As we approach the end of the year, our property markets continue to move from strength to strength.
In stark contrast to the gloomy property forecast initially set by ANZ at the onset of COVID-19, experts now expect modest property price growth to close off this year, with a strong rebound predicted for next year.
In this update, we will cover:
- Record high consumer confidence
- Clearance rates and market activity across capital cities in Australia
- The removal of stamp duty and what this will mean for buying and selling property in NSW, as well as other states
Confidence is back - and hitting new records
According to Tim Lawless, Head of Research at CoreLogic, the ‘time to buy a dwelling’ indicator from NAB’s consumer sentiment has been on a strong upwards trajectory since September, rising to finish at its highest level in 7 years.
Lower interest rates, the easing of restrictions across Victoria, as well as the re-opening of some borders helps to explain the new sense of positivity in how consumers are feeling, but the recent positive news around progression towards a vaccine also supports the rise.
These latest consumer sentiment results bode extremely well for housing activity, as historically there has always been a strong relationship between optimism around the broader economy and housing activity and markets.
Clearance rates remain consistently strong - recording a preliminary clearance rate of 75.1 per cent across the combined capitals
Auction clearance rates have been consistently strong, not just in the two big auction capital of Melbourne and Sydney but around Australia. With more buyers and sellers entering the market off the back of increase consumer confidence, transaction numbers have also increased consistently. According to CoreLogic, there were 1,739 homes taken to auction across the combined capital cities this week, compared to 1,757 auctions over the previous week.
Of the 1,388 results collected so far, 75.1 per cent were successful. Last week, a preliminary clearance rate of 73.2 per cent was recorded across the combined capitals, revising down to 69.0 per cent at final figures. One year ago, 2,590 homes were taken to auction and 70.1 per cent of reported auctions were successful.
House prices have turned the corner
House prices are turning higher, helped by lower interest rates, substantial government stimulus and a bounce in confidence as the second wave of the pandemic comes under control. These factors seem to be offsetting weak fundamentals of high unemployment, very low population growth and a fractured rental market.
But listing numbers remain close to record lows
It is clear that the housing markets are responding positively to the stimulus of low mortgage rates and improved sentiment, with values rising and stabilising across much of the country, but despite the rise in new listing numbers over the last few weeks, the total advertised inventory levels remain close to record lows, sitting at -15.2 per cent.
Bye bye, stamp duty (for NSW)!
On Tuesday, it was unveiled at the announcement of the NSW state budget that buyers in NSW could be given the option to opt out of stamp duty and instead chose a smaller annual property tax. The state government’s plans to phase out stamp duty would save house hunters tens of thousands of dollars in upfront costs and boost housing market activity.
The reform which is projected to be set in motion in the second half of 2021, is set to inject as much as $11 billion into the state’s economy over 4 years, and generate 75,000 new jobs.
The reform would also replace the current stamp duty concessions for first-home buyers — eligible on properties worth up to $800,000 — with a grant of up to $25,000.
AMP Capital chief economist Shane Oliver said stamp duty had long influenced people’s decisions to buy and sell and kept them living in unsuitable homes for longer.
It can be very inequitable and makes it harder for younger people to get into the market and harder for older people to get out of the market or get into a smaller property,” Dr Oliver said.
NSW Treasurer Dominic Perrottet on Tuesday called for states to work together to phase out stamp duty on residential properties following the release of the state budget.
If you’re thinking of taking advantage of the increasingly positive market conditions, get in touch with your local Upside agent today for a free, no-obligation appraisal to see what your home could be currently worth. As part of the process, we also supply a detailed market report of properties that have sold in your immediate area in the last three to six months.