John McGrath’s Real Estate Market Review - Spring 2012
4th OF September 2012
The results of my Spring Real Estate Market Review are in! There is a new air of positivity in the marketplace in the lead-up to the biggest selling season of the year. The opportunity to buy at the bottom might already have passed with new data showing price stabilisation and even growth in some markets, particularly Sydney...
By John McGrath, Property Expert
Buyers appear to be less cautious and looking to make a new purchase over Spring. Loan applications are up, as are clearance rates with Sydney recording its highest clearance for two years on August 4 at 68%. We are seeing more buyer enquiry and multiple offers on some homes, so indications are demand is on the rise.
Recent RP Data figures show Sydney property values rose 1.2% in July and 1.7% for the year to August. At McGrath, auction clearance rates in the high 70% region for properties under $1M, which suggest a somewhat two-speed recovery.
Falling mortgage rates are playing a vital role in the change of buyer sentiment. Home loan rates are around 50 basis points lower than their 15-year average. Fixed rates are extremely attractive, with offerings such as 5.59% for one to three years.
AFG, Australia’s largest mortgage broker processed more home loans in July than for any July since 2007 at $2.73 billion–nearly 20% up on July 2011. First homebuyers are also re-emerging and this will likely have a cascading effect on the market, enabling second homebuyers to move up the price ladder.
Although buyers are cautious, more are coming into the market and we’re expecting a solid Spring. I wouldn’t say the market has completely turned the corner but there are signs we are heading in that direction. I think the market will turn around to the positive in 2013 and people are realising this is potentially the last opportunity to get in at current market prices in Sydney, Brisbane and regional areas.
• For some time, the lion’s share of activity has been occurring under $1M and this continues. On August 4, McGrath achieved an auction clearance rate of 78% for properties priced between $750,000 to $1M and 77% for those priced under $750,000. The clearance rate above $1M was 62% – a solid result but indicative of a two-speed recovery in Sydney.
• According to AFG, first home buying in NSW jumped from 10.9% to 14.4% in July, while nationally it rose from 15.6% to 17.3% – a two-year high. Rising rents, decreasing interest rates and good value buying is creating a compelling environment for young people to purchase. In NSW, the expiry of the $7,000 First Home Owner Grant for established properties on September 30 has no doubt prompted many young buyers into action.
• New incentives for first homebuyers to purchase new properties in NSW begin on October 1. First homebuyers of newly-built or off-the-plan properties under $650,000 will receive a $15,000 grant, reducing to $10,000 in 2014.
• The shift from houses to apartments continues. Both owners and investors see apartments as serious options due to greater affordability, lower maintenance and security. Medium and high density living close to the city is increasingly popular.
• The ACT market has stabilised and buyers are re-engaging in the lead-up to Spring. Enquiry is up, more people are attending opens and properties are selling under the hammer.
Highlights & Statistics
-Highest clearance rate in Sydney in two years on August 4 at 68%
-Sydney values up 1.7% YTD in two speed recovery
-Home loan rates 50 basis points below 15-year average – RBA -New loan approvals up; large spike in first home buying in NSW -Price-to-income lowest since March 2003
-Market will turn around to the positive in 2013
Read Part 2 of John McGrath's Spring Real Estate Market Review–including his top Sydney metro and regional picks for the best opportunities to buy, as well as insight into the current regional market.
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