Property Market Update July 27th 2020

A lot has been happening in the Australian Property Market lately and today I wanted to share information from the Property Update article from 27th July 2020.

Property Update Article: https://propertyupdate.com.au/australian-property-market/

0:00 – Introduction
0:40 – Changes in Australian Property Prices
3:10 – Early market indicators
5:05 – New properties for sale and rent
5:40 – Rental markets
6:25 – Finance activity
6:42 – What’s happening to property prices
9:52 – New property listings and sales
11:42 – Vendor discounts and time on market
14:25 – Auction clearance rates
15:50 – Changes in rents

Transcription:

Ryan 0:00
a lot has been happening in australia and the australian property market since i last recorded an update and i was reading through property updates article on the australian property market update and i thought that this was so interesting that i wanted to go through it with you guys and to share it as well so we can get a better understanding of where the markets at and they also talk about some of the leading indicators and where the market may go so they’re saying there’s lots of property news and data over the last week obviously we’ve got that second wave of COVID-19 coming through particularly in victoria will that happen in the other states we’re not sure we’re going to you know see if that happens but basically if we look at the australian price heatmap here we can say that this week basically the major capital cities everything is down or steady so sydney and melbourne both down a bit brisbane and adelaide held steady perth is down as well month today everything is down or steady within the adelaide being at 0% but sydney and melbourne down 0.7 0.9% brisbane is down less 0.2% perth down 0.6% which i’m finding interesting because perth seemed before COVID to kind of hit the bottom of the market and looked like it was due for a rise but perth obviously continuing to decline if we look since the COVID lockdown so when was that that was march sometime or early april i can’t quite remember now seems like a lifetime ago sydney is down 1.4% melbourne is down 3.3% brisbane has held steady adelaide is actually up and perth down 1.8% and then we’ve got since the melbourne lockdown which is a lot more recently everything’s down or steady so where are things at since 2017 maximum so sydney and melbourne peaked in 2017 and then went through 18 months of decline and then went back up in late 2019 so if you bought at the top of 2017 where would you be at sydney and melbourne you’d be down around you know three to 4% sort of range gold coast of brisbane gold coast and adelaide you’d be up but only by a little bit 1.3% 2.4% and then perth you will actually be down 13% since that 2017 so that’s actually crazy if you look at the last 12 months you can see how gangbusters sydney and melbourne have gone with 12.4% growth in sydney 9.1% growth in melbourne and solid growth in brisbane gold coast at 4.5% adelaide at 2.3% and perth is down minus 2.6% so yeah i find like this data is really interesting the saying like residential prices are mostly softening since the pandemic sorry about the aeroplane overhead if you can hear that at the moment i’m just parked out on the beach in the van loving working just on the road at the moment but this is what i found interesting as well is early market indicators so this is a number of indicators that could actually give us a clue to what’s ahead so obviously we just looked at okay what’s happened in the past and that’s interesting to look at but what we all want to know is what’s coming in the future and it’s always you know really hard to predict but there’s some leading indicators that can help us to understand what may happen and to give us some clarity on that so they’re saying buyer activity edge higher last week as shown by realestate.com they use weekly demand report report for sale search volumes increased 0.1% last week and now minus 2.3% below their recent record high so when was that back in you know late june or maybe it was early july we had record highs in the search volume for properties obviously more searches means more people looking to buy properties for sale so largest increases were in queensland and interestingly the northern territory while the biggest falls were in victoria south australia western australia and tasmania i do worry about hobart hobart had has had such an amazing run for so long i keep looking at it and thinking how long can this actually continue hobart how long can you keep going the dip in western australia you may reflect the fact that demand for new houses appears to be booming since the announcement of the home builder or but that’s not captured in this search data the new houses isn’t so

that’s interesting the largest year on year increases for sale search volume have occurred in the ac t at 99.5% western shy of 45.6% while the smallest jumps have been in victoria and south australia but there’s mounting evidence that this interest in for sale listings is translating into sales with a data showing an upward trend in transactions alright number two is newly advertised property for sale and rent the following chart shows the change in number of new residential listings in the past seven days over the last week the number of new properties coming on the market has virtually been steady not a bad feat considering the concern about Coronavirus and the number of new properties advertised for sale is at 3.4% over the month showing renewed vendor confidence so that’s the thing it’s like okay we want properties for sale but you don’t want too many to be listed all at once because of too many alyssa that’s going to flood the market and decrease prices rental markets okay realestate.com to you tracks the number of rental searches on its portal and it’s showing that that is up so we can see that that around march and april that went into the negative growth but since we’re coming out in may that is trending upwards year on year change so rent renters are expected to continue to closely monitor what becomes available we may also see more rental stock come online given some tenants will be facing reduce incomes from loss of employment so still not really sure what’s going to happen around there number four is finance activity while many australians have been busy getting new loans as you can see from the charts below more than two thirds of these were for refinancing existing loans rather than for new property purchases so obviously people refinancing down to lower interest rates in order to save money so that’s not surprising they’re saying what’s happening to property prices capital city home value changes weekly changed monthly change year to date change all the weekly is down or steady or the monthly is down or steady you know 12 months we already talked about that sort of stuff but considering all the negative market sentiment capital city property values have held up pretty well while property values are slipping a little one has to dig deeper into the numbers to see the full picture there are certain segments of our market holding their value as well with a shortage of a great homes and investment properties compared to the numbers of buyers meaning that property values in certain locations are creeping up that’s it like that’s really important to think about as well is while this gives a like overall city picture of how things are going it doesn’t give a suburb by suburb pitch out and you’ve got some suburbs or some types of properties within certain suburbs where there’s a lot of demand and the values of those properties are going up or he’s got other suburbs that are bringing these averages down and dragging them down so they can still be good opportunities even in markets that are pretty steady or in declines like we’re looking at the moment there is a flight to quality significant policy supports the earlier reopening of the economy have met the various worst case scenarios a 20 to 30% price falls that some of the common economists have been touting seem likely however i still see property values falling a little further as unemployment will remain high consumer confidence will continue to languish and immigration will fall i would probably agree with that and i would have a similar sentiment to that is that i would think that property prices would continue to slip will they slip as much as they did in 2017 2018 going down by 50 15% in sydney and melbourne i didn’t know if we’re going to see that much of a fall especially in places like perth that’s already seen so much decline or brisbane that’s been steady for like 13 years now and hasn’t really grown so don’t say massive declines in the future but obviously i don’t have a crystal ball but i think what’s going to be really interesting and something that ben has been talking about as well is that when this does eventually blow over not blow over but you know when we’ve got when we’ve got COVID under control when there’s a vaccine out there when the borders reopen and life starts to go back to normal is there going to be an influx of immigration in order to make up for the last immigration that we’ve had over the last couple of years so while we may not see a lot of immigration over the next couple of years the government does want to grow the population of australia and does want to do that through immigration and it can easily just bump up the figures to the amount of people that are allowed to immigrate each year so will that happen in one year or in two years or whenever the borders reopen again and could that see a delayed surge in pricing so

maybe we’ll go through a time of a slight decline or steady but then if we get all of this influx of people will that add to you know growing house prices are that property is listing for sale new listings mean the count of listing events that have occurred so far not been seen in the calendar year so properties listed for sale sydney melbourne brisbane adelaide down what are they saying about this as you can see from the following chart despite more properties coming onto the market for sale the total number of listings like properties actually available for sale is falling now that falling is generally a good sign as to not be a rapidly declining market because if properties are being listed on the market and they’re sitting there for a long period of time because they’re overpriced no one’s buying them everyone wants cheaper properties then you see a growth in properties on the market and when you’ve got more properties than people who want to buy properties that can lead to decrease prices but this is saying corelogic report there are 1.3 buyers in the market for every property for sale and they say this confirms what we’re finding on the ground at metropole that well located properties are quickly selling with a queue of buyers waiting for them the car next to me has just started out so i apologize for that sound but yeah so if we start to see properties on the market available for sale going in this upward trajectory then we need to be worried but we’re not seeing that at the moment number of property transactions i’m guessing this is going to be down the Coronavirus lock downs of course very significant slowdown in transaction numbers the following table a private treaty sales which represents the vast majority of all dwellings shows that over the last week and then it goes into details on how many were sold how that compares to last year i’m not exactly sure next year looking at vendor metrics vendor metrics have generally improved with the number of days to sell a property decreasing which is a sign of tight supply vendor discounting decreasing it’s easier for them to sell at the price that they want so this is definitely two things to track when you’re looking at a suburb you’re looking at a market you look at okay what are the days on market how long does it take to sell a property you’re looking at both the number how like how long but you also looking at the trend so somewhere that’s a hot market things will be selling really quickly sometimes in under a month when it’s a cold market when it takes long to sell things you’re looking at 6090 days or rural markets can be 300 plus days so you’re looking at the number how long does it take to sell but also the trend so if it’s trending it takes less and less time to sell a property that’s a sign that buyer demand is there properties getting snapped up quickly if you’re seeing a trend that it’s taking longer and longer to sell properties then that’s a sign that the market may be cooling off doesn’t mean that the market is not still going to continue to grow but it might not just grow at the same rate that it’s been growing up same with vendor discounting is how much the vendors discount below their asking price and what’s the average for that so bigger discounts mean they’re discounting their property it’s harder to sell their property so they’re giving bigger discounts if there’s a smaller vendor discount that means the properties are selling easier for the price that they want again you want to look at the number for this as well as the trend if the trend is increasing to larger and larger discounts could mean a cooling off market if the discount is decreasing to the point where you have no discount a little to no discount that is a really hot market and we’re definitely seeing some markets when they’re absolutely chugging along and peaking vendor discount is actually like a positive so it’s not discounting properties are selling above their asking price so if we’re looking at capital city median time on a market we can say lord sydney and melbourne 46 and 47 days hobart 35 days which is the lowest at the moment and then have we got darwin in here 54 days camera 56 interesting analyze at 57 when that’s the city that’s been holding steady or growing and then we look at vendor discounts here so looking as you can see just looking at this doesn’t give you it doesn’t give you a big enough picture into what’s happening just getting a snapshot of like time on market and vendor discount because you need to look at the trends and how they’re going over time but they’re saying here that they’re trending downwards which is generally considered a good sign auction clearance rates auction clearance rates generally it’s like sydney and melbourne you pay attention to those otherwise other cities don’t have as many auctions so it’s harder for those to track i personally don’t like track auction

clearance rates a lot i don’t know if it’s my lack of understanding about it or just that it only applies to sydney and melbourne and not other cities so but we can look over these church preliminary auction clearance rates of 59.2% i don’t know what that means that’s something i should i’ll be learning about but you can see the weekly clearance rates obviously when cds go into lockdown that allowed to have auctions so that can really mess up the figures there in terms of clearance rates so as you can say like sydney auction clearance you’re looking at you know anywhere from 50% or we have like lockdown periods where it drops really low but generally kind of around that 50 to 90% is really high but then you look at brisbane like auction clearance rates looking at like 20% 10% it kind of peaks at 60% whereas sydney peaks around 90% same deal with melbourne much higher auction clearance rates in those cities they’re saying there’s still downward pressure on sydney and melbourne rents so asking rents in sydney and melbourne have continued to soften even though there’s been no further apparent increase in the vacancy rates so even though vacancy rates have declined there’s not lots of properties vacant on the market the trend is that rents actually trending downwards or getting cheaper and given that sydney is actually decreasing in price this means rents are decreasing faster than the prices in sydney so let’s say it’s different in other capital cities rather than rising perth rental vacancy rate has continued to decline and is now down to 1.5% if you look at the vacancy rates of perth you’re just seeing this steady decline in vacancy rates which is a good sign hobart’s rental market seems to strengthen with tight vacancy rate of just under 1% that is chronically under supplied adelaide asking rents been relatively steady with a low 1% vacancy rate brisbane market has been more volatile perhaps stabilizing in recent weeks after an earlier period of weakness so what have we got here sydney asking rents and vacancy rate so we can see the dollar amount here and we can see our this is week two this is in 2019 and then in 2020 so we can say from you know early 2020 since COVID that we’ve just had this big downward trend in rental prices and if we look at vacancy rates as well we can see they’ve gone up but they’re kind of starting to stabilize and go down melvin’s also seen a decline an increase in vacancy rates by the stabilization brisbane asking rents have been going up and vacancy rates are shot up after around COVID but have been declining since and then what do we got here hobart and perth have been seen a bit decline kind of steady and then perth has been seeing a decline in vacancy rates hobart and adelaide pretty steady here the same the statistics above that are dated weekly the following site by site data is updated monthly at the beginning of each month so i really like this i feel like this video has kind of gone long enough to talk about the market and some of the key indicators and where things are at but i’ll link up to this article down below because it’s just super interesting to go through all of this data super interesting to see all of this stuff so thank you property update for putting this out and i’ve loved sharing this with you guys they got so much good content over there i’ve really been enjoying reading their stuff sharing it with you on the channel as well so go ahead check out this article if you want to see more details about that otherwise go ahead and check out one of the videos that i’ve done recently where i talked about financial freedom investing in property etc so i’ll link up to some interesting videos on the site here go ahead check them out otherwise i hope you’ve enjoyed this episode please give us a thumbs up and subscribe to the channel for future content and until next time stay positive