- The sales to new listings ratio remains at around 1.1, so stock levles are falling
- Demand outstrips supply, despite fresh listings recording above the five-year average
- Price performance between capitals and regional areas has narrowed
Government incentives and easy monetary policy intensified the heat in the housing market once again last month, with CoreLogic’s national home value index recording a 2.2% rise.
Of the 334 sub-regions analysed, 97% recorded a lift in housing values over the past three months. Such a synchronised upswing is rare across Australia’s diverse array of housing markets.
The strong performance of regional areas across Australia has declined, with price increases narrowing substantially between the capital and regional areas. For the second time in three months, growth conditions in capital city home values outpaced regional markets by 0.3%.
The annual growth rate is generally higher across the smaller capitals. Darwin broke a remarkable 20% annual growth barrier in May, as well as regional New South Wales and regional Tasmania.
Meanwhile, regional Western Australia recorded the weakest growth rate where values were flat. Inevitably, the extended lockdown in Melbourne has created a significant drag on the annual rate of growth.
Demand remains high relative to advertised supply. However, fresh listings added to the housing market have picked up over the recent months, with the number of new listings tracking 15% above the five-year average.
More demand than fresh stock
The sales to new listings ratio remains at around 1.1. This means that for every new listing there is more than one sale occurring. Over in WA, the number is 0.98, which partially explains why the property market is not going quite so gangbusters in the West.
Despite fresh listings coming onto the Australian property market, demand is rising faster so advertised inventory levels are getting lower. This is reflected in auction clearance rates, which have held in the mid-to-high 70% range through May.
It is clear that Australia is still very much undergoing a housing boom. The reduction in Federal Government fiscal support seems to have had little to no impact on housing demand.
CoreLogic is expecting housing values to continue rising throughout this year and next year, albeit at a gradually slower pace.
APRA – the prudential regulator – may very well impose lending restrictions as affordability constraints continue rising and if investor speculation continues an upward trend. The Reserve Bank of Australia (RBA) is also watching lending standards every closely, ready to raise the alarm on any sign that would warrant tighter lending rules.
As reported earlier today, investors are starting to return to the housing market, while first home buyer demand is pulling back.
Over the medium term, CoreLogic predicts housing supply will increase together with the demand. The impact of closed international borders will be another factor that may hold back soaring house prices.
