The strong level of pre-listing activity across the real estate market has continued again during the most recent week with the Market Activity Index eclipsing its previous record high during the previous week. The level of pre-listing activity indicates that vendors are extremely confident about the health of the real estate market and is likely to result in a greater number of new listings nationally during the coming weeks.
Industry Market Wrap
The Reserve Bank of Australia released the minutes of its February 2010 Board Meeting this week, providing an insight into the rationale behind leaving the cash rate unchanged earlier this month. The minutes of the meeting highlighted the significant amount of positive economic data received during the preceding months. Given that there had been three consecutive cash rate increases in the late part of 2009, monetary conditions were deemed to no longer be “exceptionally accommodative” although it was determined that interest rates were still “somewhat below average.” The Board did not regard that the outlook required an increase at every meeting, and the removal of government stimulus afforded the Board the flexibility to wait for more information on how the Australian economy responds to the three successive interest rate rises at the end of 2010. As a result there was no change to the cash rate however, should the positive economic news continue we would expect interest rates to increase in the not too distant future.
Pre-listing activity continued to ramp up (as it has been since mid January) and as a result new listings to the market have increased during each of the last four weeks, a trend which we expect to continue given the high level of pre-listing activity. New listings are currently greater in each state and territory than they were at the same time last year with the Northern Territory the only exception. Nationally, new listings are up 37% on the levels from the same time last year. Despite the fact that new listings are recording strong week-on-week growth total listings are 2.5% lower than at the same time last year. This result indicates that there is a strong level of sales activity with properties being advertised for sale being absorbed at a very rapid pace.
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Auction markets are continuing to see activity levels grow with more than 1,000 capital city auctions held last week, The weighted clearance rate across the combined markets jumped from 59% to almost 67%. The nation’s two largest auction markets each recorded healthy clearance rates of 75% in Melbourne and 70% in Sydney with both recording an increase in clearance rates compared to the previous week’s results. Despite increasing volumes and clearance rates, both remain below levels recorded during late 2009.
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Data detailing the number of properties advertised for rent during the last month shows that the number of new and total rental listings remain well above levels from one month ago.
The facts about first home buyers
First home buyers were an extremely important element in the property market recovery during 2009. This week we look at exactly what impact first home buyers had on the market in 2009 and how their gradual slowdown in demand may affect the market in 2010.
During 2009, 191,000 first home buyers took the opportunity to become home owners across Australia. It’s no real surprise that first home buyers were so active during 2009 given that the Government was offering the First Home Owners Grant Boost, interest rates were at almost 50 year lows, some State Government’s were offering additional incentives such as low or no stamp duty on more affordable property purchases and properties had become more affordable during 2008 thanks to a fall in values. The volume of first home buyers during 2009 represented the highest annual volume of buyers on record and saw a 55% increase on first home buyer activity compared to the previous year.
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The Reserve Bank Board minutes that relate to their meeting in the first week of February make an interesting read if you like to keep up to date on the economic state of play. The minutes provide a relatively easy to digest synopsis of the factors that are deliberated by the Reserve Bank Board as they decided whether official interest rates should move up, down or sideways.
Of particular interest is how the Reserve board views the housing market. The Reserve is paying more attention to the private property index providers (including the RP Data – Rismark indices) than the ABS data these days, quoting gains in the residential market of between 10 and 12 percent over the last year (the RP Data – Rismark Hedonic Home Value Indices were reporting a gain of 11.1 percent across the nation’s capital cities).
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