Our property markets keep bounding along with the five capital city index increasing 0.5% over the last week alone.
Overall capital city property prices are up 1.7% so far this month, already virtually matching the 1.8% gain in April.
Over the past three months, property values have increased 6.9% in our major capital cities, yet we are just over a third of the way through the year.
Auction clearance rates remained elevated, at 78.2% for the capital cities, almost a repeat of last week’s 79.0%, continuing the strong trend evident from the latter part of last year, but down a little from the heady days in March.
Although our auction markets reported more boomtime results over the weekend, clearance rates are now clearly lower having been impacted by a continuing surge of sellers keen to take advantage of the strong competition.
Capital city demand continues at a vigorous rate, with buyers out in force – owner-occupiers, investors, and first home buyers – at a time when available supply is struggling to keep up, keeping pushes prices higher.
- Sydney properties increased 0.7% over the last week alone, up 2.2% so far this month and 11.6% so far this year,
- While Melbourne properties increased in value by 0.4% over the week and are up 7.7% so far this year.
So far this year property values around Australia have increased 9.3%.
This surge in property value has caused all our major banks to forecast 20% to 30% rises in property values around Australia this cycle with strong growth continuing for some time and then slowing down over the next couple of years.
The number of properties for sale in Australia is still in short supply
The supply of properties for sale just can’t keep up with demand.
Capital city demand continues at a vigorous rate, with buyers out in force – owner-occupiers, investors, and first home buyers – at a time when available supply struggling to keep up.
The stock of advertised properties in the four weeks to 16 May is 6.1% below year-ago levels across the capital cities.
At the same time “time on market” continues to decline.
These are signs that property values will continue to rise.
Of some encouragement, Sydney (-3.4%) and Melbourne (+14.4%) are managing somewhat better on the supply side than in the other capital cities.
New listings have perked up in recent weeks in Sydney and Melbourne.
Available stock in the other capitals are well below year-ago levels and are flat in level terms, still well below year-ago levels.
To help keep you up-to-date with all that’s happening in property, here is my updated weekly analysis of data and charts as of May 24th provided by NAB, Corelogic, and realestate.com.au.
What’s happening in our property markets?
The REA Buyers Index
The REA Insights Buyer Demand buyer demand has remained broadly flat over the past month, at levels almost 50% above the average seen over 2019.
The level of buyer demand is also only 7% below the historic peak recorded in mid-February this year.
According to Paul Ryan, demand was steady across state and territories this week, although it grew in Victoria at twice the national pace, up 1.3%.
Demand has increased significantly over the past year, by 12%, although this time last year the property market was still recovering from national lockdowns due to the pandemic.
Demand for units has been the stand-out, increasing by 22.6%. Demand for houses is still up a significant 9% over the year.
Regionally, Victoria and the Australian Capital Territory have seen the biggest increases in demand over the year, of 18%.
While the number of high-intent buyers on realestate.com.au rebounded strongly in 2020 following the end of country-wide lockdowns, in 2021 demand has increased further, spurred by continued low borrowing costs.
Demand is likely to remain at elevated levels over the coming weeks and months as interest in the property market remains high.
However, more stock coming onto the market will likely lead to more buyers finding new homes, which in turn could weigh on the overall level of demand.
The REA Rental Demand Index
The REA Insights Rental Demand Index, edged slightly higher last week, rising 0.2%.
According to Paul Ryan, Queensland saw the largest increase in rental demand in the week of 1.2%.
Aggregate rental demand is 8% below levels of a year ago, when rental demand boomed as the country emerged from national lockdowns.
Victoria and the Australian Capital Territory were the strongest performers, with rental demand up 6% and 8%, respectively.
Rental demand has fallen elsewhere over the year, by 10% or more.
Rental demand for units has held up the best over the past year, falling only 4 per cent.
While rental demand remains 18% below the peak recorded in January this year, the level of demand remains much higher than it was prior to the pandemic.
This is surprising given that foreign students – traditionally a strong source of rental demand in inner-cities – remain unable to enter the country.
First-home buyer activity remains strong, making up the highest share of new lending since 2009, so we may see rental demand continue to drift lower over the coming weeks and months.
Once border closures are removed, expect rental demand to return – particularly in inner-city areas previously popular with students.
Median property prices
NOW READ: Why Bluechip property will rebound strongly in 2021
Vendor Metrics
Vendor metrics confirm we’re in a seller’s market with the number of days to sell a property decreasing (a sign of the tight supply situation), and vendor discounting (it’s easier for them to sell) at realistic levels.
The shortage of good properties on the market is seeing properties selling quickly with minimal discounting.
Our Rental Markets
The inner-city unit markets have struggled since borders were closed to international students, visitors, and those who would have sought holiday work, for example in hospitality, on farms, and elsewhere.
Melbourne and Sydney’s inner-city markets remain very weak with rents still falling. 
Compared to pre-pandemic levels, Melbourne’s inner-city unit rents are down 27.7% as of April 2021, Sydney rentals down 18.2%. Inner-city prices for such units remain flat.
The absence of new international students and some pandemic preference for less congested and near-city living remain headwinds.
This week’s Federal Budget was built on the assumption that international borders will remain essentially closed until mid-2022 so little immediate relief on this front seems likely.
Inner-city rents in Brisbane have not been as soft as in the two larger cities but still fell a net 3.0% from pre-pandemic levels.
Perth though has tightened, even in inner-city markets that have shown a net rental increase of +2.1%.
While Sydney and Melbourne’s inner-city rental markets remain soggy, prices of units across these cities covering the broad array of suburban units, continue rising, evidenced by reports of demand from owner-occupiers, first home buyers, and investors.
Rental market conditions remain diverse, with significant differences between the regions and housing types.
From a geographic perspective, the tightest rental markets are Darwin and Perth, where both house and unit rents are recording double-digit annual growth.
Last weekend’s auction clearance rates
Auction clearance rates remained strong last weekend, but they’re slowly losing steam compared to the white hot markets before Easter.
This weekend 2,333 properties were taken to auction, a few less than last weekend’s 2,406 (but more than the previous weekend’s 2,569.)
Now is the time to take advantage of the opportunities the current property markets are offering.
Sure the markets are moving forward, but not all properties are going to increase in value at the same rate. And some sectors of the market will continue to languish.
Now, more than ever, correct property selection will be critical.
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Source of graphs and data: CoreLogic, NAB and REA
from Property UpdateProperty Update https://propertyupdate.com.au/australian-property-market/
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