After robust sales in 2009, competition is waning and buyer selectivity is increasing in Australia’s real estate market. The strong fundamentals of Australia’s economy should help insulate its property market from a price crash, though, especially with population growth outpacing new housing supply. See the following article from Property Wire for more on this.
Property sales rates in major cities in Australia appear to be weakening as buyers become more selective, it is claimed.
Residential real estate sales are significantly lower than the same time last year with the latest figures from Australian Property Monitors indicating they have fallen in Sydney, Melbourne, Brisbane and Adelaide.
In 2009 Sydney auctions cleared 70.5% of homes and Melbourne’s clearance rate was a healthy 78% but they are now down to 49.8% and 55.6% respectively, the figures show.
In Brisbane they are 47.1% compared with 51.9% last year and in Adelaide, which had a clearance rate of 57% last year rates have now fallen to 47.6%.
National property consultant Damian Kininmonth, from Preston Rowe Paterson, attributed the steady decline in clearance rates across the country’s major markets to buyers being more selective and taking their time to make a purchase.
‘Obviously there were large volumes being transacted earlier in the year and people were really keen to get into the market. But with the rising of interest rates, people are becoming more selective with their properties, so we are actually starting to see the gap widen between good properties and what are just also ran properties,’ he explained.
‘The good properties are still doing very well, but the also rans are not as sought after because people are happy to wait for another property to come along the next week,’ he added.
Catherine Cashmore of JPP Buyer Advocates said there are fewer competing against fewer bidders and paying more realistic prices. ‘Now instead of seeing five, six or seven bidders in a crazy auction there are often just two or three,’ she added. It could also be due to the seasonal winter slowdown, she said.
According to Enzo Raimondo of the Real Estate Institute of Victoria the residential real estate market is much more balanced with purchasers less likely to be confronted with homes selling for unexpected prices.
Meanwhile, MacQuarie Bank has dismissed analysts’ predictions of a plunge in real estate prices over the next 12 months but still expects them to soften. In its general economic outlook report it says that a combination of rapid population growth, strong labor market conditions and sustainable debt suggests the Australian housing market is built on solid foundations.
It said there were several reasons to believe the outlook for house prices was not as dire as many analysts predicted. ‘The most obvious starting point in addressing the sustainability of house price growth in Australia is the structural supply and demand imbalance. Essentially, there are not enough new houses being built to accommodate a rapidly growing population,’ the report says.
It said while 150,000 houses had been built each year since 2005, the population had grown by more than 350,000 a year. ‘This is a 50% increase in the pace of population growth, but no change in the rate of new dwelling construction,’ it added.
Despite home shortage being a key factor in driving up house prices in recent years, price spirals had been kept in check by worsening affordability and rising debt levels and very low mortgage arrears rates implied Australian households had coped well with current debt levels, Macquarie said.
This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.