October Property Market Update
National Dwelling Values Continue to Recuperate
Australian dwelling values have finally made it into the green with a 0.4% rise this October. The tale between regional and metro housing values remains unchanged, with overall regional performance outshining metro areas. The only declines recorded this October came from metro Melbourne (-0.2%) and regional South Australia (-0.5%). (Lawless, 2020).
RBA Cash Rate Cut Set to Further Stimulate Demand
As of 25 October, Realestate.com.au’s Weekly Property Demand Index* was 34.7% higher than it was a year ago. More specifically, the index revealed demand for houses and units were 35.1% and 33% higher than they were this time last year, respectively. (Kusher, 2020)
Since the Reserve Bank of Australia (RBA) announced a cash rate cut to an all-time low of 0.10%, demand is expected to further increase as borrowing becomes even more affordable for hopeful homeowners. (McLean, 2020)
With end of year holidays around the corner, this data indicates November is an excellent time to list your property on the market and sell in time for a stress-free Christmas.
Property Owners Prompted to Consider Rental Price
Over the 12 weeks leading to 25 October 2020, Realestate.com.au’s Weekly Rental Demand Index^ had steadily declined, meaning tenants were less engaged with rental listings than they once were. That said, the index was still 27% higher than it was in October 2019, which indicates renters are still active on the market. (Kusher, 2020)
The effects of COVID-19 have been rough for renters. The severity of impact differs depending on where COVID has hit the hardest. For example, Queensland has fared better than Melbourne, and regional areas are outperforming their metro counterparts. According to a study conducted by the Australian Housing and Urban Research Institute (AHURI), 60% of renters are currently experiencing financial distress or anticipate they will in the coming months. (Bell, 2020)
Since demand from tenants is still relatively strong, adjusting your asking price to match current market conditions could be the key to successfully securing rental income.
Current Market Trends
Melbourne’s Come Back Story
Melbourne’s real estate market has sprung back into action after Victoria’s second wave restrictions eased in September. In fact, New Listing volumes jumped 330% in the four weeks leading to 18th October. While this statistic sounds impressive, there are a few thoughts to consider. (Owen, 2020)
One area of concern is whether this increase in listing volume is fuelled by distressed listings because of heightened unemployment rates and households unable to afford their mortgages. However, while there are sure to be distressed listings in this mix of listings, early data from our property portals indicate this boost is likely a market rebound because Melbourne vendors have been greeted with fierce pent up buyer demand.
Tree Change Sea Change & Job Markets
The pandemic has influenced a shift to regional areas for buyers and renters alike. Before COVID-19, suburbs just outside of metro areas were already seeing an increase in demand. However, the effects of COVID-19 have accelerated demand in these areas and opened the gateway for the deeper regional suburbs. (Conisbee, 2020)
Job creation is one of the reasons regional Australia has seen a recent boom – for example, a surge in Australia’s mining industry. The pandemic has crippled other countries’ ability to maintain sufficient production levels, which has created an opportunity for Australia to fill the gap. Given current unemployment rates, wherever job opportunities are created, demand will likely follow.
Lifestyle change is another main reason for which regional areas have performed well. Many people are now accustomed to the work-from-home (WFH) lifestyle, which has weakened the necessity to live close to CBDs. After experiencing COVID-induced lockdowns some people have realised they want a less congested lifestyle, opting for tree or sea change.
While regional demand is currently a strong trend, experts are unclear on how this will play out in the long-term as Australia finds its sense of normality.
Wrapping it up
October has proven that Australia’s real estate market is on the road to recovery. With housing prices on the rise and demand holding strong, you can be confident now is an excellent time list your property on the market.
If you have questions about the process of selling privately, call our Private Property Specialists today on 1300 289 697. We're always happy to help.
- * Weekly Property Demand: Number of high-intent buy listing interactions on realestate.com.au indexed against a long-term cumulative average. *LTA calculated as cumulative average since Jan 2017 (Kusher, 2020)
- ^ Weekly Rental Demand: Number of high-intent rental listing interactions on realestate.com.au indexed against a long-term cumulative average. *LTA calculated as cumulative average since Jan 2017 (Kusher,2020)
- Bell, M. (2020, November 12). Over half of Aussie tenants are expected to struggle to afford their rent as a result of COVID-19. Retrieved November 13, 2020, from https://www.realestate.com.au/news/over-half-of-australians-are-struggling-to-afford-their-rent-as-a-result-of-covid19/
- Conisbee, N. (2020, November 05). REA Insights Regional Australia Report 2020. Retrieved November 04, 2020, from https://www.realestate.com.au/insights/rea-insights-regional-australia-report-2020/
- Kusher, C. (2020, October 28). October 28 REA Insights Weekly Property Demand Report, 2020. Retrieved November 4, 2020, from https://www.realestate.com.au/insights/october-28-rea-insights-weekly-property-demand-report-2020/
- Kusher, C. (2020, October 28). October 28 REA Insights Weekly Rental Demand Report, 2020. Retrieved November 4, 2020, from https://www.realestate.com.au/insights/october-28-rea-insights-weekly-rental-demand-report-2020/
- Lawless, T. (2020, November 02). CoreLogic October home value indices: Australian housing values move into recovery mode. Retrieved November 04, 2020, from https://www.corelogic.com.au/news/corelogic-october-home-value-indices
- McLean, S. (2020, November 03). RBA Makes Cup Day Rate Cut As Economy Bounces Back. Retrieved November 05, 2020, from https://www.realestate.com.au/news/rba-makes-cup-day-rate-cut-as-economy-bounces-back/
- Owen, E. (2020, October 22). New listings soar across Melbourne, overtaking Sydney as restrictions ease. Retrieved November 13, 2020, from https://www.corelogic.com.au/news/new-listings-soar-across-melbourne-overtaking-sydney-restrictions-ease