As millions of Australians remain in lockdown across our major cities, it seems that virtual house hunting has helped keep some sane.
Search activity on realestate.com.au jumped 2.4 per cent last week according to the property portal’s REA Insights Housing Market Indicators Report.
“With more people locked down across the country, it has led to an increase in online property searches and email inquiry to real estate agents with physical inspections on hold.
We’ve seen a big jump in email inquiry from investors, which is now at levels last seen in early 2019,” said REA group director of economic research and the report’s author, Cameron Kusher.
The recent jump in search activity for the week ending August 8 was the first rise in four weeks and the largest increase in 17 weeks.
Mr Kusher added that even though property prices are rising nationwide and buyer demand remains strong, the return of lockdowns in the most populous cities has had a “moderate dampening effect” on the key metrics studied in the report such as search activity, email inquiry, views per listing and property days on site.
“All indicators point to stronger housing market conditions than a year ago, however, they also suggest demand for property will not be as strong as it was earlier this year,” Mr Kusher explained, adding that the slowdown could also be partially attributed to the fact that the property market tends to hibernate for the winter.
With the spring selling season just weeks away, he suggested that these coming months would be a “litmus test” for the housing market, depending on how long restrictions remain in place.
“Typically, demand and supply ramps up in spring and it will be interesting to see whether the market strength returns to levels seen earlier this year,” he says.
“As we move closer to spring and lockdowns continue in NSW and Victoria, we expect search volumes to remain at heightened levels.”
According to the report there was a 7.2 per cent national increase in email inquiry to real estate agents for properties for sale in July. Buyer inquiry about houses was up 7.3 per cent, units 7.2 per cent and vacant land increased by 6.3 per cent.
With robust price growth nationally, it appears that potential buyers are now accepting that a million dollar price tag is becoming the new normal. The REA report revealed that there had been an increase in the number of price-filtered searches for properties listed at $1 million or more.
“Throughout the combined capital cities, more than three times as many filtered price searches were for properties listed for at least $1 million (42.5 per cent) than those less than $500,000 (13.5 per cent) in July 2021,” Mr Kusher wrote.
Just one year earlier, REA data showed that the difference between the number of searches over $1 million and under $500,000 was 36.2 per cent to 16.8 per cent.
This willingness of more Australians to accept high purchase prices revealed in REA’s Insights Report comes on the same day as nationwide real estate agency and property research firm PRD unveiled its Australian Economic and Property Report 2021.
PRD’s chief economist, Dr Diaswati Mardiasmo, said that the property market had “changed in leaps and bounds” due to multiple factors within the industry, society, and government policy.
“Housing finance commitment is at an all-time high at $32.6 billion as of May 2021. Australians are in higher debt by 1.1 per cent for first-home buyers and 2.6 per cent for others. Historical low home loan mortgage rates have kept the home loan affordability index and proportion of family income devoted to meeting average loan repayments on an equal footing,” she said.
“No doubt we are seeing a different property market compared to 12 months ago. At present, local Australian buyers are still sheltered from the usual international demand as our borders remain closed. Now is the most affordable and advantageous time for first home buyers, especially as many banks and lenders are signalling an increase in their interest rates”, Dr Mardiasmo said.
The PRD analysis included a Time to Buy a Dwelling Index, which suggested many Australians were starting to feel the sting of rising property prices with sentiment declining by 5.5 per cent in the 12 months to June.
Dr Mardiasmo explained that the index increased from June 2020 once general Covid-19 restrictions were eased, with many Australians reallocating their funds towards the property market. She said sentiment reached its peak in December 2020 as the government introduced more housing grants and employment levels started to recover.
“However, with the increase in demand, imbalances by supply, and the increase in prices, it seems Australians are rethinking their decision,” she said.