This week’s Australian Property Market Update – Latest Data, State by State July 10th, 2023
Key takeaways
Twelve interest rate rises, stubbornly high inflation, wage decisions that risks a wage-price spiral and new economic data suggesting Australia’s economic growth is slowing
, yet our housing markets keep moving forward.
We’re just over half way through the year and our combined capital cities have increased in value by 3.3% in the year to date.
Sydney property prices increased by 0.1% over the last week and increased 1.5% over the past 28 days, and are up 5.5% year to date, yet are still -4.6% lower than they were 12 months ago.
Melbourne property prices increased 0.1% over the last week, also increased 0.6% over the past 28 days and are up 0.9% year to date, yet are still -5.5% lower than they were 12 months ago.
Brisbane property prices increased by 0.2% over the last week, increased 1.2% over the past 28 days, and are up 1.6% year to date, yet are still -8.2% lower than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 1.1% over the past 28 days yet are still -4.4% lower over the last 12 months.
We’re just over half way through the year and it’s unlikely that many would have believed the resilience of our property markets at the beginning of the year.
Twelve interest rate rises, stubbornly high inflation, wage decisions that risks a wage-price spiral and new economic data suggesting Australia’s economic growth is finally slowing a little, yet our housing markets keep moving forward.
In fact property values in our combined 5 capitals are up 3.3% so far this year according to Corelogic.
And the pause in interest rate hikes at the beginning of this month has only increased buyer confidence.
So what’s behind this resilience?
There are a few factors at play.
- The supply of housing remains very tight. This is due to a number of factors including a lack of new construction and a limited pool of properties available to sell.
- Demand for housing remains strong, being driven by a number of factors, including surging population growth, strong economic growth, and a desire for homeownership among millennials and Gen Z.
This means that currently houses are being sold at a faster rate than they are being listed for sale by agents as vendors continue to sit on the sidelines while buyers remain undeterred by the rising interest rates.
And the depth of buyer confidence again showed in strong auction clearance rates this weekend.
After last week recording the lowest preliminary rate in nine weeks, the combined capital’s preliminary clearance rate rebounded to 74.5% with 1,066 results collected so far by Corelogic.
This week’s preliminary clearance rate is 4.2 percentage points higher than last week’s rate (70.3%, revised to 64.9% at final figures) and 19.4 percentage points above the final rate recorded this week last year, when just 55.1% of capital city auctions were successful.
This week CoreLogic reports that…
- Sydney property prices increased by 0.1% over the last week and increased 1.5% over the past 28 days, and are up 5.5% year to date, yet are still -4.6% lower than they were 12 months ago.
- Melbourne property prices increased 0.1% over the last week, also increased 0.6% over the past 28 days and are up 0.9% year to date, yet are still -5.5% lower than they were 12 months ago.
- Brisbane property prices increased by 0.2% over the last week, increased 1.2% over the past 28 days, and are up 1.6% year to date, yet are still -8.2% lower than they were 12 months ago.
Overall, Australian capital dwelling prices increased by 1.1% over the past 28 days yet are still -4.4% lower over the last 12 months.
In other words…there’s still good value in our housing markets.
Of course, these are “overall” figures – there is not one Sydney or Melbourne or Brisbane property market.
And various segments of each market are performing differently.
Declines had been led by the top end of our housing markets last year, as have recent increases, particularly in Sydney.
Source: Corelogic 3rd July 2023
Despite the fall in property values, other than Melbourne, property values are still significantly above their pre-Covid levels.
Source: Corelogic 3rd July 2023
To help keep you up-to-date with all that’s happening in property, here is my updated weekly analysis of data and charts as of 10th July 2023 provided by CoreLogic, and realestate.com.au.
Combined capitals clearance rate rebounds to a five-week high, rising to 74.5%
Capital city auction activity continued to ease for the third consecutive week, with just 1,418 homes actioned across the combined capitals last week.
The quietest auction week since the June long weekend, this week’s auction numbers were -8.1% below the volumes held the week prior (1,543) and -12.9% below the 1,628 homes auctioned this time last year.
But remember…it’s school holidays around Australia, so it’s no surprise that auction numbers were down.
After recording the lowest preliminary rate in nine weeks the week prior, the combined capital’s preliminary clearance rate rebounded to 74.5% with 1,066 results collected so far.
Last week’s preliminary clearance rate is 4.2 percentage points higher than the week prior’s rate (70.3%, revised to 64.9% at final figures) and 19.4 percentage points above the final rate recorded last week last year when just 55.1% of capital city auctions were successful.
Melbourne saw a slight increase in auction numbers last week (564), with the city hosting 14 additional auctions compared to the week prior (550).
Melbourne’s preliminary clearance rate rose 2.6 percentage points above the week prior’s preliminary rate (70.2%, revised to 63.3% at
final numbers), with 72.8% of the 448 results collected so far returning a successful result.
Melbourne’s preliminary clearance rate has now held above the 70% mark for 13 consecutive weeks.
This time last year, 627 homes were taken to auction across the city, and a final clearance rate of 55.7% was reported.
In Sydney, 564 homes went under the hammer across the city, down from 676 the week prior and 605 this time last year.
Sydney’s preliminary clearance rate rose 4.4 percentage points, with 75.6% of the 427 results collected to date reporting a successful result.
The rise in the preliminary clearance rate was accompanied by a slight increase in the withdrawal rate (13.6%), while the portion of properties passed in at auction (10.8%) fell to its lowest rate since mid-October 2021 (8.0%).
A preliminary clearance rate of 71.2% (revised to 67.2% at final figures) was recorded the week prior, while this time last year, 53.1% were successful.
Across the smaller capitals, auction activity fell across Adelaide (-8.0%) and Brisbane (-19.8%) but rose in Canberra (2.9%) and Perth, from six auctions the week prior to 12 last week.
Brisbane (105) hosted the most auctions among the smaller capitals last week, followed by Adelaide (103) and Canberra (70).
Adelaide continued to record the strongest preliminary clearance rate among the smaller capitals, with 86.2% of auctions reporting a successful result, up 4.4 percentage points week-on-week and the highest preliminary clearance rates since the last week of February earlier this year.
This was followed by Canberra (76.3%), up 15.8 percentage points, and Brisbane, where 69.1% of auctions recorded a successful result.
Just two of the six auction results collected so far were successful in Perth.
No auctions were held in Tasmania this week.
With Victorian school holidays set to end this week, capital city auction volumes are set to see an unseasonal rise of roughly 12% next week.
Sellers are on strike
It’s not unusual that when markets turn that buyer confidence returns quicker than seller confidence.
As you can see from the chart below, discretionary vendors have not returned to the market yet.
But when they do, many of these will be buyers looking to upgrade or downgrade their homes – remember buyers are sellers, and sellers are buyers.
So even though there will eventually be more properties on the market for sale, there will also be more buyers out there looking for their next home.
The charts below show the lack of property listings available for serious buyers at present, and with home buyers back in the market well located properties are being snapped up quickly.
But not all properties are selling well- there is currently a flight to quality.
Property listings for sale provide a useful real-time indicator of seller sentiment and general market confidence.
However, this year sellers have erred on the side of caution before listing and the trend is moving lower again with the flow of new listings consistently below average since spring last year.
Vendor Metrics
READ MORE: The latest median property prices in Australia’s major cities
At a national level, properties are taking slightly longer to sell than they were during the property boom of 2020 and 2021.
However the number of days to sell a property is still relatively low (a sign of the tight supply situation for good properties), and vendor discounting is still at very low levels.
In general, houses are selling quicker than apartments, but the shortage of good properties on the market is seeing A-grade properties selling quickly with minimal discounting.
Our Rental Markets
Our rental markets have been tightening further over the last few months, with vacancy rates for both houses and apartments extremely low across the country and asking rents rising rapidly.
Asking rents across the capital cities for houses are rising in annual terms in the “mid teens”, while for units, new asking rents are rising at faster rates, at over 20% in Sydney, Melbourne and Brisbane.
Rents have been rebounding across inner-city rental markets (popular with international students) after slumping during the pandemic when international borders were closed.
Rents have surged over the last year or so and will only continue to do so as there is a minimal new supply of properties set to enter the market in the medium-term future.
Rent inflation is set to be a key support for CPI inflation looking forward and the flow through to rental yields could be supporting house prices.
