98d4fd3e-2b8d-46ad-bac6-7dbcdd10c34d

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The stronger-than-expected <a href="https://theurbandeveloper.com/articles/house-prices-make-biggest-jump-in-4-years">rebound</a> in house prices has caused economists across the country to reassess forecasts as the nation’s two largest cities lead “phenomenal” growth in housing demand.</p><p>The Commonwealth Bank latest dwelling price outlook doubles its previous forecast of a 3 per cent lift in 2020 to 6.1 per cent over Australia’s eight capital cities.</p><p>House <a href="https://theurbandeveloper.com/tags/House%20prices">prices</a> made their <a href="https://theurbandeveloper.com/articles/house-prices-make-biggest-jump-in-4-years">largest monthly gain </a>in more than four years in October, increasing 1.2 per cent and lifting national prices 2.9 per cent from their June floor.</p><p>CBA senior economist Gareth Aird said that the bank’s original price targets have been achieved much sooner than expected. </p><p>“Auction clearance rates are high, the flow of credit has picked up markedly and both house price expectations and home buyer intentions have spiked,” Aird said. </p><p>Clearance rates, a good forward-looking indicator on house prices, recorded the second busiest week of the year and are now tracking well above a year ago. More than 2500 homes were taken to auction over the weekend, with a clearance rate of 74.1 per cent.</p><p>“Over the past four months the key indicators of momentum that we monitor have all strengthened,” Aird said.</p><p>“Our base case for property prices in Sydney and Melbourne has them rising by 7 per cent and 8 per cent respectively over 2020.</p><p>“For Brisbane and Perth, we see prices rising more modestly. </p><p>“Nationally, we think prices will rise by 6 per cent.”</p><p>Related: <a href="https://theurbandeveloper.com/articles/-property-prices-forecast-to-rise-in-2020">House Prices Set to Rise 7 to 11pc in 2020: SQM</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th>Year</th><th>% annual change to October 2020 (forecast)</th><th>% annual change to Dec 2019 (forecast)</th><th>% annual change to Oct 2019 (actual)</th></tr></thead><tbody><tr><th>8 Capital Cities</th><th>6.1</th><th>2.1</th><th>-2.4</th></tr><tr><th>Sydney</th><th>7.0</th><th>3.8</th><th>-2.5</th></tr><tr><th>Melbourne</th><th>8.0</th><th>4.0</th><th>-1.0</th></tr><tr><th>Brisbane</th><th>4.0</th><th>0.8</th><th>-1.3</th></tr><tr><th>Adelaide</th><th>3.0</th><th>-0.7</th><th>-0.9</th></tr><tr><th>Perth</th><th>2.5</th><th>-6.6</th><th>-8.7</th></tr><tr><th>Hobart</th><th>3.0</th><th>2.4</th><th>2.6</th></tr><tr><th>Darwin</th><th>0.0</th><th>-8.1</th><th>-9.2</th></tr><tr><th>Canberra</th><th>4.0</th><th>2.9</th><th>2.0</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Housing shortage will ‘manifest itself’ </strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>The continued decline in housing construction—with falling<a href="https://theurbandeveloper.com/articles/apartment-approvals-jump-16pc-in-september-"> approvals</a> pointing to further declines in activity ahead—will drag on jobs and growth in the near term.</p><p>While strong population growth rate of 1.6 per cent over the third quarter will trigger a “larger price response” in house prices.</p><p>Aird said that the decline in residential construction is taking place at a time when the excess of supply is small.</p><p>“This means it won’t be long until the excess supply has been eroded,” Aird said.</p><p>“Our estimates point to an undersupply of housing from late-2020.</p><p>“This should put downward pressure on vacancy rates and upward pressure on rents and dwelling prices.” </p><p>The latest RBA minutes <a href="https://theurbandeveloper.com/articles/housing-shortfall-will-kick-start-price-growth-rba">published on Tuesday</a> indicate that the central bank considers a larger-than-expected contraction in housing construction a near-term downside risk to the economy.</p></div></div></div></div></div>

The stronger-than-expected  rebound  in house prices has caused economists across the country to reassess forecasts...

4f56faca-2967-40c1-8305-6e4773e6199a

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Sydney auctions returned the strongest results in about two years over the weekend, recording a preliminary clearance rate of 81.5 per cent — a marked improvement from 55.2 per cent a year earlier.</p><p>While final clearance figures will likely be revised lower and volumes remain soft, the trend toward higher clearance rates has continued this week, with 901 homes taken to auction across the nation reaching a 70.6 per cent preliminary clearance rate. </p><p>Buyer appetite in Melbourne also picked up, reaching its highest point in almost two years to return a preliminary clearance rate above 70 per cent. </p><p>The strong results support a growing consensus that the big east coast property markets are reaching <a href="https://theurbandeveloper.com/articles/australias-residential-market-approaching-bottom-bis-">bottom</a> and showing signs of <a href="https://theurbandeveloper.com/articles/suburbs-with-the-strongest-auction-results-for-the-quarter">stabilising</a> after two years of sharp declines. </p><p>Brisbane posted a preliminary clearance rate of 45.7 per cent from 80 auctions, while Adelaide recorded 20 cleared results from 55 auctions. Volumes remained low in Perth, with just 2 auction results from 12 scheduled auctions. </p><p>Related: <a href="https://theurbandeveloper.com/articles/regulators-positive-about-housing-market-recovery-">Regulators Positive About Housing Market Recovery</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><h2><strong>Capital city auction results </strong></h2></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><table><thead><tr><th></th><th>Clearance rate</th><th>Total auctions</th><th>Results</th><th>Cleared</th><th>Uncleared</th></tr></thead><tbody><tr><th>Sydney</th><th>81.5%</th><th>303</th><th>216</th><th>176</th><th>40</th></tr><tr><th>Melbourne</th><th>70%</th><th>416</th><th>327</th><th>229</th><th>98</th></tr><tr><th>Brisbane</th><th>45.7%</th><th>80</th><th>46</th><th>21</th><th>25</th></tr><tr><th>Adelaide</th><th>58.8%</th><th>55</th><th>34</th><th>20</th><th>14</th></tr><tr><th>Perth</th><th>50%</th><th>12</th><th>2</th><th>1</th><th>1</th></tr><tr><th>Tasmania</th><th>N/A</th><th>5</th><th>2</th><th>2</th><th>0</th></tr><tr><th>Canberra</th><th>60%</th><th>30</th><th>25</th><th>15</th><th>10</th></tr></tbody></table></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><sup><sub>^ Preliminary results. Source: Corelogic.</sub></sup></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>While APRA’s <a href="https://theurbandeveloper.com/articles/apra-relaxes-home-lending-rules">loosening</a> of serviceability requirements and rate cuts has improved access to credit, a tighter regulatory regime will keep prices constrained. </p><p>“While the outlook definitely looks more positive, ANZ research does not expect a v-shaped recovery for prices,” ANZ economist Felicity Emmett said.</p><p>“[Our] view for some time has been that tightening in credit has been the major driver of weakness and changes to the use of household expenditure measure (HEM) and the introduction of comprehensive credit reporting will offset some of the impact.”</p><p>Emmett said that the change in sentiment has shifted from pervasive negativity to cautious optimism.</p><p>“Falling interest rates and easing credit requirements have helped to shift sentiment.</p><p>“In June, prices rose in Melbourne for the first time in 16 months while prices in Sydney were flat after nearly two years of declines.” </p><p>Economic forecaster BIS Oxford Economics now <a href="https://theurbandeveloper.com/articles/australias-residential-market-approaching-bottom-bis-">expects</a> Sydney house prices to grow by 6 per cent over the next three years and 7 per cent in Melbourne. </p></div></div></div></div></div>

Buyer appetite is picking up, with another week of strong auction results supporting a growing consensus that the big east coast property markets...  

House Prices Surge 500 per cent

<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Australian housing prices have grown by more than 500 per cent during the past 25 years.</p><p>According to data from REIA, capital values have lifted from $160,000 in 1996 to $825,000 in 2020.</p><p>Housing prices spiked by 25 per cent in the past five years, from a median of $683,000 to $825,000, while other dwellings rose by 10 per cent to $600,000.</p><p>During the 25 years, Australian housing yields tightened from 5.1 per cent to 2.9 per cent while other dwellings recorded a drop in yields from 5.2 per cent to 3.7 per cent.</p><p>Houses in Darwin had the highest return, averaging 4.2 per cent, while Melbourne and Sydney had the lowest yields, both falling from around 4 per cent in 1996 to just 1.8 per cent in 2020.</p><p>House prices now look on track to <a href="https://theurbandeveloper.com/articles/buyer-fomo-drives-housing-surge">surge</a> again as buyers take advantage of <a href="https://theurbandeveloper.com/articles/rba-cuts-interest-rate">record low-interest rates</a>, <a href="https://theurbandeveloper.com/articles/experts-eye-end-of-homebuilder">low levels of immigration</a>, government programs and utilise money saved during the coronavirus recession.</p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/511a18ff-e942-4b57-ac18-06f5b4a21ccc.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Across the combined capital cities, 874 homes were taken to auction over the weekend making it the busiest Easter on record.</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The signs already look good for a strong price rally in 2021 after the east coast-dominated residential market finished 2020 strongly, with more buyers entering the market as listings remained low.</p><p>Across the December quarter, the weighted average capital city median price increased by 6 per cent to $825,205 for houses and 0.9 per cent for other dwellings. </p><p>Owner-occupiers have driven the boom with new loans up 80 per cent since May, although investor activity is starting to grow with a 9.4 per cent increase in January, the strongest monthly result since September 2016.</p><p>“Despite rising vacancies and the low yields, we are starting to see investors re-emerge as they respond to a rising market with further growth expectations and low borrowing costs,” REIA president Adrian Kelly said.</p><p>ANZ economists expect <a href="https://theurbandeveloper.com/articles/sydney-housing-market-update">Sydney</a> and Perth house prices to jump 19 per cent across 2021, with prices in Hobart expected to lift by 18 per cent, <a href="https://theurbandeveloper.com/articles/melbourne-housing-market-update">Melbourne</a> and <a href="https://theurbandeveloper.com/articles/brisbane-housing-market-update">Brisbane</a> 16 per cent and Adelaide 13 per cent.</p><p>Westpac also upgraded its forecasts for the next two years, tipping <a href="https://theurbandeveloper.com/articles/westpac-forecasts-20pc-property-gains">10 per cent gains this year and next year.</a></p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><div><picture><img src="https://tud-prod-tudmedia-oj9w2zshuo0o.s3.amazonaws.com/raw/images/bfeed326-b240-4edd-8c2f-73ec8b775ad2.jpg" width="800"/></picture><div><span style="align-content:center;opacity:0.8">▲ Home values continue to rise on the back of ultra-low interest rates, stimulus and the nation&#x27;s adept handling of pandemic. Image: Alamy</span></div></div></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><br>The RBA said it will keep the cash rate at 0.1 per cent until 2024, despite the bank’s own research finding a permanent cut to rates of one percentage point could push house prices up 30 per cent over three years.</p><p>The RBA has said it will only lift interest rates when inflation is sustainably within the 2-3 per cent band.</p><p>No action has been taken by regulators who say high lending standards continue to be maintained, however prices and loan activity will continue to be under scrutiny.</p><p>The last time house prices nationally lifted so much was in the late 1980s in a property boom that was ended by double-digit interest rates and the 1990-91 recession.</p><p>SQM Research managing director Louis Christopher said recent price increases had not been supported by the fundamental dynamics of supply and demand, but low interest rates.</p><p>AMP chief economist Shane Oliver said recent prices increases in the face of low immigration suggested that an impending oversupply could be on the horizon.</p><p>“Without immigrants coming in, the underlying demand will be running below supply which will lead to rebalancing,” Oliver said.</p><p>“[This] massive pandemic inspired demand for houses [has also been] helped along by HomeBuilder which ends this month,” Oliver said.</p></div></div></div></div></div>

Australian housing prices have grown by more than 500 per cent over the past 25 years...

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<div class="row" data-reactroot=""><div class="cell cs12 cx12"><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p>Australia’s <a href="https://theurbandeveloper.com/articles/how-will-coronavirus-affect-property-prices">housing market</a> is inevitably being impacted by social distancing measures and the market’s weaker confidence due to the coronavirus pandemic, with preliminary clearance rates taking a hit this week, falling to 61.3 per cent across its combined capital cities.</p><p>Despite the escalating health crisis and <a href="https://theurbandeveloper.com/articles/coronavirus-delays-federal-budget-15bn-loans-to-businesses">related economic fallout</a>, the weekend experienced the second busiest for auction activity to date this year. Figures show 2,539 homes were taken to auction across Australia’s combined capital cities.</p><p>The preliminary auction clearance rate of 61.3 per cent is up on a year ago when home values were falling, but the impact of Covid-19 has begun to be felt. </p><p>Corelogic described this week’s preliminary auction results as “marking a turning point in buyer and seller sentiment”, with withdrawal rates rising and vendors thinking twice about testing the market as buyers lose confidence or choose to avoid public gatherings.			</p><p>Corelogic says it’s likely that the preliminary auction clearance rate of 61.3 per cent will revise down to below 60 per cent for the first time since mid-2019 as remaining results are collected.</p><p>In comparison, the previous week saw 2,274 homes taken to auction returning a preliminary auction clearance rate of 70.6 per cent, before revising down to a final clearance rate of 65.3 per cent.		</p><p>To date, Corelogic says there is no evidence of “reduced housing values”, although notes that it is clear, transactional activity will be temporarily disrupted in the coming weeks and months. </p><p>“The extent of this disruption depends on how long it takes to contain the virus and for sentiment to recover,” the data house notes. </p><h2><sub><strong>Housing values</strong></sub><strong> </strong></h2><p>Speaking on the housing market, AMP economist Shane Oliver said that if the recession should last more than six months – with unemployment up to 10 per cent or more, house prices could collapse by up to 20 per cent in a worst case scenario.</p><p>While social distancing is likely to delay property transactions, Oliver said AMP’s base case is for a rise in unemployment to around 7.5 per cent. </p><p>“This is likely to drive a 5 per cent or so dip in prices ahead of a property market recovery into next year as the economy bounces back and pent up demand is unleashed again helped by ultra-low interest rates,” Oliver said. </p><p>On Friday, the federal budget was postponed until October, as Scott Morrison outlined that the pandemic is likely to remain<a href="https://theurbandeveloper.com/articles/coronavirus-delays-federal-budget-15bn-loans-to-businesses"> a problem for at least six months</a>. </p><p>Morrison&#x27;s<a href="https://theurbandeveloper.com/articles/coronavirus-delays-federal-budget-15bn-loans-to-businesses"> $66 billion stimulus package</a>, announced Sunday, dwarves the<a href="https://theurbandeveloper.com/articles/coronavirus-stimulus-package-development-construction-industry"> initial $17.5 billion economic stimulus package</a> announced eleven days ago, in a bid to “cushion the economy” as Australia goes into social shut down. </p><p>The measures follow the <a href="https://theurbandeveloper.com/articles/coronavirus-forces-unprecedented-rate-cut">Reserve Bank of Australia’s emergency cash rate cut to 0.25 per cent</a> last week.</p><h2><sub><strong>Rent relief model during Covid-19 </strong></sub></h2><p>Canberra has also announced that both commercial and residential tenants struggling to pay rent, would receive assistance as part of the coronavirus stimulus package.</p><p>“To ensure that in hardship conditions, there would be relief that would be available, and ensuring that tenancy legislation is protecting those tenants over the next six months at least,” Morrison said on Friday. </p><p>“Everyone does have that role to play, and that will include landlords for people who are enduring real hardship.” </p><p>Morrison said that this work will be done by states and territories. </p><p>“And that work will be led by Western Australia, together with New South Wales, working with all other states and territories, to bring back some model to be applied in hardship cases.” </p></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><hr/></div></div></div><div class="row ci"><div class="cell cs12 cx12"><div class="ci cl"><p><em>Coronavirus update note: </em><a href="https://theurbandeveloper.com/articles/shopping-malls-stay-open-auctions-banned-"><em>Auctions and open house inspections are now banned, under latest restrictions</em></a><em> following national cabinet’s meeting on Tuesday night. </em></p></div></div></div></div></div>

Australia’s housing market is inevitably being impacted by the social distancing measures and the market’s weaker confidence from the coronavirus.

AUCTION CLEARANCE RATES