John McGrath – Autumn auction season to open strongly
The Autumn auction season kicks off this week and all indications are that we’ll see a strong start.
During the first week of auctions in January, we saw 70% of houses in the capital cities selling under the hammer, according to CoreLogic data. There were good results in key regional areas as well, including an 83% auction clearance rate on the Mornington Peninsula in Victoria, and 67% in Queensland’s Sunshine Coast region.
We consider 60% normal market conditions, so these results indicate ongoing market strength.
We saw more homes up for grabs in the first week of January auctions, with 448 going under the hammer in our capital cities compared to 244 this time last year.
This ongoing increase in supply will likely temper the rate of price growth in 2022, but I do think prices will hold at their current levels and increase further throughout the year in most markets.
This will be, in part, because of the impact of rising inflation in our economy this year. New inflation numbers just released by the Australian Bureau of Statistics show the Consumer Price Index (CPI) up 1.3% in the December 2021 quarter and 3.5% annually. The cost of goods or products is rising faster than the cost of services, and the December quarter increase is the highest we’ve seen since 2008.
As I said in last week’s column, traditional winners in a more inflationary environment are property and shares, so we are likely to see a lot of cash finding its way to blue chip investments.
Upgrading will be the dominant trend in property this year, with recent search data from realestate.com.au showing the highest growth rate of enquiry in the higher priced brackets.
Comparing December 2021 and December 2020, the proportion of buyers looking for homes above $1 million in our capital cities increased from 35.8% to 43.9%. In regional areas, it increased from 18.7% to 30%, according to REA.
The key motivators to upgrade and improve our at-home lifestyle include:
– Whilst some banks have increased loan rates recently, they are still historically low
– We’re still spending a lot of time at home due to Omicron cautiousness
– People have amassed significant savings during lockdowns, giving them more buying power
Upgrader demand is reflected in CoreLogic’s annual Best of the Best report, which reveals the suburbs with the highest price growth in both metro and regional locations during 2021. Many of them are either family neighbourhoods or aspirational lifestyle suburbs.
Here are the East Coast suburbs with the greatest house price growth in 2021.
- Kurnell 54.5% (Median price $1,945,529)
- South Turramurra 52.5% ($2,657,828)
- Gordon 46.5% ($3,783,598)
- Gerringong, Illawarra 56.4% (Median price $1,681,227)
- Kiama Heights, Illawarra 52.8% ($1,790,480)
- Shoalhaven Heads, Southern Highlands and Shoalhaven 52.7% ($1,187,458)
- St Andrews Beach, Mornington Peninsula 58.6% (Median price $1,473,279)
- Fingal, Mornington Peninsula 47.1% ($1,707,356)
- Sorrento, Mornington Peninsula 45.1% ($2,257,794)
- Mount Beauty, Hume 50.1% (Median price $521,494)
- Myrtleford, Hume 47.1% ($529,486)
- Tawonga, South Hume 44.7% ($607,727)
- Indooroopilly 41.8% (Median price $1,386,937)
- Newmarket 40.5% ($1,314,552)
- Teneriffe 40.5% ($2,379,902)
- Mermaid Beach, Gold Coast 51.7% (Median price $2,223,546)
- Miami, Gold Coast 49.8% ($1,415,291)
- Mermaid Waters, Gold Coast 46.3% ($1,570,911)
- Watson 39.7% (Median price $1,293,269)
- Palmerston 36.4% ($1,116,808)
- Holder 36.2% ($976,661)
- Lewisham 35.7% (Median price $720,299)
- Midway Point 35.2% ($644,620)
- Carlton 34.8% ($632,282)
- Campbell Town, Launceston and North-East 50.5% (Median price $319,898)
- Orford, South-East 46.2% ($541,489)
- Beaconsfield, Launceston and North-East 43.7% ($401,122)
Source: Best of the Best 2021, CoreLogic
You’ll note that Tasmania is included in my list for the first time this year, as we have just opened our first McGrath office on the Apple Isle in Launceston. I look forward to welcoming more Tassie readers to this column soon!