Australia’s housing market: Where are we at?
Winter temperatures might have been at record lows in parts of Australia this year, but for some, the housing market has been smokin’ hot. Yet with spring came warmer temperatures – and a cooling housing market in certain areas.
In Sydney it appears vendors have been buoyed by the booming property market, which has meant there were more listings at the start of spring. According to SQM Research, property listings in Sydney rose 7.6 per cent in September and increased 11.1 per cent compared to the same time a year ago.
SQM Research managing director Louis Christopher said: “The Sydney surge in listings is another indicator suggesting that the Sydney housing market is now slowing. Buyers should now find there is a little more choice out there compared to earlier this year. Yet, I note that asking prices are still higher. I suspect vendors are not quite registering that conditions have changed somewhat since the white hot market of autumn.”
While listings jumped in Sydney, in Melbourne there were fewer listings in September this year compared to last year.
“The Melbourne result is also interesting in that there was barely any movement at all in listings in September and that stock for sale is well down on this time last year. This is suggestive of a strong housing market that is not slowing down at all,” said Mr Christopher.
According to PRD Nationwide’s Property Hotspots recent report, the Melbourne property market has experienced considerable growth throughout 2015, particularly the house market, which has witnessed 12.7 per cent growth, bringing the average median house price to $982,444.
And SQM Research figures showed that asking prices for Sydney dwellings continued to climb over September, with a total monthly rise of 1.6 per cent for houses and 0.9% for units. The median asking price for a unit has now reached $636,100, while the median house asking price in Sydney is over a million ($1,143,300).
Adelaide’s annual median price growth also continues in a positive direction, with a rise of 4.9 per cent for units and 10.2 per cent for houses. However, with a median house price of $425,000, Adelaide remains one of Australia’s most affordable cities, according to PRD Nationwide National Research Manager Diaswati Mardiasmo. “Coupled with being one of the world’s most liveable cities, the future is shining bright for Adelaide,” Dr Mardiasmo said.
Hobart median prices have also enjoyed growth for houses and units, at 5.2 per cent and 2.7 per cent respectively. Dr Mardiasmo predicted the “apple isle” capital would become a hotspot for first homebuyers and investors thanks to proposed large infrastructure spending.
In contrast, median asking house prices in Canberra recorded yearly falls, with a year-on-year comparison showing a 12-month decline of 2.5 per cent for houses, and 0.3 per cent for units. Meanwhile, Perth median asking prices continued to record yearly falls – in particular asking prices for houses were down 5.3 per cent over the last 12 months, and 1.7 per cent for units.
Overall, CoreLogic RP Data reported that nationally September’s rise in home values pushed the annual rate of home price inflation to 11 per cent across the eight state and territory capitals. That’s up from 10.2 per cent in the year to August.
Clearance rates down but demand still strong
However, CoreLogic RP Data’s Senior research analyst Cameron Kusher said while auction clearance rates in the country’s two biggest markets (Sydney and Melbourne) had shifted from the mid to high 80 per cent range to the low 70 per cent range over recent months, it was important to note that even at the 70 per cent mark, the auction results were across substantially higher volumes and still indicated strong housing demand, suggesting there was likely to be further growth in home values.
“The cumulative effect of tighter lending conditions, more expensive mortgage rates for investors and lower yields, as well as natural affordability constraints and higher levels of new housing supply, is likely to continue to dampen some of the exuberance we have seen across the Sydney’s housing market,” he said. “Although we anticipate that value growth will continue we expect that in Sydney the rate of this growth is starting to slow.”
Similarly, CommSec chief economist Craig James was quoted as saying that in the Sydney market price rises are likely to be more muted in coming months, as a result of tighter lending policies among the banks and new housing supply.
House prices remained high relative to the rental earnings they offered investors, the CoreLogic RP Data report showed. In September, gross rental yields (rents as a proportion of home values) stayed near their historic lows – 3.4 per cent on average for houses and 4.3 per cent for home units. That’s in comparison to 4.2 per cent for houses and 4.8 per cent for home units three years prior.
The lowest yields were for houses in Melbourne (2.9 per cent), while the highest were for units in Darwin, where rents were 5.8 per cent of the value.