Citing a 15% increase in valuation events and a 20% increase in the gross value of sales, Tim Lawless from RP Data said that the housing markets are relatively healthy at this point in time.
Dwelling values have been rising since June 2012 and are now 16.1% higher over the current cycle of growth. Our market is very cyclical, and is currently in a growth phase… but is that growth sustainable? Clearance rates are starting to taper off across the board.
While growth trend is strong, previous cycles have recorded substantially higher capital gains
Most of the growth is coming from Sydney and Melbourne, with less than 10% growth coming from other capital cities. With renewed capital growth, every capital city has seen equity improvements over the past two years. Loss making sales are becoming less frequent.
Melbourne is showing excessive growth right now, and alarm bells are going off about whether this will erode rental yield. Brisbane affordability is steadily becoming a compelling force in the market.
Lifestyle markets are showing improvements; bouncing back after a long slump. Cairns prices have been improving, the Gold Cost is coming back to a level of health and in Byron Bay prices and volumes are starting to rise. But regional resource driven markets are slumping.
There is a substantial pick up in buyer demand but total sales remain well below previous peaks. We’re also seeing more building confidence and transaction volumes growing. With transactions and values rising, the gross commission pie has reached record levels.
Rental markets remain relatively subdued compared with capital gains resulting in lower rental yields. Vendor metrics remain strong but have recently levelled, with private treaty events accounting for 60% of all sales.
First home buyers remain on the sidelines while investor and upgrader activity surges. Investors represent close to 40% of the market now. Concentrations of investor activity are becoming apparent in Melbourne and Sydney unit markets
Mortgage brokers out-perform on conversion, capturing a higher share of settlements than new loan applications.
Tim suggested that interest rates probably won’t rise until mid-next year, given that inflation and unemployment are under control for now.