As the Spring selling season heats up, sellers are joining the party with just under 2,000 homes going to auction across the capital cities last week. According to CoreLogic September, home value index results saw the national index post the largest monthly gain since March 2017, largely driven by a strong rebound in Sydney and Melbourne where values were up 1.7% over the month.
Despite the higher volumes of properties for sale, the preliminary auction clearance rate was 74%, a slight increase from the previous week’s 72.8%. While the numbers show an increase in sellers, they are still 400 properties fewer than this time last year, but the clearance rate is much higher than in 2018.
CoreLogic head of research Tim Lawless said, “Although housing values are now consistently tracking higher, at least at a macro-level, the national index remains 6.8% below the October 2017 peak, indicating that buyers still have some time to take advantage of improved housing affordability before values return to record highs.”
Mr. Lawless believes that the strong rebound in Sydney and Melbourne housing markets relative to other regions can be attributed to a variety of factors. He said, “While all regions are benefitting from low mortgage rates and improved access to credit, economic and demographic conditions in New South Wales and Victoria continue to outperform most areas of the country. Population growth is higher, unemployment is lower and job growth is stronger, providing a solid platform for housing demand.”
In Sydney, 647 homes were auctioned, with a preliminary clearance rate of 76.6%. This time last year 861 Sydney homes went to auction with just 51.1% selling. There were 1,022 Melbourne homes auctioned last week, 77.8% of which returned a successful result. One year ago, 53.8% of the 1,161 Melbourne auction were cleared. Canberra was the best performing of the smaller markets, with a preliminary auction clearance rate this week of 65.3%, Adelaide followed closely with 59.2% of homes selling at auction.
Mr. Lawless said, “Although markets outside of Sydney and Melbourne isn’t showing the same recovery trend, most areas have either seen a reduction in the rate of decline or are seeing a modest trajectory of growth as low mortgage rates and a slight loosening in credit policy support buyer demand.”
The September housing market results provide further confirmation the housing market recovery is in full swing across Sydney and Melbourne while the remaining capital city and regional areas are showing a mixed result. Mr. Lawless said, “Low mortgage rates, and the expectation that they will move lower, along with better affordability, a loosening in credit rules and improved housing sentiment, are all factors contributing to the rebound.”
As for why Sydney and Melbourne are outperforming the other capitals’ property markets, Mr. Lawless said it was due to their stronger population growth, lower unemployment, and strong job creation. “Although markets outside of Sydney and Melbourne aren’t showing the same recovery trend, most areas have either seen a reduction in the rate of decline or are seeing a modest trajectory of growth as low mortgage rates and a slight loosening in credit policy support buyer demand.”
Another point of difference, he observed, was the strong level of investor participation. The most recent housing finance figures (July), showed that 32 percent of mortgage demand in NSW was from investors — far higher than any other state. In Victoria, 26 percent of mortgages were taken out by property investors. Furthermore, the CoreLogic figures showed the sharpest price rises were happening in the most expensive quartile of the national market. Prices in the top end of the market lifted by 3.6 percent in the past quarter — while the lowest-priced quartile saw prices rise of 1.4 percent.