It’s no secret that as Aussies, we love bricks and mortar. At present our housing market is experiencing soaring prices far and wide, leading to one Australia’s fastest post-recession recoveries in history.
According to CoreLogic’s research director, Tim Lawless, “The last time we saw a sustained period where every capital city and the rest of the state region was rising in value was mid-2009 through to early 2010.” The Australian housing market has now recorded the fastest rise in property values in 17 years. CoreLogic is calling this a “broad-based boom” and declaring that dwelling values surged 2.1 percent in February resulting in the largest month-on-month change recorded since August 2003.
A number of factors are influencing this broad-based boom including record low mortgage rates, attractive government grants and concessions, demand is exceeding the low level of supply, a ban on international holidays and the fear of missing out (FOMO).
Auction activity is frantic and clearance rates have climbed sharply, including in Perth, Adelaide and Brisbane where auctions are not usually favoured. At the end of the first week in March, CoreLogic recorded Sydney’s auction clearance rate as 86.7 per cent, up from 75.2 per cent in the same week last year. Melbourne 80.9 percent from 66.1 percent, Perth 81.8 percent up from 44.1 percent, Adelaide 81.7 percent from 56.5 percent and Brisbane 82.3 percent from 45.2 percent.
In part due to covid restrictions, record numbers of prospective purchasers are virtually viewing homes and making multi-million dollar offers before setting foot on the property. According to a recent survey by the Real Estate Buyers Agents Association (REBAA) and Property Talk Australia (PTA), 30 per cent of buyers said they would buy without physically inspecting a property. Cate Bakos, REBAA president said, “It’s alarming to think that people are basing the biggest financial investment decision they’re likely to make in a lifetime on a video and a few photographs that may or may not be showcasing the property’s flaws.”
Demand is outstripping the supply of properties for sale and is driving the shortage of homes available. Add to this, overall property prices are rising so fast that some properties are being flipped (on-sold) in relatively small time periods, like six months, for substantial profit.
As housing prices continue to rise, Australians will begin to feel wealthier and start to spend more which in turn improves earnings, profits and investment which subsequently leads to higher wages and inflation. All signs of a strongly recovering Australian economy in a globally challenging time.