Source: Realestate.com.au
Buyers have hit the 2022 property market with a running start according to new data from REA Group.
In January, purchaser activity reached an highest and more house hunters searched in the $1 million plus price bracket than ever before.
But despite the year beginning with a bang, this year’s housing market isn’t expected to match the unparalleled year that was.
REA Group’s PropTrack Housing Market Indicators Report for February showed buyer activity based on views-per-listing on realestate.com.au was at a record high for the first month of 2021.
Although interest has soared, an increase in new listings by the close of 2021 has meant today’s buyers have more choice — a reality that will take some of the heat out of the market, said PropTrack senior economist and the report’s author Eleanor Creagh.
“Australia’s housing market is springing back to life after the holiday break, which typically brings a seasonal slowdown. The Omicron variant remains a distraction, but so far the housing market is off to a strong start – though not yet a match for 2021’s historic year,” Ms Creagh said.
“Indicators of buyer demand show property seekers remain motivated, but after what has been an exceptional year, demand is beginning to moderate from the extreme levels witnessed in 2021. This should be welcomed in bringing what could be a more sustainable balance between buyers and sellers in the year ahead.”
Analysis showed views-per-listing surged 48.2 per cent month-on-month to reach a new high. The unprecedented activity was strong across all states, with the exception of Victoria.
The largest annual leaps for the capitals were seen in Brisbane, where views skyrocketed by 81.5 per cent for the month, then in Adelaide at 70.1 per cent.
In the regions, South Australia experienced an extraordinary 92.4 per cent increase and NSW at 68 per cent. Regional areas in each respective state, except for the Northern Territory, had seen views-per-listing jump by more than 35 per cent year-on-year.
Forecasting the future
The perfect storm for property prices experienced last year won’t be repeated in 2022, said Ms Creagh, given that the benefits of historically low mortgage rates have already been translated into higher purchase prices.
“And as the tailwind from low interest rates is diminished – alongside more choice and less competition – price growth will moderate,” Ms Creagh said.
With January and the traditional summer holiday period behind us, she said analysts will get a better read on what conditions lay ahead.
“Demand is likely to continue easing from peak levels as new listings are likely to remain elevated, with would-be sellers responding to the strong price growth witnessed last year,” she added.
“Sales volumes remain elevated, and this year will hopefully be less hindered by restrictions. Buyers and sellers who have held back until now will have the opportunity to transact unencumbered, providing another tailwind for activity.”
Buyers adjust price expectations
After a year that saw the fastest annual pace of price growth in three decades, more house hunters are looking online in the $1 million and above bracket.
The PropTrack report revealed that throughout the combined capital cities, 45.2 per cent of searches were for properties listed over $1 million.
Just 12 months ago, that share was 36.8 per cent.
Moving to the regions and the share of searches for homes priced above $1 million reached 31.7 per cent, compared to only 19 per cent a year ago – almost triple the average pre-pandemic share. Buyers with a budget below $500,000 only accounted for 12.6 per cent of searches, compared to 14.7 per cent a year earlier.
“Demand remains strong and borrowing costs remain low, despite fixed rates having begun to climb. The pace of price growth is moderating, but it would be reasonable to expect a further increase in higher priced searches as the hottest property market in decades has pushed housing prices higher Australia-wide,” Ms Creagh reported.
Purchaser inquiry slows
By October 2021, email inquiries from buyers via realestate.com.au hit a record high and has since fallen by 20.9 per cent post lockdowns as prospective purchasers can now view homes in person.
When it came to what buyers want, the PropTrack report showed houses remained the dominant property type asked about with a 59.3 per cent share of inquiries. Interest in units proved to be the highest it’s been in two years at 31.4 per cent.
“This is interesting, and bears watching as 2022 unfolds. The premium of house prices over unit prices has reached record highs, with the pandemic driving one of the biggest shifts we’ve ever seen when it comes to housing preferences. But with credit conditions tightening and a normalisation of migration placing renewed pressure on inner city rental markets, demand for units could rise as buyers look for affordable options,” Ms Creagh explained, adding that investors may also capitalise on the unit discount.
“Investor inquiry climbed steadily through 2021 and is now 30.4 per cent higher year-on-year, with the share of inquiry from investors (25.6 per cent) hovering around the highest level (25.8 per cent) recorded in more than three years. This is another reason why we could see increased demand for units.”
Demand from first-home buyers in 2021 was buoyed by historic low borrowing costs and government incentives. First homebuyer inquiry has fallen 23.8 per cent from peak levels recorded in September 2021.
“This is to be expected as incentives expire, and higher house prices increase the deposit hurdle for first home buyers.”
Homes lasting longer online
Properties are taking longer to sell with the median number of days a listing sits on realestate.com.au 54 days in January, compared with 32 days in December.
On a capital city level, homes are selling eight faster than they were a year ago, with the exception of Melbourne, Hobart, Darwin.
Properties in the ACT averaged 41 days on the site in January while Hobart and Adelaide averaged 39 and 44 days respectively. The big stand out was regional South Australia where the time properties were listed for sale had dropped by 54 days in January from the same period a year ago.
Ms Creagh said the strength in new listings and auction volumes from late 2021 were carrying on into early 2022 as sellers finally decide to list post lockdowns or found themselves motivated to list due to recent price growth and elevated demand.
“We expect new listings are likely to remain elevated as would-be sellers respond to strong price growth and a hopefully lockdown-free year results in vendors feeling more comfortable listing their properties. With more supply and fewer competing bidders, properties are also likely to be on the market longer.”
