Buyers back in the Market
Property prices in key markets continue to rise, with an increasing number of buyers taking out mortgages in case growth rates gain momentum. While national prices are still down according to the latest ABS data, the tide is starting to turn in Sydney and Melbourne. CoreLogic has recorded price gains in Australia's two biggest markets over the last three months, which may be a sign of better things to come nationwide. Despite improving conditions, buyers are being affected by a lack of housing stock as property listings remain stagnant.
According to the ABS, the median house price in Sydney rose from $870,000 to $875,000 in the June quarter, which is the first increase in a year. Melbourne's median price held in the quarter at $680,000, with the median house price also rising in Brisbane, Hobart, and the ACT. Real prices are not the best indicator of growth, however, with the residential index showing price declines of 0.8% and 0.5% in Sydney and Melbourne respectively over the quarter.
Hobart was the only capital to witness higher prices over the year with 2% growth, with Darwin down 1.8% for the quarter, Brisbane down 0.7%, and Adelaide down 0.6%. According to the index, median national prices were down by 0.7% over the quarter, which put them well into negative territory for the year at -7.4%. Despite being the latest release, these negative numbers are based on June data and may actually be a snapshot of the marketing bottoming out.
There are lots of signs of increased activity and optimism since June, with real prices increasing and CoreLogic reporting gains in the Sydney and Melbourne markets over the last few months. According to ABS chief economist Bruck Hockman, recent ABS data does not tell the entire story: "Sydney and Melbourne housing markets have seen residential property price falls moderate this quarter," but "A number of housing market indicators, such as auction volumes and clearance rates, have begun to show signs of improvement, though they remain below the levels seen one year earlier."
According to CoreLogic, house values in Sydney lifted by 1.5% in August, and have climbed by 1.6% over the last three months. This momentum is also being seen in Melbourne, where house values increased by 1.3% in August and 1.6% over the past three months. According to CoreLogic's research director Tim Lawless, "While the recovery trend is still early, it does appear that growth trends are gathering some pace, particularly in the largest capital cities."
Price rises are partly due to more buyers on the ground, along with a discrepancy between buyer numbers and housing stock. According to realestate.com.au, there has been a massive 25% increase in searches over the past 12 months, with the federal election and interest rate cuts leading to increased optimism along with APRA lifting multiple lending restrictions. New home loan commitments jumped 5.1% in July, which is the biggest monthly gain in four years, following a smaller 3.2% gain in June. While recent price rises are somewhat muted, especially on a long-term basis, the market seems to be expecting more to come.