The Wilson Weekly: Exploring the Mid-Season of the Spring Selling Season

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The Wilson Weekly: Exploring the Mid-Season of the Spring Selling Season

Good morning, readers! Welcome back to The Wilson Weekly, your go-to source for the latest insights on the housing market. In this edition, we dive into the mid-part of the spring selling season and analyse the key trends and developments that have unfolded. Join Dr. Andrew Wilson, chief economist of My Housing Market, and Graeme Holm as they provide you with valuable information and expert analysis.

Introduction: Spring Selling Season and its Phases

As we enter the mid-part of the spring selling season, it’s important to understand the different phases that define this period. The spring selling season can be divided into three parts: the pre-holiday period, the mid-season, and the end of year phase.

The pre-holiday period runs up until the long weekend holidays, such as the recent football grand finals. The mid-season phase, which we find ourselves in now, extends from the holidays until the Melbourne Cup weekend in early November. Finally, the end of year phase sees higher numbers of listings as sellers aim to close deals before the year comes to a close.

Market Performance: Buyers and Sellers at Par

The mid-part of the spring selling season typically sees a more balanced market between buyers and sellers. Market dynamics play a crucial role in determining the level of motivation for both parties. Throughout this year, sellers have enjoyed favourable conditions, but the market landscape may start to shift.

Although there has been speculation about a potential housing market cliff caused by the expiration of low fixed loan rates, recent data from the Reserve Bank of Australia (RBA) has officially debunked these concerns. Borrowers have proven to be more resilient than expected in servicing their debt despite rising interest rates. Non-performing loans remain at near-decade lows, with only a small percentage facing challenges in meeting mortgage costs.

Rental Market: Easing of Tight Conditions

The rental market experienced a sharp tightening during August due to a surge in demand, particularly from international students entering Australia post-lockdown. However, the return of these students without a corresponding outflow has contributed to sustained high demand. As a result, vacancy rates have eased slightly but remain extremely low across most capital cities.

In terms of rental prices, Sydney continues to face the highest rents in the country, with a significant gap compared to Melbourne and Brisbane. Unit rents have also seen a resurgence, reaching record highs in Sydney. However, the overall trend shows a steady increase in rents across major capital cities, reaffirming the need for more rental properties to meet demand.

Home Building: Approvals Rise but Long-Term Trend Remains Depressed

While there has been a slight uptick in home building approvals, the long-term trend remains worrisome. Building approvals have been fluctuating due to the volatility in unit development, which can significantly impact the overall figures. Despite the recent increase, approvals are still well below the peak in 2016, reflecting a chronic shortage of housing supply.

The current housing shortage poses significant challenges, as government initiatives alone cannot bridge the gap. Encouraging private sector investment in the housing market may be a viable solution to increasing supply. However, policymakers must address the roadblocks hindering construction, such as green tape, planning restrictions, and red tape, to ensure the livability and affordability of housing in the long run.

Auction Market: Post-Holiday Surge and Solid Results

Following the holiday break, the auction market experienced a predictable surge in listings. Despite buyer distractions and a more relaxed mindset, the results remained positive. Sydney, Melbourne, Brisbane, and Adelaide all reported strong clearance rates, indicating a healthy market. Canberra, however, saw a slight decline in clearance rates.

The auction clearance rates serve as a forward indicator of the housing market’s overall health. The consistent performance across major capital cities demonstrates the resilience and robustness of the market, even as it transitions into a more balanced phase.

Conclusion: A Resilient Market Amidst Challenges

As we reflect on the mid-part of the spring selling season, it becomes evident that the housing market has proven to be more resilient than expected. Despite concerns about a potential cliff and rising interest rates, borrowers have managed their debt well, leading to low levels of non-performing loans. The rental market continues to face tight conditions, emphasizing the need for increased supply, while the home building sector struggles to meet demand.

Looking ahead, it is crucial for policymakers to address the barriers to construction and incentivize private sector investment in the housing market. By doing so, they can ensure the continued affordability and availability of housing for all Australians.

Thank you for joining us in this edition of The Wilson Weekly. Stay tuned for our next update, where we delve into the regional housing markets and explore the latest house building costs. Until then, happy house hunting!

Disclaimer: The information provided in this article is for educational and informational purposes only. It should not be considered as financial or investment advice. Please consult with a professional advisor or conduct your own research before making any financial decisions.