The housing market is currently a sellers’ market, according to RiskWise Property Research, with low listing volumes putting home owners in an extremely comfortable position.
RiskWise Chief Executive Officer, Doron Peleg said there were “very clear and consistent signs of recovery” in the market and this turnaround, as well as further improvements in auction clearance results, could lead to an increase in volume.
This week’s preliminary clearance results in Sydney hit just below 85 per cent and in Melbourne were just shy of 80 per cent.
However, Mr Peleg said, at this stage it appeared, generally, sellers did not “feel the rush to list their properties”.
“Clearance rates in the 80s put sellers in a very comfortable position. We are also seeing, from the independent source of the Westpac-Melbourne Institute, significant improvements in consumer sentiment in relation to house price expectations and time to buy a dwelling indices,” he said.
“In addition, when it comes to auction clearance rates in Sydney and Melbourne, we are seeing very clear signs of recovery. The trend now is very clear with interim results in the 70s and 80s over the past four weeks and final clearance rates in the 70s for that period. This is significantly higher than the clearance rate in the mid-50s a year ago in those capital cities.”
He said a combination of the election results, RBA interest rate cuts with at least one further cut on the horizon, APRA’s changes to the floor assessment and tax cuts delivering more funds to households, all contributed to the confidence in the market and, consequently, for higher clearance rates that were also well connected with higher prices.
“The recent auction clearance rates and improved consumer confidence are creating a very clear trend, that will consequently lead to price increases and a rise in volumes, as sellers expect stronger demand for their properties and, therefore, are more confident to put them on the market,” he said.
“Basically, what we are seeing is improving confidence, improving clearance rates and improving prices. In fact, according to CoreLogic data, in July 2019, dwelling values increased across all capital cities except for Adelaide, Perth and Canberra.
“This shows that sellers are in a good position, they see improvement in the market, and they are in control of what happens next. Generally, both Sydney and Melbourne are performing really well, especially Sydney in recent weeks. The key thing we are seeing is very consistent and strong results, particularly, but not only, in the high end of market,” he said.
In fact, the high end of the market continues to lead the way with extremely strong results in Northern Sydney and Hornsby (91.9 per cent), Sydney Inner West (89.3 per cent) and Northern Beaches (92.6 per cent).
In Melbourne, both Inner Melbourne and Inner East delivered 82.8 per cent and the Inner South 80.5 per cent.
“This is a good trend and with the recent rate cuts by the RBA, the high likelihood of another this year, and potentially one in first half of 2020, this are looking extremely positive. Demand for housing and housing finance are also showing very clear signs of improvement,” he said.
“With the interest rate falls and recent changes in the floor assessment, combined with serious competition between banks and non-banks making it easier for borrowers, particularly owner-occupiers to refinance and reduce mortgage repayments, there’s negative pressure to sell because vendors see the market recovering.”
“Often people think if there is low volume, the market it poor and high volume means it is strong, but that is not necessarily the case. It really depends on the context.” Mr Peleg said.
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