Australian homes are selling faster than ever as the property market enters what is expected to be an unseasonably active winter season, according to new analysis from realestate.com.au.
The latest REA Insights Housing Market Indicators Report shows the typical property listed on realestate.com.au in May had been on the site for just 32 days, compared to 37 days in April and 62 days in May 2020.
In releasing the report on Wednesday, realestate.com.au economist Anne Flaherty said the 32-day national average was a historic low, highlighting strong selling conditions across Australia currently.
“We’re seeing properties fly off the site faster than we’ve ever seen,” Ms Flaherty said.
“That average takes into account every area across the states [and territories]. If we think about regional areas, they tend to sell properties much slower there, so the fact that on average we’ve come down to 32 days, that’s quite remarkable.”
Ms Flaherty said strong buyer demand, fuelled by record-low interest rates, is exceeding the supply of properties for sale, leading to stiff buyer competition and speedy sales.
“In order to compete, buyers are putting in offers sooner than they did in the past.”
In May, all states and territories recorded a drop in the average number of days a property was listed on realestate.com.au compared to a year ago. Queensland and Western Australia experienced an increase over the month, while days on site were at historic lows in NSW, Victoria, South Australia and the ACT.
Ms Flaherty said she expected properties to keep selling at record speed over the winter months, with demand remaining strong and housing supply dropping even lower.
“Generally in winter, we often see things cool off slightly, but we’re still continuing to see strong demand. Even though search volumes have decreased slightly over recent months, they’re still high relative to historic levels,” she said.
“On the other hand, winter is a less popular time for people to sell their properties and often they’ll hold off until spring, which could mean a decrease in supply of properties for sale [during winter]. But even with slightly fewer buyers in the market, a decrease in supply of properties for them to buy means properties will continue to sell very quickly,” Ms Flaherty explained.
The report shows weekly sales volumes remain well above the levels recorded in 2020 and 2019. Sales volumes were up 75% last week compared to the same week in 2020, despite easing from their pre-Easter highs.
“We’re now at the point where lockdowns have well and truly affected sales last year and this is highlighted by how much stronger cumulative preliminary sales are so far this year compared to last year,” Ms Flaherty said.
“Transaction activity is expected to remain elevated, but we do expect some seasonal slowing over the coming weeks, and of course Melbourne’s lockdown could affect things depending on how long it drags out. Either way, [sales] volumes are still expected to remain elevated.
“I expect prices will continue to rise over winter, however, with slightly reduced demand, stimulus removed from the market, and rises in longer-term fixed rate mortgage rates, prices are likely to rise at a much slower pace.”
First-home buyers expected to pull back as investors return
Search activity on realestate.com.au has been trending lower over recent weeks, but is still 17.9% higher than it was at the same time last year, according to the report.
Demand based on views per listing increased nationally by 7.7% over May to be 53.5% higher than at the same time last year and just 2.8% shy of its historic peak in March 2021. The number of views per listing was at an all-time high in South Australia, Tasmania and the Northern Territory in May.
“Search volumes on realestate.com.au have dropped slightly but a softening supply may help to sustain above average views per listing in a winter market that will remain unseasonably active,” Ms Flaherty said.
The report shows email enquiries from all buyers to agents through realestate.com.au jumped in May after three consecutive monthly falls. Even more surprisingly, enquiry from first-home buyers increased by 12.4% over the month, despite the end of HomeBuilder stimulus.
By comparison to May 2020, enquiry from first-home buyers was 21.8% lower, keeping in mind that HomeBuilder was not introduced until June 2020.
“We would expect the volume of enquiry from first-home buyers to normalise following the winding down of HomeBuilder,” Ms Flaherty said.
However, she said first-home buyer activity will likely wane in the coming months, as these buyers tend to prefer a slower-moving market.
“The fact that HomeBuilder has ended and the market is moving so quickly, this might be off-putting to some prospective first-home buyers,” she explained.
Ms Flaherty added low interest rates will continue to drive first-home buyer activity, but those already in the market will be at an advantage.
“With prices rising, the biggest barrier to entry for first-home buyers is getting that deposit together. Even though some government initiatives help first-home buyers to get past that deposit hurdle, there’s not enough available for the number of first-home buyers,” she explained.
“On the other hand, if you’re someone who already has a property, you can use the existing equity in your property in place of a deposit, and with interest rates so low it means purchasing an additional property is going to become more affordable for some people.”
Email enquiry from investors jumped 7.2% over May to be 49.9% higher year-on-year, signalling the return of investors to market after the height of the pandemic.
“Investor enquiry is increasing, and we are seeing them return to the market, driven by the low cost of debt and expected capital growth,” Ms Flaherty said.
“We continue to expect that demand from first-home buyers will wane over the coming months while investor enquiry will continue to climb due to low borrowing costs, attractive yields and the potential for capital growth.”
More buyers searching in the $1m-plus range
For the first time in May, there were more than twice as many searches on realestate.com.au for properties priced above $1 million than there were under $500,000, according to the report.
Nationally, 38.1% of filtered price searches were for properties listed in excess of $1 million compared to just 16.0% for properties listed for less than $500,000.
“The rise in the share of searches over $1 million has come at the expense of searches below $500,000,” Ms Flaherty said.
“The main drivers of more expensive searches remains increased household saving and low borrowing costs. However, with stimulus being removed, longer-term fixed rate mortgage costs rising and affordability deteriorating, the trend towards more expensive searches may slow over the coming months.”
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