With the end of lockdowns in sight property activity picked up in September, particularly across Australia’s largest markets in Sydney and Melbourne.
Despite the Spring market springing to life slightly later than usual, our agents have continued to help vendors achieve unbelievable results all the way through, with the volume of home transactions showing no sign of slowing down; especially now the stage is set for an easing of restrictions across the nation.
In our latest update, we cover how the property market boom is pacing for October, as well as a few market indicators to look out for in the coming weeks as activity increases even further.
State of Property Market: October
The latest PropTrack Housing Market Indicators Report released by Realestate.com.au showed market activity picked up in September, with measures of buyer interest reaching new highs despite the long lockdowns in Sydney, Melbourne and the ACT.
The turnarounds in activity in locked-down states drove an increase in national sales volumes last week, realestate.com.au senior economist Eleanor Creagh said.
Overall, we have a clear picture that coming out of lockdown with freedom in sight, activity is turning a corner and is beginning to pick up,” Ms Creagh said.
In the latest CoreLogic Monthly Indices report by CoreLogic, it was reported that sales volumes rose 41.9% in the 12 months to September, and transaction volumes through the month of September were estimated to be__ 25.5% above the five year average__.
Buyer demand continues to surge
The high volume of sales can be attributed to the rise in buyer demand we have been seeing over recent months, with this interest now translating into sales amid a limited supply of available stock.
The ongoing shortage of stock available for sale coupled with elevated search volumes on realestate.com.au resulted in record high interest from buyers in September, and this demand is showing no signs of slowing.
The Housing Market Indicators Report highlighted demand based on views per listing of properties for sale on realestate.com.au hit a new high in September, while email enquiries to agents and developers also reached record levels.
This indicates a continuing disconnect between the supply of stock for sale and buyer demand, which could put further upward pressure on prices for just a while longer.
With vaccination thresholds and roadmaps out of lockdown being met across the nation, search activity is expected to remain at elevated levels well into the spring selling season, aided by an influx of new listings as seller's emerge with confidence.
Home prices continued to climb in September
Across Australia, home prices continued to surge, rising 20.3% over the last year in the biggest annual growth since 1989.
Auction clearance rates have also recovered strongly through September, as Melbourne saw some restrictions eased around property inspections.
In the last week, successful auctions in each capital city rose substantially, recording a clearance rate above 80% and marking the third consecutive week CoreLogic has recorded a preliminary combined capital city clearance rate in the 80’s.
New lending rules to cool the market
For some time, it was rumoured that the banking regulator would step in to cool down the overheating Australian property market. Last week, APRA confirmed it would be raising the servicibility buffer that banks use when assessing home loan applications.
This serviceability buffer is designed to ensure a borrower could still service a mortgage if interest rates were to rise. Banks will now be expected to apply a serviceability buffer of 3 percentage points, rather than the previous buffer of 2.5 percentage points, from October.
This higher interest rate used to access serviceability aims to reduce maximum borrowing capacity, although a great majority of borrowers would fall just below.
How will the property market play out for the rest of 2021?
APRA's new increased interest rate buffers will impact the maximum amount that mortgage applicants can borrow, and although these changes will only marginally impact borrowing capacity for now, it also opens the door for potential headwinds of further tightening to cool the market to come.
For the time being, borrowing costs remain low, with buyer appetite for property still competitively high and demand far outweighing supply. With total listings available on the market sitting at -27.4% below the five year average despite new listings increasing in volume, it is evident that there is still a strong absorption from sales which is likely to continue for just a while longer.
Thought about seizing this golden window in the market? In these unprecedented times, a seasoned property agent can provide you with invaluable advice for how to buy or sell your house.