How Aussie homes are trumping rate rises

The home selling season is here and like the US election, expect the unexpected.

The home selling season is here and like the US election, expect the unexpected.

In his weekly column, John McGrath reveals what is likely to eventuate during the spring selling season.

The busy Spring season begins this week and selling conditions are favourable in most markets across the country.

Auction clearance rates look very healthy at above 70 per cent in Sydney and above 65 per cent in Melbourne and Brisbane in recent weeks.

The time it takes to sell a home is a median 28 days across the combined capital cities and 44 days in the regions. These are reasonable time frames that reflect healthy market activity.

Listing numbers increased during Winter, which is unusual. But the data suggests demand continued to exceed supply in most markets over the colder months. In the four weeks ending August 4, CoreLogic reported an increase in new listings nationally to a level that was 7.7 per cent above the five-year average.

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Spring is here at last. Picture: Supplied/Jellis Craig

However, total listings – which include new listings and older listings – were 15.9 per cent lower than the historical average. This indicates the market easily absorbed the extra Winter flow of new listings.

On the East Coast, it is clear that Brisbane and regional Queensland are the strongest property markets leading into Spring.

House prices rose by 3.4 per cent in Brisbane and 2.8 per cent in the state’s regions over the three months ending July 31, according to CoreLogic. South-East Queensland (and in particular, Brisbane, the Gold Coast and Sunshine Coast) remains very attractive to seachanging retirees, investors and Millennial families from Sydney and Melbourne. They are adding to already robust demand from local owner-occupiers and investors.

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The Sydney and regional NSW markets look well-balanced with 1.1 per cent and 0.3 per cent house price growth over the three months to July 31. Canberra is in a market recovery, with house prices up 1.1 per cent.

DIFFERENT STATE, DIFFERENT MARKETS

Buyer demand remains robust. Picture: Supplied/Jellis Craig

Things are different in the southern parts of the East Coast market.

Melbourne, Hobart, and regional Victoria are buyers’ markets at the moment. Supply remains higher than demand and there were house price declines over the three months to July 31. However, they weren’t dramatic at -1.2 per cent in Melbourne, -1.5 per cent in Hobart and -1.6 per cent in regional Victoria.

The supply/demand balance is the key driver of price movements across Australia’s cities and regions today. The areas doing well have tight supply and demand and vice versa in the softer markets.

Australian property has generally performed remarkably well this year despite higher interest rates. This has only happened because the number of homes for sale has been so low that it trumped the normal dampening effect of higher rates. Prices have continued to rise in the strongest markets this year, whilst there have been only moderate price falls in the softest markets.

As always, we will see an increase in listings this Spring, so this will test the market somewhat. On average, the supply increase in Spring is typically close to 20 per cent and sales typically lift by about 8 per cent, according to CoreLogic data.

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MARKET MOMENTUM FOR SPRING

Spring is a great time to sell. The market finds new momentum as buyers and sellers re-engage and feel more motivated to make decisions before the school break starts at the end of the year.

If you’re thinking of selling this Spring, choose your agent carefully and invest in a high-quality marketing campaign to maximise buyer enquiry and generate great competition for your home.

Even in weak markets, it is still possible to sell well if you get all the fundamentals of your selling campaign right.

That means putting an experienced and energetic agent in charge, getting the price guide right from day one (and advertising your guide in the states and territories where this is allowed), and ensuring your home is presented at its best.

* John McGrath is the founder, Managing Director and Chief Executive Officer of McGrath Estate Agents

Originally published as How Aussie homes are trumping rate rises