listings grew by less than 1%.
Nick identifies that this suggests that buyer demand exceeds the supply levels, given the stable number of total listings compared to the surge in new listings.
Excitingly, this was most evident in Melbourne, with new listing increasing by up to 500% in the wake of lockdown restrictions easing, yet total stock levels increased by around 38 higher.
While the national market is showing positive growth trends, it pays to consult an expert who can provide in-depth analysis of your local area and needs. For more advice and tips on buying and selling in these conditions, head to our blog or reach out to a local Hockingstuart expert to discuss your property needs.