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It seems that the property markets around most of the country have (finally) started to pick up. According to the latest RP Data research, there are some very healthy signs that the property market will continue to gain pace but there are just a couple of factors that may pull back the pace of recovery. Firstly, the positive indicators.
Home value increases
Home values have increased in all capital cities (except Hobart) over the last 12 months. Perth has seen the greatest annual growth at 9.4%, followed by Sydney (7.0%), Melbourne (4.3%), Canberra (3.8%), Darwin (2.8%), Brisbane (2.5%) and Adelaide (0.5%). Hobart recorded an annual drop in home values of 1.1%. This trend of increasing property prices is set to continue for a number of years.
Volume of sales
The number of properties sold has increased over the last three months. In combination with increasing prices, this is a sign that the property market is picking up. Estimated house sales in the June quarter 2013 are 31% higher than they were for the June quarter 2012. Estimated unit sales have increased by 26% in the same period.
Average days on market/ Vendor discount/Number of listings
It seems that we are slowly changing from a buyers’ market to a sellers’ market based on the time it is taking to sell property, the change in vendor discounting and the number of properties on the market.
Last year, it took an average of 62 days to sell a property. This year, it is only taking 41 days. Last year, vendors had to drop their asking price by 7.0% to secure a sale. This year the vendor discount is only 6.0%. The number of properties for sale in our capital cities has dropped by 16% compared to last year.
Auction clearance rates
Auction clearance rates are at their highest level in three years. This is particularly important to Sydney and Melbourne where many properties are sold by auction.
Inflation and interest rates
Two very important macro-economic indicators for property markets are inflation and interest rates. Inflation is well under control and interest rates are at historical lows.
My main concern in relation to the health of the property market is unemployment. I know the latest monthly figures showed a fall in unemployment but it is forecast to rise in the medium term. However, compared to world standards, we are in a very healthy position.
So there you have it! There are far more positives than negatives in the property market and the future is looking bright.
Happy House Hunting!
Written by Peter Koulizos, university lecturer, author and buyers advocate.