Despite losing steam since the highs of the market in March, data from CoreLogic indicate an annual property change in values for Sydney is 23.6%, with national values rising at the fastest pace since 1989.
Despite the rise in new listings, the high rate of absorption i.e fast rate at which properties are being sold continues to result in low advertised stock.
The expectation that mortgage rates will remain at record lows for some time yet and high savings as a result of less spending throughout lockdown, are also likely factors in the strong housing demand we have seen.
This demand and competition from buyers amid low stock levels continue to be a major factor placing upward pressure on property values.
Tim Lawless (CoreLogic research director) suggests continued affordability constraints may result in less demand going forward. High property costs, raising a deposit along with transactional costs is becoming a significant barrier for many people.
Whilst housing trends are positive for the moment, in the coming months, we are likely to see an increase in stock levels. More choice and less urgency from buyers could take some of the heat out of the market particularly if as a result of affordability constraints and potential for tighter lending we see a drop in demand.
Whilst the RBA has indicated that the cash rate is unlikely to increase until 2024, it is worth noting that the federal treasurer has endorsed tighter credit policies for home lending. For now, market momentum is strong and very much a ‘vendor’s market’.