Residz Team 2 min read
Australian home owners have had a record run over the pandemic, but giant price rise leaps are probably at an end, according to a recent CoreLogic report. “Australia’s housing market may be nearing a peak value,” says CoreLogic’s head of research Eliza Owen on the findings of the Pain & Gain report.
“Higher average mortgage rates, rising advertised stock levels and affordability constraints are already seeing values slip across Sydney and Melbourne and the impact of interest rate tightening may also affect profitability for more recent buyers,” she said.
Many sellers are now asking Should I sell at auction? Preliminary data from CoreLogic shows the number of successful auctions across the combined capital cities has fallen to under 70% and Sydney’s auction clearance rate at just 58.9%. This means almost half the homes offered at auction are failing to sell in the harbour city. At the same time last year the clearance rate was 81.4%
Melbourne’s auction clearance rate is around 65%, down from 74% at the same time last year. Brisbane was even lower at around 63% (74% last year), but Adelaide auctions are performing better than last year (an 81% clearance rate compared with 77% in 2021). The relative affordability of Adelaide is no doubt a factor in its strong performance.
Homeowners in poorer performing areas will be wishing they owned property in Geelong in Victoria or on the Queensland Sunshine Coast. Resales in these popular two areas rewarded their owners with the highest proportion of profitability of all the coastal regions in Australia. 99.5% of homes in these areas achieved a gain in profit when resold, shows the Pain & Gain report.
Looking at the Residz investability score for each region, Geelong comes in at 53 out of 100 - above the state average score of 44. Noosaville on the Sunshine Coast has an even higher investability score of 78 out of 100, above the state average score of 66. Coastal living is high on many buyers’ wish lists but it’s not without risk.
Hobart was the capital city with the highest incidence of profit-making sales in the December quarter at 98.3% followed closely by Canberra (98.2%), according to CoreLogic. Darwin was the least profitable city, with the rate of loss-making sales through the December quarter sitting at 26.9%. That’s better than it was a year ago, though, when almost half the homes in Darwin sold at a loss.
There were also plenty more “us and them” statistics from the Pain & Gain report.
“Investors had a lower incidence of profitability (91.4%) than owner occupier sellers (96.7%).” said Eliza Owen. This will be down to houses performing better than units, the mainstay for investors. As well, regional Australia saw nominal gains for 94% of sales, compared with 93.7% of capital cities. Competition from regional migrants no doubt accounts for the higher prices being paid for regional property.
As always, time in the market was a factor in realising a profit. CoreLogic found that, nationally, the median hold period for profit-making resales was 9.2 years. Properties held for more than 30 years had the highest total median return of $770,000. Properties held for two years or less (ie. those who bought and sold in the anxiety-inducing bidding wars during the boom) had the highest nominal gain per year of $150,500.
Image: Melbourne CBD by Nazareth College