An increase in the number of properties for sale to moderate buyer demand according to new REA Insights Housing Market Indicators Report.
About this report
This monthly report combines eight key metrics to provide an up-to-date view of the property market and emerging trends. The report analyses consumer behaviour in real time by extracting property market insights from the 12 million Australians who visit realestate.com.au each month.
Key metrics include search activity, email enquiry, views per listing, weekly sales of properties listed for sale on realestate.com.au, days on site of properties sold, filtered searches by price and by bedroom, and developer enquiry.
While the Australian housing market remains undoubtedly strong, there are some signs that some of the heat has come out of the market.
Many of the metrics remain at elevated levels compared to a year ago, albeit they have eased back from their recent historic highs.
While low borrowing costs remain a strong lure for buyers in this market, an increasing number of buyers have now purchased, incentives have been removed from the market and price increases mean that housing has become less affordable.
We don’t expect the market to come to a grinding halt, prices are expected to keep rising but we expect that the second half of this year will not see the market quite as strong as it has been over the first half.
In this report
- Total search volume
- Email enquiry by property type
- Email enquiry by enquirer type
- Average views per listing
- Number of properties sold
- Average days on site
- Searches by maximum price
- Searches by minimum number of bedrooms
- Developer enquiries
The volume of visitors to the realestate.com.au website searching for properties for sale has increased by 46.3% relative to a year ago. This trend is also replicated throughout each state and territory as the charts show.
Weekly for sale search volumes have trended lower over recent weeks and are currently -8.4% below their historic high. Search volumes are lower across all states and territories. As sales volumes have lifted over recent times, we have seen a moderation in searches albeit they remain historically high.
Houses remain the dominant source of email enquiry
The volume of email enquiry to residential real estate agents fell for the third successive month in April 2021. While the volume of enquiry continues to fall, enquiries for houses remain dominant (62.7%) compared to units (26.7%) and land (10.6%).
Although there has been a recent drop-off in enquiry volumes, it was still significantly higher in April 2021 than it was a year ago, up by 24.6% for houses, 33.4% for units and 31.0% for vacant land.
With sales volumes strong, search volumes easing back over the past month and HomeBuilder having ended, it wouldn’t be a surprise to see a further decline in email enquiry over the coming months given that many prospective buyers have now purchased and there is seemingly fewer buyers in the next wave and housing costs are becoming more expensive as prices rise.
Investor enquiries continue to rise as first home buyer fades
In April 2021, email enquiries from buyers accounted for 62.3% of all enquiry which was an historic high. Separately email enquiry from first home buyers continued to drift lower accounting for 20.5% of all enquiry while investor enquiry accounted for the remaining 17.3% which was its highest share since March 2020.
Compared to the same time last year, buyer enquiry is currently 29.3% higher, first home buyer enquiry volumes are 0.7% higher while investor enquiry has seen the largest increase up 84.2% year-on-year.
With HomeBuilder having now ended it seems likely that first home buyer enquiry will continue to soften while tight rental market conditions and attractive yields and capital
growth potential will likely lead to an ongoing uplift in enquiry coming from the investor segment of the market.
Views per listing fell over the month but remains much higher than a year ago
Despite some recent increases, the supply of stock listed for sale has generally been much lower than the level of demand since the end of lockdowns last year which has resulted in some significant increases in views per listing.
Average views per listing in April 2021 were slightly lower than they had been in March however, they are 86.3% higher than they were during last year in lockdown-affected April 2020. NSW and Tas have recorded the largest year-on-year increases in views per listing and NT and WA have recorded the smallest increases, albeit they are both up more than 50% on a year ago.
We expect that views per listing will continue to ease with a heightened volume of new stock coming to the market, sales volumes slowing somewhat and fewer overall buyers searching for properties.
Preliminary weekly sales are much higher than last year but not as strong as they were pre-Easter
Preliminary weekly sales volumes nationally were 116% higher last week than they were over the same week last year. While sales volumes remain much higher than they were a year ago it is noticeable that sales volumes have eased from their pre-Easter highs.
Over the first 19 weeks of 2021, there has been 57.4% more preliminary sales than there were over the first 19 weeks of last year and as the chart shows, in most states, sales volumes are more than 50% higher than they were at this point last year.
With borrowing costs at historic lows, we would expect that transaction activity will remain strong over the coming weeks, however, sales volumes have eased back from highs as have search volumes and I would expect a further moderation in sales over the coming weeks.
Properties listed for sale on site are still typically selling quickly
Days on site recorded a moderate increase in April after having trended lower since the middle of last year. It is important to note that the rise is likely seasonal with public and school holidays during the month.
The typical property that sold on realestate.com.au during April 2021 had been on the site for 38 days, up from 34 days in March but down from 52 days at the same time last year.
WA and ACT were the only states and territories in which days on site didn’t rise in April 2021 however, days on site across all states is lower than it was a year ago with WA (21), NSW (12), Qld (12) and ACT (12) seeing the greatest falls and NT (6) and Vic (9) the smallest.
Higher priced property searches continue to increase in popularity
The shift towards potential buyers searching for higher priced properties continues across capital city and regional markets. This is evidenced when looking at the change in filtered price searches for dwellings by the maximum price.
In April 2021, 42.6% of filtered searches in capital city regions and 22.5% of them in regional areas had a maximum price of at least $1 million compared to shares of 34.1% and 14.4% at the same time last year.
Unsurprisingly, the shift to more expensive searches has seen a large decline in the share of searches under $500,000 which have fallen from 18.8% a year ago to 12.7% this year in capital city areas and from 35.3% a year ago in regional areas to 27.0% this year.
While low borrowing costs and a lack of international travel has driven more demand for housing, as affordability pressures rise with strong increases in prices it will be interesting to see how much further this trend runs especially with a number of indicators having weakened from their recent peaks.
People want more bedrooms in capital cities but that’s not necessarily the case in regional areas
The share of searches filtered by number of bedrooms highlights that an increasing share of buyers are looking for larger homes in capital cities while regional trends are
In April of this year, 67.1% of these searches in capital cities were for at least three bedroom (incorporating 3, 4 and 5-bedroom searches) up from 64.1% a year ago. Meanwhile in regional markets 72.5% of searches in April 2021 were for at least 3 bedrooms which was an decrease from 74.1% a year earlier.
The capital city trends are likely attributable to lower investor demand resulting in reduced interest in 1 and 2-bedroom apartments. In regional areas, the falling share of searches for 3 or more bedrooms over the past year is likely attributable to investor interest shifting to regional areas with people happy to own smaller holiday homes/units and investment properties in these areas.
While enquiry is much higher over the year, the end of HomeBuilder led to a fall in volumes
Looking at enquiry to the new homes section of the realestate.com.au website, land estate enquiry in April 2021 was 189.4% higher than it was a year earlier while apartment project enquiry was 129.1% higher.
The number of projects advertised for sale has declined by -3.6% year-on-year for land estates and has risen by 33.3% for apartment projects.
The flow of enquiry has shifted dramatically since the pandemic. Historically apartment projects have accounted for most of the enquiry but with HomeBuilder proving more attractive for land estates, they accounted for 56.2% of all enquiries in April 2021, at the same time a year earlier the figure was 50.4%. With HomeBuilder having now ended it will be interesting to see if these trends shift over the coming months, closed international borders are expected to continue to be a bit of a handbrake on enquiry for apartments.
Originally published as: REA Insights Housing Market Indicators Report May 2021
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