Despite a strong start to winter some seasonal weakness is starting to set in, with a string of recent lockdowns also impacting local markets.

Nationally, properties continue to sell quickly due to the lack of stock on the market and heightened buyer demand. While there was a slight increase in the median number of days a property was listed on realestate.com.au during June, the number of days on site still remains near historic lows.

The biggest challenge for the market over the coming month will be the length of the lockdowns in several states and the likelihood of reduced sales.

Market conditions are not as strong as they were prior to Easter. Picture: Getty.


Borrowing rates in focus

The Reserve Bank of Australia has held the official cash rate steady at a record low of 0.1% since November 2020, but lenders have begun preparing for an expected interest rate rise in 2024.

Recent data from the RBA shows, on average, the interest rate on new owner-occupier loans with a fixed term of more than three years has risen by 12 basis points since the record-lows seen in February, and interest-only rates have increased by 7 basis points.

The RBA’s Term Funding Facility – which provided low-cost funding to the banks for three years – expired at the end of June, so it would be reasonable to expect that we might see some further increases in average mortgage rates over the coming months.

In the shorter term, owner-occupier variable and fixed mortgage rates of three years or less drifted slightly lower during May. For investors, average interest rates have fallen across all product types.

So, what does it mean for the property market?

The RBA has remained steadfast with its forecasts that the conditions required for a rate rise won’t be met until 2024. However, the stronger-than-expected recovery has prompted many economists to bring forward their predictions for when the first hike will occur.

For buyers, the impact here will really depend on who do they believe.

If they think rates will rise earlier than expected, it could create more urgency in the market as buyers bring forward purchases to lock in lower mortgage rates.

Even without that added urgency, strong demand continues to outstrip the supply of stock, which is likely to continue to push prices higher.

The ongoing challenge for buyers is the low volume of stock for sale and significant competition to purchase.

Investors to target new markets

Recent lending data by the Australian Bureau of Statistics showed the value of home loans hit a record high in May, with both new lending and refinancing activity recording strong growth.

New lending to investors now well and truly outweighs lending to first-home buyers. As borrowing costs for investors have continued to fall, I would expect to see more investor purchases over the coming months.

What will be interesting about this trend is that investors are unlikely to be targeting the inner-city apartment markets that have been so popular over recent years.

Rather, they will be looking to outer-suburban and regional markets, particularly those with lifestyle appeal.

Where to from here?

There continues to be some strong evidence that market conditions are not as strong as they were prior to Easter. What is a little more difficult to disseminate is how much of this is true market conditions and how much is seasonality.

It’s reasonable to expect that buyer and listing activity will slow over the coming months as it usually does through winter.

Lockdowns in Greater Sydney, Victoria and South Australia will present a bit of a road bump for the performance of the market, however based on property activity recorded during Melbourne’s 112-day lockdown last year, it will likely pave the way for an even stronger spring market due to pent-up supply and demand.

While the supply of stock for sale has been a common problem for would-be purchasers for some time now, weekly sales data indicates that many are finding something to buy and completing those transactions.

At this stage, it is unlikely the lockdown will have long-term impacts on the property market.


How property is faring around the country

Nationwide, properties are selling much quicker than they were a year ago, and while search volumes have eased from record levels they remain higher than they were a year ago.

We continue to see an increasing number of people searching for homes with more bedrooms and higher price points which is a contributing factor to the rising prices we’re seeing.

Let’s look at how market conditions are faring throughout the states and territories.


New South Wales 

Both Sydney and regional NSW continued to record monthly price increases in June 2021.

Sales volumes

In Sydney, preliminary weekly sales volumes have bounced-back after initially being impacted by lockdowns, and are currently sitting at volumes similar to recent months.

While sales volumes have steadied the ongoing increase in the length of the lockdown is likely to result in a decline in weekly sales over the coming weeks.

Sales volumes in regional NSW remain lower than their pre-Easter peak but are trending higher.

So far this year there have been 57.5% more preliminary sales in Sydney compared to the same period last year, with the Baulkham Hills and Hawkesbury regions recording the largest rise in year-on-year sales.

Sales volumes in regional NSW are 51.6% higher than a year ago, with New England and the north west recording the largest rise.

Days on site

There was a slight increase in the number of days a property was listed for sale before being sold in both Sydney and regional NSW during June. When compared to a year ago, however, the number of days a Sydney property was listed is down by two weeks, and 48 days lower in regional NSW.

In June, Sydney properties were on site for just 26 days with Northern Beaches properties on site for the shortest length of time.

In regional NSW properties are sold after 36 days on site, with Illawarra properties selling the quickest.

Views per listing

Properties advertised for sale across NSW got an average of 2,052 views during June, which was 49.3% higher than in the same month a year ago.

In Sydney, Northern Beaches properties are typically getting the most views per listings, while properties in the Outer West and Blue Mountains have seen the largest year-on-year increase in views per listing.

In regional NSW, Illawarra properties are getting the most views per listing. Views per listing have doubled over the year in Capital Region, Coffs Harbour-Grafton, Mid North Coast, and Southern Highland and Shoalhaven.


Victoria

Price growth slowed in Victoria during June, likely due to the recent lockdowns. However, property values still rose with regional Victoria recording larger rises than Greater Melbourne.

Sales volumes

Recent lockdowns have affected preliminary weekly sales throughout the state during June, with sales volumes only marginally rebounding in regional Victoria. However, in Greater Melbourne weekly volumes have rebounded back to their previous levels.

So far in 2021 there have been 82.7% more sales in Melbourne than there were over the same period last year and 51.8% more sales than last year in regional Victoria.

Melbourne’s north east, west and south east have all seen cumulative sales more than double over the year while in regional Victoria, Ballarat recorded the largest lift in sales.

Days on site

The lockdown throughout June caused the median number of days on site rise to rise from 27 days in May to 35 days in June in Melbourne. Properties on the Mornington Peninsula are selling the fastest.

Days on site for regional areas increased from 40 days to 44 days during June, with properties in Geelong recording the fewest days on site.

Views per listing

The average views per listing across Victoria was 2,031 views, down 6.5% over the month but 32.3% higher year-on-year.

In Melbourne, Mornington Peninsula is seeing the highest average number of views-per-listing, and also recorded the largest year-on-year increase across Greater Melbourne.

In regional Victoria, Geelong properties are receiving the most views per listing while properties in Warrnambool and the south west have seen the largest year-on-year increase.



Queensland

Property prices continued to rise at a moderate pace in June with regional prices lifting at a faster pace than Brisbane.

Sales volumes

Preliminary weekly sales volumes have been steady in Brisbane for several months now, marginally lower than their pre-Easter highs.

In regional Queensland, sales volumes are lower than they were pre-Easter however, they did spike higher last week.

So far this year, there have been 51.2% more preliminary sales in Brisbane than over the same period last year. Cumulative weekly sales have more-than doubled over the year in Ipswich and Logan-Beaudesert.

In regional Queensland there has been 70.6% more sales so far this year, compared to the same period a year ago. Sales have doubled in Toowoomba, Outback region and Mackay-Isaac-Whitsunday.

Days on site

In Brisbane, the median number of days on site has risen from 39 days in May to 46 days in June 2021 however, days on site is still 26 days lower than it was in June 2020. Properties in western Brisbane spent the fewest days on site over the month.

In regional Queensland, days on site was recorded at 57 days in June 2021, up from 56 days in May but still substantially lower than the 92 days recorded in June 2020. Properties are selling the fastest on the Sunshine Coast.

Views per listing

The average number of views per listing during June was 1,279, which was 0.2% fewer than the previous month but 57.1% higher year-on-year.

The highest views per listing in Brisbane in June were in South Brisbane while in regional Queensland, the Sunshine Coast just edged the Gold Coast for the most.

In terms of growth over the 12 months, Ipswich in Brisbane has recorded the largest increase and Wide Bay has seen the largest increase in regional Queensland.

South Australia

Prices continued to rise in Adelaide and regional South Australia last month, albeit the pace of growth was slow.

Sales volumes

Preliminary sales volumes in Adelaide peaked a few weeks ago and have since fallen quite sharply back to levels last seen in March of this year.

Sales so far this year are 46.0% higher than a year ago, with suburbs across northern Adelaide recording the largest year-on-year increase.

In regional SA, sales volumes have now risen to similar levels recorded in recent months.

Weekly sales so far this year are 62.9% higher than a year ago, with the Barossa-Yorke-Mid North region recording the biggest annual increase.

Days on site

The average number of days on site for properties sold in June 2021 was 36 days in Adelaide, up from 30 days in May but 21 days lower than in June 2020.

Properties are selling quickest in Adelaide in the Central and Hills region of the city.

In regional SA properties that sold were typically on site for 92 days in June 2021 compared to 98 days in May 2021, and 172 days in June 2020.

Properties in the south east region are on site for the shortest number of days in regional SA.

Views per listing

The average number of views per listing across SA increased by 0.3% in June 2021 to reach 1,575 views, 51.6% higher than at the same time last year.

In Adelaide, the south region has the highest views per listing while in regional SA properties in the south east receive the highest number of views. These two regions have also recorded the largest year-on-year increases in views per listing.


Western Australia

Price growth has slowed in Western Australia over recent months however, both Perth and regional WA have still recorded price increases in June 2021.

Sales volumes

Unlike most other states, weekly sales volumes in Perth and regional WA have returned to levels higher than those achieved pre-Easter, with sales volumes similar to those recorded during the peak of spring-selling last year.

So far this year, preliminary weekly sales volumes are 66.5% higher than they were over the same period last year in Perth and 93.8% higher in regional WA.

In Perth, the south west has seen the biggest rise in cumulative sales year-on-year, while cumulative sales have more than doubled over the year in Wheat Belt, Bunbury and Outback (south) regions of WA.

Days on site

Properties listed on realestate.com.au that sold in June 2021 were typically on site for 62 days in Perth and 94 days in regional WA. In both regions the number of days on site rose from 57 days and 91 days respectively however, days on site was much lower than the 100 days in June 2020 in Perth and 158 days in regional WA.

In Perth, properties are selling fastest in Mandurah, while regional properties are selling the most rapidly in WA Outback (north).

Views per listing

Throughout WA, properties listed for sale in June saw an average of 735 views per listing which was -7.8% lover over the month, but 13.4% higher than June 2020.

In Perth, the Inner region is seeing the most average views per listing while in regional WA Bunbury has the highest views per listing.

In terms of the growth in views per listing year-on-year, Mandurah has seen the largest increase in Perth and in regional WA Bunbury again comes out on top.


Tasmania

Over the past month, property prices have continued to rise across Hobart and regional Tasmania.

Sales volumes

In Hobart, preliminary weekly sales volumes have fallen over recent months and are lower than they were earlier this year.

In regional Tasmania it is a similar story with weekly sales volumes having continued to trend lower for the past three months.

Despite the recent weakness in sales, Hobart has seen 31.0% more sales so far this year compared to the same period last year.

Regional Tasmanian sales volumes are 38.1% higher this year.

Days on site

The median days on site for properties sold in Hobart during June 2021 was 27 days, up from 26 days in May 2021, and 47 days in June 2020.

For regional Tasmania, days on site was recorded at 48 days in June 2021, compared to 47 days in May 2021 and 98 days in June 2020.

Views per listing

Tasmania is one of the few states and territories in which view per listing rose in June, up 2.8% to a new record-high 2,682 views, which was 79.2% higher year-on-year.

Hobart is seeing substantially more views (4,311) than the south east (2,508) which has the second highest number.

Views per listing have increased 81.6% year-on-year in Hobart while they have more than doubled in the south east.


Northern Territory

Darwin property prices continued to rise in June while there was a moderate fall in prices outside of the capital city.

Sales volumes

The number of preliminary weekly sales is trending lower at Darwin. Last week, the city recorded its fewest sales since the beginning of the year, although the data is based on low sales, volatile and subject to some revision.

Volumes are much lower in regional Northern Territory, however, they are trending quite flat overall.

So far this year, Darwin has recorded 46.4% sales than over the same period last year and in regional NT, sales volumes are 175.4% higher than they were a year ago.

Days on site

In Darwin, properties that sold were typically listed on site for 66 days in June 2021, compared to 49 days in May 2021 and 91 days in June 2020.

In regional NT, days on site was recorded at 135 days in June 2021, compared to 96 days in May 2021 and 160 days in June 2020.

Views per listing

The number of views per listing in the NT increased by 6.0% in June 2021 to reach an historic high 763 views, which was 57.6% higher than at the same time last year.

Over the months there was an average of 1,017 views per listing in Darwin and 381 in regional NT.

The year-on-year increases in views per listing are recorded at 117.6% in Regional NT and 52.7% in Darwin.


ACT

Canberra has continued to see a strong increase in property prices throughout June 2021.

Sales volumes

The number of preliminary weekly sales in Canberra is trending lower, as it has been since Easter of this year.

While sales on a weekly basis are trending lower, there have been 28.7% more preliminary sales so far this year than there were over the same period last year.

Days on site

The typical number of days on site for properties in the Australian Capital Territory sold during June 2021 was 24 days, which was an historic low and unchanged compared to May 2021.

A year ago, the number of days on site in the ACT was 47 days.

Views per listing

The number of views per listing across the ACT fell by 1.2% in June 2021, however views per listing were 40.6% higher in the month than they were in June 2020.

Originally published as: REA Insights Property Market Outlook – July 2021

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