As the weather begins to heat up, so too, is the property market. The Spring selling season is now well underway, with trends in the real estate market indicating that the nation is starting to shake off the fog cloud that lingered with the onset of COVID-19 in early March.
In this update, we will be looking at:
- RBA interest rates held at record low on big budget day
- What the 2021 Federal Budget means for the property market
- Predictions for house prices by industry experts
- Market wrap up and statistics for the week ending October 4th
On Tuesday, it was announced that the Reserve Bank of Australia has left the official cash rate on hold at a record low 0.25 per cent as the country braced for the delivery of what many are calling ‘the most important federal budget since World War II’.
The Morrison Government revealed an enormous wave of spending and the biggest deficit in Australian history as the government begins to kickstart the economy amid the pandemic.
Aussie taxpayers are set to receive some money back in their pockets, with the government bringing forward stage 2 of its legislated tax cuts, that will see the 19 per cent threshold rise from $37,000 to $45,000, and the 32.5 per cent threshold go from $90,000 to $120,000.
Also announced was an expansion of the government’s First Home Loan Deposit Scheme, which will see an extra 10,000 people able to apply, in addition to the value of eligible properties also increased.
Previously properties worth up to $700,000 in Sydney were covered under the scheme, but this will be increased to $950,000. Melbourne’s cap will be increased to $850,000 and Brisbane to $650,0000. This will mean that first home buyers with a 5 per cent deposit will not have to pay lenders mortgage insurance.
In further news for the housing industry, the Federal government announced plans to change credit laws to mitigate the effects of the pandemic, making it easier for Australians to take out mortgages and refinance their home loans. New laws proposed aim to reduce verification procedures, shortening the length of time it will take to secure loans.
As Australia continues to recover from the COVID-19 pandemic, it is more important than ever that there are no unnecessary barriers to the flow of credit to households and small businesses," said Treasurer Josh Frydenberg.
"Maintaining the free flow of credit through the economy is critical to Australia's economic recovery plan."
Off the back of these government stimulus plans, economy experts have also reflected a recent positive sentiment, with their revised predictions a far-cry from the initial forecast of doom and gloom in house price crashes at first lockdown.
CBA now expects a rebound in house prices from mid-next year, further revising their forecast for a smaller 6 percent slide in average property prices nationally, a reduction from the initial 10 per cent dip predicted in April.
A revised Westpac report reflected an even more upbeat outlook, predicting national house prices to rise by a total of 15 per cent by 2023, with Brisbane house prices expected to lead the surge at 20 per cent, while Sydney home prices are slated to jump 14 per cent over the same period.
The bank has attributed the substantial boost from lower interest rates and a milder-than-expected recession as the driving force behind the more optimistic prediction.
"This recovery will be supported by sustained low rates, which are likely to be even lower than current levels; ongoing support from regulators; substantially improved affordability; sustained fiscal support from both federal and state governments; and a strengthening economic recovery," the economists wrote.
Market insights across the nation
Over the long weekend, the combined capital city preliminary auction clearance rate came in at 70 per cent over a decreased volume of 657 homes (due to the public holiday), only slightly lower than last week’s preliminary figure of 70.5 per cent across 1,082 auctions. This time last year, a final clearance rate of 64.2 per cent was recorded across a higher 1,324 auctions.
Sydney auctions accounted for 66 per cent of all activity this week, despite volumes much lower than the week before, which recorded the busiest week this city has seen since April.
At Upside, we also saw an all-time record open home attendance the week prior, reflecting record low stock keeping interest levels high.
Auction Clearance Rates
|City||Clearance Rate||Total Auctions||Clearance Rate (last year)||Total Auctions (last year)|
Meanwhile in Melbourne...
In Melbourne, activity still remained close to record lows with 57 auctions scheduled, but this was still a slight increase on the 40 auctions last week, again an increase on the 11 auctions held two weeks ago. This time last year, Melbourne recorded 775 homes auctioned at a clearance rate of 70.5 percent.
As restrictions begin to peel back across Melbourne, we expect this number to begin to rise substantially.
Capital City Home Value Changes
Even though buyers are returning to the market, overall the number of properties listed for sale nationally remains down 17.7 percent.
The lack of good properties for sale at a time when there are still many interested buyers is one of the reasons property prices have been well insulated from dropping.
Capital City properties listed for sale
While the property market begins to heat up and Melbourne looks set to rejoin, it is important to note that the market we are currently observing could very well be the most stable it will be for some time.
- Record low interest rates means that there will be ready and willing buyers to purchase properties that spring on to the market and are priced well.
- Stock levels are very low, with buyer demand last week 24.9 per cent higher than it was the same time last year.
- The tapering off of government stimulus support and the end of mortgage freeze could see a rise in distressed sales towards the end of the year.
- Despite the recent reduction in home values, demand is still much higher than it was a year ago, a run-on impact from historic low mortgage rates, stimulus and restrictions on how people are spending their money (no overseas holidays or interstate travel in some instances), is driving a big appetite for housing.
- Some experts are predicting an extended spring as transactions continue into December on the back of lower transaction volume throughout the rest of the year coupled with less people travelling over summer. This could be even more pronounced in Melbourne as they look to transition out of lockdown.
Naturally, you’ll want to make sure that the direction you take with your property is the right one, whether you’re selling or buying a home in Australia.
The best thing you can do to ensure that, is to get in touch with an experienced real estate agent. In these unprecedented times, a seasoned property agent will have assessed the situation better than anyone else and will be able to provide you with invaluable advice for how to buy or sell your house.
Get in touch with your local Upside agent today to guide you towards the best move for your home.