The volume of home sales across Australia is up 32 percent compared to last year.
Over the 12 months to the end of June 2009 the number of homes sold across Australia increased by 32 percent, jumping from 98,500 in June quarter last year to 130,000 in the most recent June quarter. Despite the clear improvement in market activity, sales volumes remain lower than the heights achieved during 2007 and are well below the ‘boom’ levels of 2001 to 2003 when quarterly volumes averaged about 150,000 sales each quarter.
Activity in the Australian real estate market bottomed during the September quarter last year and has recorded consistent improvements since this time. Thanks to historically low interest rates, a first home buyer stimulus package and improving economic figures, buyers have been given renewed confidence in market conditions.
Amongst Australia’s capital cities, the most significant improvement in residential sales volumes has been recorded in Perth where home sales are up 60 percent compared to last year. The Perth market is coming from a low base; in June last year Perth sales volumes were almost 70 percent lower than the five year average and values had declined more than any capital city. The future is looking brighter for Perth with the resources sector once again picking up and a modest degree of capital growth returning to the market.
Sydney has recorded the second highest improvement in home sales volumes over the last year with volumes up by 38 percent compared to the same time last year. Over the June quarter there were approximately 27,000 home sales across the broader Sydney market, 9,600 more sales than when the market bottomed in the March quarter last year.
Brisbane volumes are up 35 percent, Hobart sales are up 34 percent, Darwin sales are up 32 percent and Melbourne sales are up 30 percent.
At the other end of the spectrum, Adelaide volumes have not seen as dramatic an improvement over the year. Home sales are up by just 9 percent over the 12 months to June. Adelaide appears to have taken a longer time to recover; the June quarter saw sales volumes lift by almost 20 percent as the Adelaide market falls into line with movements in the other capital cities.
On a price basis the proportion of house sales at the most affordable end of the spectrum (under $300,000) are drying up, partly as a result of bracket creep (houses prices under $300,000 are becoming a rarity in the larger capital cities) and partly as a result of more buyers becoming active in the middle of the market.
Most buyers in the capital city markets are purchasing homes priced between $300,000 to $400,000. This market segment has remained relatively stable over the last four years, accounting for approximately 25 percent of all sales.
The proportion of top end house sales declined over the last year with house sales priced at $1 million and over accounting for 7 percent of all sales. Sydney accounts for just over half of these top end sales.
The price bracket that has seen the largest movement in demand has been houses priced between $400,000 and $500,000 - a price range that is likely to capture the broadest mix of buyers, from first home buyers to investors and upgraders. The proportion of sales in this price bracket has increased from 17 percent of all sales to 21 percent of all sales.
The latest housing finance commitments data from the Australian Bureau of Statistics shows the volume of home loans declined over July as first home buyer loan numbers declined. However, non first home buyer loan volumes actually increased over the month, highlighting the trend of first home buyer demand declining and ‘upgraders’ becoming more active. In all likelihood market volumes will increase over the next quarter before falling away during the festive season. Sales volumes are likely to stabilise around historical averages during the first half of 2010 as interest rate rises dampen demand and the level of government stimulus winds down.
