RP Data’s measure of pre-listings activity, the Market Activity Index, fell again this week suggesting that with interest rate rises persisting we may start to see a slowdown in real estate listing activity. Over the early part of 2010, pre-listing activity has been at record high levels but the impact of five 25 basis point interest rate increases a slowdown may be imminent.
Industry Market Wrap
Housing finance data released this week by the Australian Bureau of Statistics showed further weakness during February. It is now reasonable to conclude that the impact of recent interest rate rises is being reflected in declining home loan volumes. The number of owner occupier housing loans fell by -1.8% for the month, their fifth consecutive fall and they are down -16.1% over the year. Commitments for the construction of new dwellings have fallen by -3.1% over the month, their fourth consecutive fall. Finance for the purchase of new dwellings increased slightly (0.7%) but is down -11.5% for the year. Both construction and purchase of new dwellings are extremely important as they add to the housing supply and this slump in commitments add further concerns to the ongoing undersupply of housing. Looking at the total value of housing finance commitments, owner occupiers accounted for $14.1 billion worth of commitments which was down from $14.7 billion the previous month. Commitments from investors also eased slightly from $6.5 billion to $6.4 billion. Investor finance commitments now account for 31.2% of the total value of housing finance commitments which is the highest level since September 2008.
The data on first home buyers shows that they are rapidly becoming a smaller proportion of the market. First home buyers now account for 18.1% of all owner occupiers down from 26.8% in February last year. The average first home buyer loan size has also fallen from $290,100 in December 2008 to $282,100 currently.
Advertised Stock on the Market
Almost 52,000 newly advertised properties were listed for sale during the last four weeks however, the number has fallen sharply from its level last week. Total listings have also fallen to less than 205,000 after recording more than 214,000 listings last week.
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Latest National Auction Clearance Rates
Auction clearance rates rebounded strongly last week after they eased during the Easter long weekend. The weighted average clearance rate across the capital cities last week was 73%. The nation's two largest Auction markets recorded healthy clearance rates of 85% in Melbourne and 74% in Sydney.
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Number of Properties Advertised for Rent
The number of new rental listings was higher over the last month than it was the previous month. The ACT was the only state or territory which recorded fewer new listings this month compared with last month. Total rental listings are now slightly lower than they were during the previous month and this trend is replicated throughout each state and territory.
So where is the affordable housing?
There were 19,417 house and unit sales priced at or over one million dollars last year, 21 per cent lower than what was recorded in 2007.
Australia’s premium property markets have had a wild ride over the last three years. In 2007 as most of Australia’s property markets were recording strong gains, the most expensive 20 per cent of Australia’s suburbs increased in value by 19.8 per cent whilst the broader housing market recorded a much lower gain of 13.7 per cent.
The following year, as the GFC started to bite, values across this same set of premium suburbs fell by 7.4 per cent compared with a 2.5 per cent fall in all home values.
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An office and warehouse unit in Salisbury Plain, South Australia, has been sold with vacant possession by agents of Colliers International.
Unit 2 at 53 Stanbel Road, Salisbury Plain, was completed in late 2009 and is understood to have received a good level of enquiry throughout the marketing campaign.
Colliers International industrial manager, Justin Fried, brokered the sale of the 500 sqm unit for $600,000 to Queensland business Sullivans Australia, which who operates the “Sullivans Windoware” business in South Australia.
“The quality of the development has attracted interest largely from the owner occupier market wanting to escape the rental cycle and invest in real property themselves,” said Mr Fried.
“There is a real demand for high quality “prime” industrial facilities in the north and this precinct has really been lacking in supply.”
“The fact that this development was completed during a relatively challenging period nationally just points to the strength behind this demand.”
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Blog: Falling housing finance commitments hint that capital gains are likely to moderate over the coming months
The value of housing loan commitments taken out in February fell by 3.4 percent over the month in seasonally adjusted terms; the fifth consecutive monthly decline in home lending and the largest monthly fall since May 2008.
Investor finance has remained much more resilient. The value of investor loan commitments fell by just 1.1 percent; the first month-on-month fall since interest rates started to rise. Investors now account for just over 31 percent of the value of all housing loans, up from a recent proportional low of just 24 percent early last year. Over the last decade investors as a proportion of the broader marketplace have averaged at about 32 percent.
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