House Growth Rate Fastest Since 1989
Quarterly Market Update with Leigh Martinuzzi
Property prices rose a further 1.5% nationally in September resulting in a quarterly growth across Australia of 4.8%. This takes the annual home price index to a whopping 17.6% since January 2021 and 20.3% over the last 12 months. According to CoreLogic, this is the fastest pace of growth since the year ending 1989. It appears the regional areas are still outperforming the capital cities as people seek lifestyle and space. Regional growth in the past quarter has risen 5.1% compared to capital cities rise of 4.7% and annually 23.1% and 19.5% respectively.
“Buyer demand is through the roof, fuelling the price surge – up 50% year on year.”
The simple reason why property prices have gone through the roof is due to unprecedented buyer demand and the Australian housing supply simply cannot keep up. Currently, the sales to new listing ratio is 1.4 meaning for every dwelling listed for sale 1.4 transactions are taking place. This is well above the decade average of 0.9. Multiple factors contribute to the surge in house sales and include the following: low mortgage rates, incentives for first home buyers, and a savings windfall.
Currently, the RBA’s cash rate remains at a record low of 0.10%. With a struggling GDP, the RBA has suggested that they are unlikely to change this until 2024 at the earliest. This means low mortgage rates for homeowners and buyers will remain. A preferred finance broker on the Sunshine coast has said the current best variable lending rate is 2.24% with a fixed rate of 1.99%. This means for a mortgage amount of $650,000 (Palmwoods average price) weekly loan repayments would be $572 variable or $553 fixed. Considering the current average prices for rentals buying a home would be a more preferred option by many. On the Sunshine Coast, the average asking rental fee is currently $630 per week for a 4-bedroom house.
“The RBA has left the cash rate at a record low of 0.10% since November 2020 and suggests it will likely remain that way until at least 2024.”
At the start of 2020, we saw the introduction of first home buyer incentives which stimulated a huge surge in demand. Some of these have now ended resulting in fewer first home buyers in the market, however, this is likely more to do with affordability than available incentives. With annual property price increases on the Sunshine Coast up by approximately 25% in 2021 mortgage repayments increase and a larger home loan deposit is required. Other costs like stamp duty also increase. While property demand and buyer interest are high, actual enquiries have reduced as many would-be purchasers are knocked out of the market. We’ve seen increasing buyer interest and offers from our southern states while many locals have had to broaden their search further afield in search of more affordable options.
Since the beginning of the pandemic, Australians have been said to have saved more than $200 billion. Previously we Aussie’s spend above $60 billion alone on international travel which has clearly been put to a halt and so our wallets have become fatter. Many companies and individuals also received government incentives to help assist during the pandemic and many of us also choose to take advantage of the mortgage holidays offered by the banks. On top of that, with the spike in property prices, the housing market in Australia is now worth a said 9 trillion dollars, more than half the Australian household net worth. With property debt at around 2 trillion dollars, it is fair to say that there is a huge amount of housing credit for those that own property available to tap into.
“Positive conditions remain however growth has softened since the peak in March.”
In March we saw the largest growth rate at 2.8% however since then property prices have slowly eased. Nationally, total property listings for sale are 28% below the five-year average however we have recently seen a spike in new listings hitting the market as we enter Spring, up 22.6% on this time last year. Overall, the housing trends remain positive however early signs have many experts and major banks predicting a very softening market in 2022. Affordability, tighter lending/credit conditions, re-opening of our borders with a change in consumer spending, and a likelihood that more properties will become available to purchase, the forecast for property price growth in 2022 is expected to be around 5% to 7%.
Have we seen the top of the market? For the next several months we expect it to remain very much a seller’s market however property prices may now be at or near their peak with perhaps little more growth to occur. Like other regional areas, the Sunshine Coast has seen figures above the national average with greater buyer demand, higher sales turnover, less availability, more significant price increases and quicker turnover. As we continue to attract interstate buyers looking for quality lifestyle options, the Sunshine Coast remains in a good position for the foreseeable future.
Quarterly Market Update and Palmwoods Snapshot Stats
PALMWOODS SNAPSHOT STATS
House Value Increase (2021) = 25%+
Median House Price = $650,000
Average Weekly Rent = $570pw
Average Days on Market = 35
Properties for sale = 35
Total sales year to date = 127
Total Listings Down = – 2900 (Sunshine Coast)
Buyer Demand Up = +56% (year-on-year)
Queensland Property Value Increase (2021) = 22.2%
Queensland Forecast 16%+
MPG STATISTICS 2021
Median Sold Price = $747,000
Average Days on Market = 12 days
Total Properties Sold = 29
Palmwoods #1 Agent 2020 & 2021 (RMA)
NATIONAL STATISTICS
Annual House Value Increase = 20.3% (annual)
September Quarter Increase = 4.8%
Dwelling Sales Increase = 41.9% (year-on-year)
Average Time on The Market = 35 days
Total Listings Down = -28.1% (5-year average)
New Listings Up = +15.7% (year-on-year)
Buyer Demand Up = +50%
Combined Capital Cities = 22.9%
Combined Regional areas = 28.6%
Auction Clearance rates combined = 80.5%
LENDING RATES AND REPAYMENTS
Australia’s current cash rate = 0.10%
Best lending rate = 2.24% variable 1.99% fixed
Average loan repayments = $572.60.00 *
Average loan repayments = $553.68.00 **
