Want to know what's happening to the housing markets around Australia?
Well, this monthly collection of charts from?Corelogic?will give you a good idea.
And our property markets have had a lot to contend with, haven't they?
As we sit here inflation is the highest it’s been for years, interest rates rose again this month (but not a s much) and people are wondering how high they will go, there is talk of recessions in many countries around the world, the war in Ukraine continues, supply chains are broken, the pandemic is lingering in China and on and on.
And the media keeps scaring us telling us we must brace ourselves for the worst housing correction on record as rising interest rates and recession fears strangle the property market.
By the way... that's not going to happen.
While Australia's economic fundamentals are still strong with our?economy growing strongly?consumer confidence has taken a significant hit and that's affecting our housing markets with buyers being more cautious and many taking a wait-and-see approach, while sellers’ confidence is more fragile in the face of recently sharply rising interest rates - and news of more to follow.
But despite all this, our housing markets have remained very resilient.
Residential real estate underpins Australia's wealth
- The total?value of Australian residential real estate?was $9.5 trillion at the end of October 2022.
- Outstanding mortgages against all residential housing are only $2.1 trillion - a very comfortable 21% Loan to Value ratio.
- 57.8% of total Aussie household wealth is held in residential property - one of the many reasons neither the banks, the government nor the RBA wants a property crash.
Change in dwelling values
- Dwelling values in Australia are -0.9% lower over the past 12 months, marking the first annual decline in national home values since October 2019.
- While the housing market downswing has become more broad-based, the monthly rate of decline slowed to -1.2% in October, from -1.4% through September.
- Our?property markets?are fragmented with some still growing, but every capital city has moved through its peak rate of growth now.
- National home values fell -4.1% in three months to October, which was steady on the three-month decline to September.
- Dwelling values are down -0.9% over the year and in the three months to October, the change in capital city dwelling values?fell?4.0% - but that's not really a crash is it?
- Combined regional property markets also fell 4.1% in the last quarter, but are up 6.6% for the year.
- As you can see from the following chart, the pace of decline slowed over the last month.
But within each state, our housing markets are fragmented, and the more expensive sectors of the market which led to the upturn are leading the downturn.
But the upper quartile of our housing markets has always been more volatile.
Our capital city markets are fragmented
- On the one hand, Adelaide property values are still rising strongly, up 16.5% over the year, just 0.6% below their record highs.
- And?Brisbane property values,?which were one of the strongest markets during the recent property boom, fell 2% in the month of October, but are still up 8.4% over the last 12 months.
- At the other extreme?Sydney house prices?are now -10.2% below their record highs recorded in January 2022.
Sales volumes are slowing down
- Sales volumes are trending lower as buyer demand slows.
- CoreLogic estimates that in the 12 months to October, there were 551,981 sales nationally, down -9.3% compared to the previous year.
We're now in a buyer's market
- We've moved from a boom-time sellers' market into more of a?buyer's property market.
- At a national level, properties are taking longer to sell.
- In the three months to October, the median days on market was 36, up from a recent low of 20 days over the three months to November 2021.
- Similarly, vendor discounting has also increased from a recent low of -2.9% recorded in three months to November last year.
- In the three months to October, the median vendor discount at the national level was -4.3%. In other words, vendors are really not having to slash their prices, despite what the media tries to tell us.
Here's how many properties are for sale at the moment
- In the four weeks to November 6th 2022, new listings volumes trended higher.
- At 38,438 newly advertised properties added for sale, the new listings trend is showing a slight seasonal uplift.
- However, new listings volumes remain low relative to previous years, -21.0% lower compared to its 5-year average.
- At the national level, total listings were fairly steady through October. Advertised stock levels remain low compared to previous years, in part due to the subdued flow of new listings.
- Vendors are a little nervous and discretionary sellers are sitting on the sidelines, but there are still plenty of properties available for sale. The problem is that very few are A Grade or investment grades. Owners of quality properties are holding onto them.
Auction clearance rates are stabilising
- The combined capital cities' clearance rate steadied through October, averaging 59.5% in four weeks ending November 6th according to CoreLogic.
- We update the weekly?auction clearance results?here each week.
We're experiencing a rental market crisis in Australia
- Rental value growth remains high across Australian dwellings, but the annual growth in house rents has shown signs of moderating growth.
- Unit rent values have seen increased momentum, rising 12.4% in the past 12 months.
- Across all dwellings, this resulted in an annual rental growth rate of 10.0%.
Finance and Lending
- New housing finance secured in September totalled $25.1 billion.
- The value of secured housing finance fell -8.2% in the month, taking new housing finance -22.4% lower than a recent peak in May.
- Investor finance fell -6.0%, compared with a -9.3% fall in owner-occupied lending in September.
- Housing finance is a "leading indicator"?of what's ahead for our property markets - fewer loan approvals mean fewer property purchases moving forward.
Source of charts:?CoreLogic?Chart Pack, November 2022
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