Housing FOMO reigns as agents contradict data suggesting Australia’s property market has peaked
Although new data suggests Australia’s red hot property market might be showing signs of cooling, experts and agents on the street say there’s an explanation why that is far from the truth.
Although new data suggests the red hot property market might be showing signs of cooling, agents on the street beg to differ.
Australian dwelling values were up 1.8 per cent in April according to CoreLogic’s national home value index, down from a 32-year high of 2.8 per cent rise for the month of March.
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CoreLogic’s research director, Tim Lawless noted seven signs that could indicate a peak in national dwelling values; citing lower clearance rates — which moved through a recent high during the last week of March at 83.1 per cent to reach 78.6 per cent for April.
He also highlighted a rise in vendor activity promoting a lift in new listings; a significant rise in new constructions; negative population growth due to closed borders; less government incentives since HomeBuilder finished all as reasons to why growth could be slowing.
However, Archistar chief economist Dr Andrew Wilson said there could be one simple reason why April appeared, on paper at least, to be cooler than March.
“Record home auction market activity reported by all capitals over March has predictably eased, with buyers and sellers distracted by the lengthy April holidays encompassing Easter, school holidays and ANZAC Day,” he said.
“April holiday distractions typically impact house price results with a lower proportion of higher priced homes offered for auction over the month,” he added.
Despite the statistics showing a slower pace, market activity in Australia’s three biggest capitals in May so far demonstrates there is still a heightened level of FOMO among buyers hoping to secure their post-pandemic dream home.
Sydney sentiment is on a high
Sydney moved from a whopping 3.7 per cent dwelling value increase for the month of March to a 2.4 per cent rise during April, according to CoreLogic figures. This easing in price growth for the Harbour City could have a simple explanation, said selling agent Jaqui Wansey of Atlas Lower North Shore.
“I think any slow down in the market is really just due to the school holidays in April. A lot of agents don’t want to put their properties on the market then because they anticipate people will be going away,” she said.
There were no signs of a go slow on Saturday May 1, when one of Ms Wansey’s listings sold for $1.75 million over the set reserve. The contemporary five-bedroom home in Neutral Bay attracted 12 registered bidders and the hammer fell at $7.25 million.
Interest for the near new home with a pool was so high during the campaign that the auction was brought forward by one week.
“We’d gathered a lot of interest and were seeing a sense of fear of missing out, especially with buyer’s agents getting involved and pushing to buy the property before auction. With that in mind, we weren’t encouraging offers and wanted to run the auction process through. So that’s why we decided to bring it forward a week,” she said, adding that there had been no softening of interest in luxury family homes.
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“All our strongest sales of late have gone more than $1 million over their reserves. One thing they all have had is that broad mass appeal to families. Without people being able to travel as much, they’re looking for those lifestyle attributes like study space, a pool, all those things that make a retreat at home without having to go away,” she said.
Buyers pay a premium in Melbourne
While Melbourne experienced a 2.4 per cent jump in values for March, a month later CoreLogic clocked growth to be at a more modest 1.3 per cent for April. Lifestyle properties, however, are still attracting cashed-up buyers who will to go above and beyond the asking price.
Tom Kurtschenko of Jellis Craig Eltham auctioned a four-bedroom home on half a hectare at the weekend and saw the eventual sale price sail past the reserve.
“A lot of the comparables we’d looked at prior to the auction suggested that it was a sub-$2.5 million property, but we just had two bidders who really went toe to toe bidding $100,000 lots all the way to the end,” he said.
The home ultimately sold for $3.3 million — $800,000 above the reserve.
“You can’t say it’s not still a hot market. I’ve been selling for 14 years and that’s probably the one result where I could put my hand on my heart and say I had no idea it would get to where it got to,” he said.
Mr Kurtschenko said while there might be a few less buyers around, prices were still on the way up.
“Based on the results we’re seeing I wouldn’t call a slow down yet. In the actual street you’re not having 10 buyers lining up at an auction, you’ve got two or three. That’s still good because you can have a really great auction with just two or three,” he said.
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Bidders are still active in Brisbane
Brisbane recorded a 2.4 per cent increase in dwelling values for the month of March, but by April the city’s growth had slowed to 1.7 per cent.
Buyers in the River City however were still keen to fight it out on the auction block last weekend, with one house in Morningside selling for $1.3105 million – more than double its August 2019 sale price.
Listing agent Tony O’Doherty of Belle Property Bulimba said he didn’t think the data painted the same picture as what he was seeing in the market.
“There’s no sign of the market cooling just yet, that’s for sure. We’ve had about eight auctions over the past couple of weeks and all of have them have been a great success,” he said.
The recently renovated home on Ernest St, Morningside had last sold for $640,000 less than two years ago, but was hotly contested under the hammer on May 1.
“That sale shows a very good market with 10 registered bidders. Now nine of them still have to find a home,” Mr O’Doherty said.
He added that if there was a case for slower price growth in the Brisbane market, it was that March stock levels had been substantially lower than April.
“So if they’re seeing that the growth has eased it might be that turnover has increased. But having said that, I haven’t seen anything to suggest a cooling market, I’m not seeing anything other than positivity to be honest.”
32 Holdsworth St, Neutral Bay
https://www.realestate.com.au/property-house-nsw-neutral+bay-136005234
39 Ernest Street, Morningside
https://www.realestate.com.au/sold/property-house-qld-morningside-135992338
37 Lavender Park Rd, Eltham
https://www.realestate.com.au/property/37-lavender-park-rd-eltham-vic-3095
Originally published as Housing FOMO reigns as agents contradict data suggesting Australia’s property market has peaked
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