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Property Market Research Report in Australia

Introduction

The global real estate market size was valued at $6,872.8 million in 2018, and is projected to reach $8,662.2 million by 2026, growing at a CAGR of 2.8% from 2019 to 2026. Real estate is a property, which consists of land or any physical structures, such as buildings, on it. The factors that drive the growth of the market includes public–private partnerships, rise in economy, and increase in efforts by the government for the infrastructure developments. Growing public–private partnerships in the different countries such as India and China would continue to fuel the growth of the real estate industry. For example, in December 2017, the Government of India has drafted a new policy on public–private partnerships to offer affordable housing and attract private developers. Similarly, China has adopted the public–private partnerships model, under which private companies will invest in government infrastructure projects. In addition, growth in construction industry is one of the major contributors to the market. However, slow economic activity after Brexit and volatile economic conditions in Latin America are expected to hinder the growth of real estate industry

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Moreover, rapid upsurge in the global population as a result of rise in migration has led to rapid urbanization. This scenario is expected to catalyze the demand for real estate. Furthermore, rise in demand for commercial buildings are expected to continue to drive the real estate market growth in the developed regions. For instance, in March 2018, Ardian, a leading private investment house, has raised more than $800 million for investment in commercial property assets in Germany, France, and Italy. Moreover, increase in industrialization in economies, such as Asia-Pacific and LAMEA, is expected to provide lucrative opportunities for the global real estate market development. Furthermore, increase in government investment in infrastructure development to help real estate is anticipated to provide lucrative opportunities for the growth of the market in the future. Government is taking many initiatives related to infrastructure developments. Economic growth is one of the major drivers.

At the same time, improving economies in developing countries such as India, Indonesia, and others have resulted in large-scale foreign investments, a factor that subsequently boosts the demand for construction equipment in infrastructural projects across various sectors. For instance, in December 2019, India planned to invest $1.39 trillion infrastructure development projects over the next five years. Similarly, in April 2019, the Government of Russia has invested around $96 billion for its 6-year modernization plan for infrastructure development, which includes highways, railways, ports, airport, and other infrastructure. The global market is segmented on the basis of property, business, and region. By property, the market is segmented into residential, commercial, industrial, and land. By property, the land segment garner the largest share in terms of revenue and the industrial segment is expected to grow during the forecast period. Furthermore, increase in demand for agricultural land is expected to provide lucrative opportunities for land real estate market expansion.

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Property Market Changes To Expect This Decade

The Australian property market has experienced some tumbles and recoveries throughout the years. Historic rate cuts have been made and an ongoing global virus outbreak is currently posing some risks. We speak to Trent Wiltshire, an economist at Domain, who shares his insight on what the property market could look like in this new decade, amidst slowing sentiments and evolving conditions across the country.

Rising values in the capitals

Property prices in capital cities will go up in the future says Wiltshire. He predicts that Brisbane, Sydney, and Melbourne may hold the strongest property values over the coming years. In Sydney suburbs, values will increase by more than $100,000 this year, says Select Residential Property (SRP) director Jeremy Sheppard. The latest figures released by CoreLogic show that the Harbour City’s median house value is now at $872,934, jumping by 10.9%. Melbourne also experienced a 10.7% median value increase. The city’s median house price now stands at $689,088. The Melbourne suburb of Brighton is set to be 2020’s hottest property spot, according to Upside. Carlton also shows a potential for growth, with the suburb topping the list for lowest median unit value in the Victorian capital last year at $364,918.

“(We would also see) rising Perth prices, which have been falling for a while. Hobart will (also) still see some growth,” Wiltshire adds.

The Perth market experienced some subdued conditions in 2019, but some suburbs in the capital have improved this year, according to Real Estate Institute of Western Australia (REIWA) president Damian Collins. In fact, the city’s rental market experienced its first growth in median rents since the start of 2017. The median rent in Perth jumped to $360 per week in February 2020, thanks to the decline in vacancy rate to 2.2%.

Market Size State by state: A February update on Australia’s property markets

Australia’s housing markets rebounded strongly last year, and this strength has continued into 2020. In fact, the property upturn which started in our big two capital cities in the middle of last year has become more widespread, with housing values rising across every capital city in January according to the latest stats from Corelogic. While Sydney and Melbourne continue as the leaders for property value increases, the speed of growth has lost some momentum over recent months as can be seen in the chart below

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The following chart shows how a number of states are at the market peak in prices, while Sydney and Melbourne property values have made up much of the ground they lost in 2018-9 and will reach new peaks sooner rather than later.

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Looking deeper into the CoreLogic stats, it is clear the more expensive end of the Melbourne and Sydney markets are the primary driver of rebounding capital gains.

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Sydney

The Sydney property market is on the move having recorded its quickest turnaround in decades. Since bottoming out after the election in May, Sydney dwelling values have recovered by 11.2%. Sydney house prices increased 1.5% over the last month (6.7% over the last quarter), while apartment values increased by 0.3% over the last month (3.2% over the last quarter). The recovery is most concentrated across the premium end of the housing market where values were previously falling more rapidly. The top quartile of the market is up 6.9% over the past three months and 10% higher over the year, while values across the lower quartile were 3.2% higher over the quarter and are only 3.4% higher over the past year.

The following metrics confirm the increased strength of the Sydney housing market:
  • The average selling time of a home is 33 days (57 days a year ago);
  • Vendors are discounting their properties an average of 3.5% to affect a sale (7.3% a year ago); and
  • 17% more properties sold in Sydney in the last 12 months compared to the previous year.

Currently investors and homebuyers are abandoning the off-the-plan apartment sector for many reasons, including concerns about construction standards. Many of those who purchased off-the-plan a few years ago are now having trouble settling with valuations coming in on completion at well below contract price at a time when banks are more reluctant to lend on these properties. In the background, strong economic growth and jobs creation is leading to population growth and ongoing demand for property in Sydney. At the same time international interest from migrants continues. The beginning of this new cycle is a great time to look at buying an investment-grade property in Sydney, which is currently offering investors an opportunity to buy established apartments in the eastern suburbs, lower North Shore and inner west at a slight discount to what they would have paid a number of years ago.

Melbourne property prices are surging with dwelling values up 8.2% higher over the last year taking them to only 1.2% below their October 2017 peak. House values are rising faster than unit values across Melbourne, up 1.4% over the last month (5.6% over the last quarter) while apartments rose in value by 0.7% (3.5% over the last quarter).  At the current rate of growth, we are likely to see Melbourne home values reach a new record high over the next month or so. But the Melbourne property market is very fragmented, with values of more expensive properties rising considerably more than affordable houses.

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Melbourne

Melbourne property prices are surging with dwelling values up 8.2% higher over the last year taking them to only 1.2% below their October 2017 peak. House values are rising faster than unit values across Melbourne, up 1.4% over the last month (5.6% over the last quarter) while apartments rose in value by 0.7% (3.5% over the last quarter).  At the current rate of growth, we are likely to see Melbourne home values reach a new record high over the next month or so. But the Melbourne property market is very fragmented, with values of more expensive properties rising considerably more than affordable houses.

The following metrics confirm the increased strength of the Melbourne housing market:
  • The average selling time of a home is 31 days (45 days a year ago);
  • Vendors are discounting their properties an average of 3.5% to affect a sale (6.7% a year ago); and
  • 9% more properties sold in Melbourne in the last 12 months compared to the previous year.

The Melbourne property market is moving from strength to strength, after exhibiting the strongest rebound in modern history. Buyers are back, sellers are back, and auction clearance rates are high despite rising volumes of properties for sale. Overall property values will be underpinned by a robust economy, jobs growth Australia’s strongest population growth and the influx of 35% of all overseas migrants. 

Remember, Melbourne rates as one of the 10 fastest-growing large cities in the developed world, with its population likely to increase by around 10% in the next four years.

Brisbane

Brisbane’s property downturn was quite shallow compared to the big two capital cities and following its recent upturn property values have reached a new peak.

Brisbane house prices increased by 0.7% over the last month (2.3% over the last quarter) while apartments in Brisbane dropped in value by 0.6% over the last month (+0.4% over the last quarter). However, Brisbane property prices are still about 55% of Sydney’s while household incomes are only about 12% lower, making Brisbane a very affordable alternative for homebuyers and investors. A recent report by valuers m3property showed there is still a significant oversupply of new Brisbane apartments, with about one in four new apartments in the Brisbane CBD remaining unsold.

The following metrics confirm the increased strength of the Brisbane housing market:
  • The average selling time of a home is 50 days (49 days a year ago);
  • Vendors are discounting their properties an average of 4.0% to affect a sale (4.9% a year ago); and
  • 5% fewer properties sold in Brisbane in the last 12 months compared to the previous year.

With migration rates lifting, supply under control and generally healthy levels of housing affordability, the Brisbane housing market fundamentals are looking healthier compared to most other capital cities. At the same time the underlying strong demand from home buyers and investors from the southern states at a time when yields are attractive and housing affordability is relatively healthy and putting a floor under property prices. Brisbane’s economy is being underpinned by major projects such as Queen’s Wharf, HS Wharf, TradeCoast, Cross River Rail, the second airport runway and the Adani Coal Mine, but jobs growth from these won’t really kick-off for a few more years.

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Adelaide

Adelaide housing values were up 0.2% in January, continuing a trend of modest growth that’s been evident since October last year. The latest month of growth has seen Adelaide home values reach a new record high, after recovering the 1.6% decline recorded between late-2018 and mid-2019. House prices in Adelaide rose 0.2% over the last month (+1.3% over the last quarter) and unit prices rose 0.5% (+1.3% over the last quarter).

Signs of the improving Adelaide property market include:
  • The average selling time for a home is 40 days (down from 44 days a year ago);
  • Vendors are discounting their properties an average of 4.3% to affect a sale (5.0% a year ago); and
  • 8% fewer properties sold in the last 12 months compared to the previous year.

While things look good for Adelaide property in the short term, with sales activity starting to trend higher, based on improving buyer demand, over the next few decades the bulk of Australia’s long-term jobs growth, economic growth and population growth will occur in our three big capital cities, meaning there are better locations for long term wealth creation that Adelaide.

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Perth

Housing values are slowly emerging from a slump that lasted five-and-a-half years.

House prices in Perth rose 0.1% over the last month (+0.4% over the last quarter) while unit prices rose 0.3% (+0.7% over the last quarter). However, Perth property values are still 5.7% lower over the past 12 months taking values 21.3% lower than their peak in June 2014. Perth values are now among the most affordable amongst the capital cities, but it’s much too early for a countercyclical investment in the west. I can’t see prices rising significantly for a number of years.

Signs of the slowly improving conditions in the Perth housing market include:
  • The average selling time of a home is 42 days (57 days a year ago);
  • Vendors are discounting their properties an average of 5.4% to affect a sale (6.6% a year ago); and
  • 6% more properties sold in Perth in the last 12 months compared to the previous year.
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Hobart

Hobart has been the best performing property market in the last few years, and while dwelling values are at a record high, its boom is now over. The Hobart market lost momentum over the last year but house prices in Hobart rose 0.9% over the last month (+2.9% over the last quarter) while unit prices rose 0.8% (+5.4% over the last quarter). It’s likely the Hobart market will continue to lose its momentum over the year.

Signs of the slowing Hobart property market include:
  • The average selling time for a home is now 25 days compared to 17 days a year ago);
  • Vendors are discounting their properties an average of 2.7% to affect a sale (3.8% a year ago); and
  • 9% fewer properties sold in the last 12 months compared to the previous year.

Over the last few years too many investors chased the Hobart ‘hot spot’ at a time when there was a lack of employment drivers, insufficient population growth and not enough infrastructure spending. Remember home buyers create a property market (they make up 70% of buyers) and investors create property booms — which is what’s happened in Hobart. And Hobart is too small a market to be a long-term investment-grade proposition. Only 5,510 property transactions occurred in Hobart last year, compared to Melbourne (76,840) Sydney 74,740 and Brisbane (48,830).

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Darwin

The Darwin property market peaked in August 2010 is still suffering from the effects of the end of our mining boom with a very soft employment market and lack of migration and infrastructure spending. Currently, values are 31.8% below their historic peak, and it is unlikely we’ll see these types of house prices again in the next decade. House prices in Darwin rose 0.6% over the last month but fell -1.4% over the last quarter, while unit prices fell -1.1% over the last month (-2.1% over the last quarter).

The following metrics confirm how sluggish the Darwin property market is:
  • The average selling time for a home is 68.5 days (69 days a year ago);
  • Vendors are discounting their properties an average of 7.6% to affect a sale ( the same as 12 months ago); and
  • 2% fewer properties sold in Darwin in the last year than 12 months ago.

The small size of the Darwin market makes it more susceptible to local events and Darwin typically has a higher and more variable vacancy rate, a product of a large transient working population.

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Canberra

Canberra’s property market has been a ‘quiet achiever’ with dwelling values having reached a new peak after growing 3.1% over the last year. House prices in Canberra rose 0.3% over the last month (+1.6% over the last quarter) while unit prices rose 0.1% (+1.6% over the last quarter).

Signs of the strength of the Canberra housing market include:

 

  • The average selling time for a home is now 35 days (45 days a year ago);
  • Vendors are discounting their properties an average of 2.9% to affect a sale (2.7% a year ago); and
  • 7% more properties sold in Canberra in the last 12 months compared to the previous year.
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Overall, the Australian housing markets are striding along

Vendor metrics have generally improved over recent months with the number of days to sell a property decreasing (a sign of the tight supply situation), vendor discounting decreasing (it’s easier for them to sell), and auction clearance rates starting the year on a very strong note.

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While sellers went on strike for a year or two realising that it wasn’t a great time to sell, vendors now seem to be slowly re-entering the market and while new listings (properties for sale) are lower than recent years they are lifting more rapidly than over recent years pointing to renewed vendor confidence.

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One sign of increased confidence, especially in the Melbourne and Sydney property markets are the strong auction clearance rates, which have persisted despite more properties coming onto the market.

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Our rental markets

Following a number of years of sluggish rental growth, rents are starting to rise.

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Other market indicators
  • The trend in population growth has eased as both the rate of net overseas migration and the rate of natural increase fell.
  • Net overseas migration is forecast to average a net inflow of 243,000 people per annum in the next three years and most of these people have jobs and are at household formation age.
  • But new dwelling approvals are trending lower and expected to fall further as presales become tougher which means that we’re likely to have an undersupply of properties in 2021.
  • Latest ABS data reveals that total value of home lending seasonally adjusted increased by 4.9% over December compared to the previous month the third consecutive monthly increase.
  • All sectors reported rise in lending over December with owner-occupiers (excluding first home buyers) up 5.3%, first-home buyers up 6.2% and investors up by 2.8% over the month.
  • Compared to 2018 however, lending totals for 2019 remained lower, with overall owner-occupiers down 5.2% and investors still down 19.2% for a total annual lending decline of 9.2%.
  • Lending for first-home buyers, however, bucked the trend, increasing by 4.6% over 2019 compared to the previous year.
Rental property vacancy rates in selected cities in Australia in February 2020
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In February 2020, the Australian city of Sydney had a rental property vacancy rate of 2.9 percent. In contrast, Hobart’s rental property vacancy rate was estimated at 0.9 percent in the same month.

Residential housing market Australia - Statistics & Facts

The Australian residential housing market has transformed significantly compared to several decades ago, and for many people in the country, the home-ownership dream has become out of reach. When it comes to home ownership, Australia underwent a generational change, with economic constraints, changing lifestyles, and working choices affecting younger households in particular. Capital cities such as Sydney and Melbourne are at the top when it comes to property price growth. However, other major cities, such as Adelaide, Perth, and Brisbane, experienced falls in residential property prices in some instances. Comparing the house price to income ratio over the last few years, a fluctuation of about ten percent can be observed, making it very difficult for young Australians to make decisions about homeownership. Another issue concerning the Australian residential property market is the decrease in foreign investors. The boom in real estate sales to foreign investors fell to the lowest proportion in years. This might be owing to the introduction of higher state taxes on foreign investment, but also constraints in the investors’ home countries.

Capital controls in China limiting the ability of citizens to get their money out of the country, especially for property purchases, might be an explanation for the drop in Chinese demand. Considering the median house value in major Australian cities, it is not surprising that the number of house owners has steadily decreased. Nonetheless, the majority of Australian households still live in separate houses, followed by semi-detached or townhouses and similar dwellings. Rental costs have also risen over the last decade, intensifying the problem of affordable housing for young people further. In line with the rise in house prices, prices for land have also increased drastically. While the price per square meter of land in Sydney was around 560 Australian dollars in 2010, it surged to almost 1,300 Australian dollars in 2018. Sydney tops the list of land prices, followed by Melbourne and South East Queensland with land prices reaching 848 and 618 Australian dollars per square meter respectively.

Owing to the increase in property prices, housing finance in the country has become more important. The share of mortgage holders whose homes are worth less than or equal to the amount they owe has increased. Unsurprisingly, fewer Australians intend to take out a home loan, with housing finance growth just starting to begin to recover.

Median value of residential houses across Australia as of March 2019, by city
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Sydney had the highest median house value compared to other capital cities in Australia as of March 2019, with a value of around 880.6 thousand Australian dollars. Melbourne similarly had relatively high median residential housing values. The two cities have consistently topped pricing markets for real estate across the country.

How strong is the property market?

While there was an overall annual growth in residential house prices in the December quarter of 2019, the housing market was largely variable across different states and capital cities. In Melbourne and Sydney, the market has been robust for several years. However, this looks set to change in the coming months, with market uncertainty and declining consumer confidence beginning to develop, driven by the coronavirus pandemic. The prospect of an Australian recession has become more realistic and may lead to falling demand in housing. Supplementing this, face-to-face auctions were expected to drop drastically in numbers, with online auctioning becoming more prevalent. This will likely affect property auction clearance rates in all cities in 2020.

Buyers’ market?

In 2019, the combined number of new real estate listings in Australia’s capital cities was the lowest that it had been in 12 years. With even more buyer indecisiveness, the price of real estate may take a short-term hit. The impact of the ongoing pandemic has also seen a flood of short-term rentals in the long-term rental market. This may lead to a rise in rental vacancy rates in larger cities such as Sydney and Melbourne.

Annual growth in residential house prices in Australia from 2006 to 2019

According to the source, residential house prices across the capital cities in Australia grew by 2.5 percent between December 2018 and December 2019. Housing affordability in Australia remains a hot political topic with many prospective homebuyers feeling priced out of the market. In 2019, the median housing prices in Sydney were 8.2 times more than median household income, while in Melbourne this value was 6.7 times more.

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House price to rent ratio in Australia from 2nd quarter 2016 to 4th quarter 2019

In the fourth quarter of 2019, the house price-to-rent ratio in Australia was estimated at 109.2 percent. An indicator of how strong the property market is, the house price-to-rent ratio was calculated by dividing nominal house prices by rent price indices. After reaching a peak in 2017, the price-to-rent ratio had decreased each quarter until the third quarter of 2019. According to the source, rent prices have increased slightly, while house price indices have seen a decline leading to a decline in price-to-rent ratio.

Is Australia in a property bubble?

Many industry experts believe the country is in a property bubble – indicated by the rapid increase in Australian property market prices to the point that they are no longer relative to incomes and rents, followed by a decline. The house price-to-income ratio has also followed a similar trend, falling to 101.6 percent in the second quarter of 2019, before recovering towards the end of the year. When considering only capital cities, the number of new property listings has similarly declined and was at the lowest number in the year ended May 2019.

Housing Demand

Although many major cities have experienced a sharp decline in residential property prices in the past year, with Sydney and Melbourne hit the hardest, the rental market indicates the demand for housing is still variable across regions. The rental vacancy rate, which indicates how many properties are available for rent out of all the rental stock, was relatively high in Sydney. This is positive for tenants, as the already high rent prices will likely not increase as quickly with a lower vacancy rate.

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Factors that affect property value

The location of a property is the most obvious factor that affects how much a property is worth. Is it close to the city centre? Is it in a sought-after waterfront location? Is it close to public transport, shops, schools and restaurants? People generally want to live close to where they work and where they enjoy their free time, so properties in these areas will be more expensive. Then there’s also the fact that some suburbs simply have a better reputation than others due to factors such as unemployment or crime rates. Two homes just streets apart can differ substantially in value if they’re simply located in different postcodes.

Supply and demand

If demand exceeds supply in a given market, property prices will increase. This is because there are more people in the market for a smaller number of properties and the competition to secure a home drives prices up.

Interest rates

What is property value When the Reserve Bank changes monetary policy, this can affect the value of property. If the Reserve Bank raises the official cash rate and lenders around the country follow suit with their home loan interest rates, the average monthly mortgage repayment goes up. This has a huge impact on property affordability, so there’s less likely to be competition in the real estate market and prices will drop. Conversely, an interest rate cut means it’s more affordable to buy and property prices will increase.

Economic outlook

The overall performance of the economy can also have an impact on the property market. If the economy is experiencing strong growth, employment and labour conditions, more Australians can afford to purchase a property, which leads to rising property values.

Property market performance

The performance of the real estate market in your local area can also affect how much your property is worth. If there’s little demand for houses in the neighbourhood and the properties listed are selling for well below the asking price, expect values to fall.

Population and demographics

The more people who want to live in a particular suburb, the greater the demand for properties in that suburb. At the same time, the type of people living in the area will also influence property values. For example, if young families are the dominant demographic group in the area, multi-bedroom houses will be more sought-after than small apartments.

Size and facilities

The features and overall size of a property will also influence its worth. A four-bedroom house is likely to fetch more than a two-bedroom house in the same area, while features such as extra bathrooms, garages, swimming pools and outdoor entertaining areas can all have an impact on property value. In busy cities, the absence or abundance of parking opportunities is another critical factor, while the functionality of a home’s layout is always important.

Aesthetics

The street appeal of a property should never be underestimated. First impressions are very important in real estate, so the way a house looks from the outside can instantly add or subtract tens of thousands of dollars from its value.

Renovation potential

The potential for growth is important for both homebuyers and investors the potential to add an extra bedroom or extra storey, the potential to increase the floorspace, or the potential to add a pool or outdoor patio. If there’s scope for a buyer to improve and personalise a property through home renovation, the re-sale value of that property will increase.

Investment potential

The value of a property is also influenced by the potential it presents to investors. Factors such as the rental income an investor can expect from a property and the capital growth they will enjoy when they later sell the property all play their part.

Energy efficiency

A property made of high quality materials is likely to have a higher value, in part because this makes the property easier to heat and cool. Given the high price of electricity and gas bills, items like solar panels, insulation and double-glazed windows can add value and appeal.

Australia New homes listing index

Using 1st March 2020 as a baseline of 100, before social distancing was strictly enforced, the following chart shows the number of new properties listed for sale initially dropped, falling by almost 50%.

No surprise here.

Discretionary sellers were on strike waiting to see what’s going to happen to the markets. But since then, following the seasonal slump around Easter and Anzac Day the number of new properties listed for sale has been increasing, showing increased confidence among vendors.

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The following chart shows that Brisbane vendors seem to have more confidence in selling their properties then sellers in other states.

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However, this charge shows that Melbourne vendors are back in the market over the last week, listing their properties for sale

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As you can see from the following chart, at the beginning of the year, sale by auction was popular in Melbourne, but now with open auctions out of the question, sales by private treaty are the norm. And the Melbourne market hasn’t gone into hibernation. Clearly transactions are still occurring with the index higher than February 1st, but clearly not as high as at its peak at the end of February.

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Similarly, the Sydney property market has taken COVID-19 in its stride and he still very active.

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In the past asking prices have proven to be an accurate reflection of future sale prices, but give an indication of what’s happening in the current market, rather than having to wait 60 or 90 days for a property to be eventually sold and reported. Currently asking prices have had little movement, suggesting vendor confidence remains. However it will be interesting to see how this holds up as the coronavirus lockdown infects consumer confidence and our property markets.

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Influences On Property Market in Australia
1) Exchange Rates:

The metric is out of mind for most property enthusiast, but it is important because it has a significant impact on Australia’s export market. When the exchange rate is supportive of these industries, the economies of various locations across Australia perform well. Job creation is a precursor for property price growth.

2) Lifestyle:

What constitutes a good lifestyles is a very subjective thing, we all have different priorities and taste plates. But there is growing interest in a lifestyle change away from big city congestion, towards safer communities, and tree / sea change locations offering lifestyles that include culinary and wine experiences. Also, the 65+ year demographic now represents 3.6 million people and 8 out of 10 of this cohort have insufficient retirement investments again increasing the demand for a lifestyle change away from big expensive cities.

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3) Housing Affordability:

History shows us that when property prices in out two biggest capital cities have significant growth surge, many residents flee to more affordable locations. We also know that during periods of rising interest rates, potential for real estate price growth in Australia’s most expensive locations is curtailed. On the whole though, the so-called “housing affordability crises” is primarily a Sydney-centric thing. As this next graph proves, nearly 60 percent of all Australian suburbs are priced under $600,000.

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Housing affordability also has a significant on policy response from federal and state governments in respect to first homebuyer grants, stamp duties and other tax policies. The other thing that history has taught us is that locations with high median house prices are more volatile than affordable locations. The higher prices go the further they can fall, plus the impact on household budgets becomes more significant.

4) Consumer Confidence:

Confidence has a significant influence on property markets. Before one buys the property assets, they must first buy the dept. So, the masses to be prepared to buy more assets, they need to be feeling optimistic. Community mood is portrayed in lunchroom and weekend BBQ discussions, which then translates through to consumer attitudes towards transacting in property. Some examples of matters which can significantly impact consumer confidence levels include government elections, interest rate shifts (ups and downs), major projects and events that generate strong community engagement, global events such as war and economic threats and proposed tax changes. High levels of confidence over a sustained period of time is renowned for creating a fear of missing out mentality among real state buyers, thereby generating a wave of momentum and a property boom.

5) Wage Growth:

It’s no coincidence that Australia’s most prosperous real estate years at the beginning of this century also produced year after year wage growth of more than 3 percent. Even though home loan interest rates were between 7 and 9 percent back then, as mentioned earlier, property prices in several capital cities and dozens of regional locations more than doubles within just 5 or 6 years. Clearly, the ability to service debt is more important that the price of the dept.

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6) Key Industries:

No matter how big or small a town or city is, every location has one or two industry sector which are more critical to its own local economy. It’s akin to the backbone of a chosen city. The performance of the key industry/s has a major influence on the performance of its local property market.

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7) State Governments:

From the quality of their economic management, to investment in new infrastructure projects and property taxes such as stamp duty, land tax and first home buyer incentives, state governments have an enormous impact on property markets. Almost as important as the policies they make in the tone of their daily dialogue and what influence that has on the electorate’s level of confidence.

8) Construction Industry:

The construction industry is directly responsible for 1 out of every 10 jobs in Australia. From important new infrastructure projects like hospitals, education facilities, aged care, commercial buildings and retail complexes, the work of Australia’s construction industry shapes the future of our cities. The project that they build, are also laces with critical tax revenues for all three levels of government. In a nutshell, when the construction is strong, the economy is generally strong and property markets tend to follow in behind.

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