As we all know – nothing in this world happens in a vacuum. You only have to look at petrol prices or recent supply chain costs to realise this innate truth! When it comes to prestige property sales, the same is also true. Whilst prestige buyers tend not to be impacted as quickly by adverse market forces, such as interest rate increases, knowing the overall state of the national real estate market is still critical knowledge if you are buying or selling any property. Even if you’re not looking to sell or purchase property at the moment, staying up-to-date with these critical facts and figures will empower you to make the best decision for your property journey in future.
Following an unprecedented increase in prestige property values into early 2022, and combined with increases in interest rates, the conventional wisdom was that the pace of property values increases, auctions and clearance rates was to return to a semblance of normality. We all know the market is not as hot as it was, but there is no crash, and none is on the horizon. Let’s look at CoreLogic’s key market metrics to get a bird’s eye view of the Australian Real Estate Sector in September 2022
Across Australia, dwelling values are 1.7% higher than at the end of September 2021. This modest difference should be considered in light of the over 20% increase in the 12 months prior, and signals a flattening of the curve and a return to more normal real estate market conditions.
The combined value of residential real estate fell by $100 billion from $9.7 trillion in August to 9.6 trillion in September 2022.
This index produced by CoreLogic “provides monthly capital growth measurements across three broad housing types: detached houses, units and a combined dwellings index that includes both houses and units.”The latest data for September 2022 shows that the combined home value index for Sydney, Melbourne, Brisbane (including Gold Coast), Adelaide and Perth fell by 1.3%.
There were 566,609 property sales in the 12 months to September. Compared to the year prior, this is a reduction of 5.2%
As demand levels out after such a sustained period of record sales, properties are now remaining on the market longer, up to 35 days in the three months to September.
It is only natural that as peak demand levels out and properties are on the market longer – that motivated vendors (whilst still enjoying fantastic property prices) would be more amenable to vendor discounts. In July, August, and September 2022, the median vendor discount at the national level was -4.2%. Compare this with September, October and November 2021, when the average vendor discount rate was only 2.9%.
In the 4 weeks ending October 2nd 2022, there were an additional 34,368 newly advertised dwellings for sale. When compared to the same period last year, this is 17.1% decrease in new listings. When compared to a 5 yearly average, this is still a whopping -14. 3%.
The national auction clearance rate is the percentage of properties sold at auction on a particular week or month. Nationally, this figure trended higher in September with an average of 59.8% compared to a 56.8% average clearance rate in Aug. Whilst this is slightly positive news for those selling their homes, this is still significantly down from 74.3% in the same period in 2021.
The other side of the property market is, of course, rentals, and we continue to see rental value growth remaining high across Australia overall.
With rises in interest rates, for many Aussies, their deposit won’t take them as far as they had planned for their intended mortgage, so renting remains a popular – or only – alternative.
Annual growth in house rents has dropped to 9.4% in the 12 months to September, while unit/apartment rent values have risen by 11.8% over the last year.
The Gold Coast specifically continues to be an increasingly desirable location for Australians across the nation, and “FOMO” or “fear of missing out” was named the reason for such an increase in growth in the GC housing market since the onset of Covid – check in with your Sydney and Melbourne friends and you’ll be surprised at just how many would love a sea change to this part of the world.
For those who are making the jump to Queensland from other states, the rental market remains super competitive, influenced by rising costs in building as well as supply chain issues. There’s no shortage of mainstream news stories about just how challenging it can be for families looking to find a place to rent.
lthough the market has seen owner-occupiers taking the lion’s share of property purchases for the last two years, we’re sure to see investors returning with the temptation of high rental yields. In short, demand is high, and supply is low – and the workforce across Australia has long since overcome the question of “Can I really work remotely and live where I like?” Now, for those beach or hinterland lovers, the reality of more sun, more work-life balance and a better lifestyle are in their grasp, and the Gold Coast continues to come out on top.
So, for those looking to buy or sell prestige property in the coming months, the real estate climate continues to remain strong. When it comes to what agent to choose to support your property journey, choose to work with the team that truly knows the Northern Gold Coast and understands the market intricacies in this in-demand area. Mercer & Cooper are your prestige property experts, and we welcome you to visit our offices today to discover more.
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