John McGrath - Spring Market Confidence Defies Pandemic

John McGrath - Spring Market Confidence Defies Pandemic

Regional Hotspots Attracting Remote Workers
John McGrath
19/10/2020 | 3 MIN READ

We are seeing renewed confidence in the market this Spring, with consistently healthy national weekend clearance rates of 60-65%, more new listings coming online, higher sales volumes compared to Spring last year and price growth in six out of eight capital cities in September, says McGrath Estate Agents founder and executive director John McGrath.



Owner occupiers are leading the charge, with many families enthusiastically looking to upgrade their homes and first home buyer activity also very strong.

 

We saw evidence of this in the latest housing finance data from the Australian Bureau of Statistics.

 

A record $16.3 billion in new home loans for owner occupiers was written in August, the highest value in the history of the 18-year series. It was a record for monthly growth, too at 13.6%. July was also big with $14.3 billion in new loans written and strong monthly growth of 10.7%.

 

Improving buyer sentiment also comes on the back of record low interest rates, with speculation that the RBA might cut the official cash rate to just 0.1% next month. RBA data shows the average variable rate on new P&I loans for owner occupiers is 2.64% and 2.3% fixed for three years or less.

 

The market is likely to receive a boost from the Federal Government’s proposal to relax ‘responsible lending obligations’ introduced in 2009. A switch in legal liability means lenders will be able to rely on the information borrowers give them, meaning less scrutiny of your Netflix and Uber Eats usage!

 

In short, the change should make the process of getting a loan faster and easier. They’re doing this to ensure strong credit flow for investment to help lift the economy out of recession.

 

In Victoria, the ban on physical inspections of homes for sale in Melbourne has finally been lifted.

 

After seven weeks on pause, the city’s property market is back up and running with an immediate surge in stock for sale in the first week of October. Despite everything Melbourne has been through, home values are down only -5.5% since March.

 

In September, CoreLogic data shows Sydney home values fell -0.3%, which was the lowest capital loss recorded since the pandemic began. Median days on market in Sydney is now 36, almost a full week’s improvement on Spring last year. All of this reflects a pick-up in the market.

 

Melbourne prices fell -0.9% in September but this data means nothing given the industry was barely operational during lockdown. Brisbane home values increased 0.5%, Adelaide 0.8%, Perth 0.2%, Hobart 0.4%, Canberra 0.4% and Darwin 1.6%. Compared to Spring last year, it’s taking less time to sell in every capital city except Hobart.

 

Across regional areas, there was growth in home values in every state and territory except Western Australia (-0.3%) and the Northern Territory (-1.4%) in September.

 

Regional Victoria was steady but there was a 1.5% gain in regional South Australia, an 0.8% lift in regional Tasmania and an 0.5% increase in regional NSW and regional Queensland.

 

It’s taking less time to sell in regional NSW and Victoria today compared to Spring last year because COVID-19 has brought urgency to the market. More people from Sydney and Melbourne are looking to depart because they can now work from home and enjoy a better lifestyle on a much lower home mortgage in the regions.

 

The median days on market for regional NSW is currently 57, which is two weeks faster than in Spring 2019. In regional Victoria, it’s 43 days now compared to 49 last year.

 

Nationally, the number of sales in the first month of Spring was higher than the number of new listings coming to market.

 

This means tight supply is ongoing and we’re seeing a bit of FOMO coming back as a result. Spring buyers are realising that they need to be ready to compete when the right home comes up.  

 

The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters. 

 

This article originally appeared in The Real Estate Conversation (October 19, 2020)

 

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