• 25/11/2020

Buyers return to the housing market

https://www.afr.com/property/residential/buyers-return-to-the-housing-market-20201020-p566pa

Mirana Ward| Australian Financial Review| 20 October 2020

Residential sales nationally are outpacing fresh listings of properties for sale as buyers take advantage of low mortgage rates, one of several indicators pointing to a rebound in the housing market.

The median vendor discount eased across capital cities and regional areas in the three months to September, according to the latest CoreLogic figures. By September the national median discount was 3.3 per cent. A year ago it was 4 per cent.

As well, the typical time on the market is down year-on-year, with properties across the capital cities typically spending 40 days on the market in the three months to September.

“It shows that the market is tighter than the market was a year ago in the sense that homes are selling a little quicker in 40 days, compared to 46 days,” Tim Lawless, CoreLogic’s head of research, said.

“The year-on-year comparison is highly relevant as a year ago the marketplace was emerging from a two-year downturn. It does show as we emerge from the COVID-related lockdowns, the market seems to be a little bit stronger than that.”

AMP Capital chief economist Shane Oliver said the time on the market for a listed property had declined as the quarter progressed, with buyers becoming more confident as the country – excluding Victoria – began to open up.

“Is that sustainable going forward? There’s a lot of conflicting indicators to the property outlook at present because there have been various forms of income support that had the effect of suppressing listings that may have occurred because of distressed sales,” Dr Oliver said.

“People haven’t really had to sell despite going through a recession because their mortgage payments were frozen and they got support from the federal government in terms of their income. “

In the four weeks to September 27, new listings rose 9.1 per cent, according to CoreLogic data. However, demand continues to outstrip fresh supply with total listings declining in the same period.

“Even though there are more properties being added to the market, sales activity has also stepped up and that ratio of home buyers to new listings being added to the market still seems to be weighted towards demand rather than a supply build-up,” Mr Lawless said.

Confidence to buy

Dr Oliver said that despite declining immigration and the end of financial support measures hanging over the property market, the confidence that it is the right time to buy is there.

“Those are the big negatives but, against that, we’ve seen more confidence in the economy, and consumer confidence surveys generally show people are more confident about the property market now and feel it’s a better time to buy,” he said.

Dr Oliver said record low-interest rates and federal government support for first home buyers would contribute to a “continued improvement in transactions through the run-up to Christmas”.

Independent Sydney buyers agent Michelle May said borrowing conditions were positive, arguing the pandemic “isn’t behaving any differently” than the disruption caused by the global financial crisis or the banking royal commission.

“Even though people are holding their breath with what’s happening with COVID, life still goes on – people still have children, they want to upsize or downsize. The natural state of the market is still happening, regardless of what else is happening in the world,” she said.

Buying a home is not something we could time successfully. If we’re going to look for something to live in, any time to buy is the perfect time to buy for us

— Huy Nguyen, potential buyer

For potential buyers asking if it might be better to wait to see what happens through to Christmas and into 2021, Ms May argued that trying to time the market was never the key to success.

“If you do that there’s a massive risk. Even if you wait and prices do come down, you’re not guaranteed the right property is for sale. If you’re pre-approved and you can still afford to, you’re better off buying today or starting your purchase journey today because then if the right property comes along you can jump on it.”

Huy Nguyen, a 38-year old IT engineer, is on the hunt for a three-bedroom home in Sydney’s inner-west for his wife and young family.

“Buying a home is not something we could time successfully. If we’re going to look for something to live in, any time to buy is the perfect time to buy for us,” he said.

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