Lockdowns are inspiring stuck-at-home residents to go house hunting online, with search activity jumping 2.4 per cent last week, according to a new report.
The REA Insights Housing Market Indicators Report August 2021 showed national search volumes experienced their first rise in four weeks and the highest increase in 17 weeks.
REA Group Director Economic Research and report author, Cameron Kusher said the three states in lockdown last month, Queensland, Victoria and NSW, all experienced hikes in the number of searches on realestate.com.au.
“With more people locked down across the country, it has led to an increase in online property searches and email inquiry to real estate agents with physical inspections on hold,” he said.
REA Group releases the Housing Market Indicators Report every month, combining eight key metrics to provide an up-to-date view of the property market and emerging trends.
Key metrics include search activity, email inquiry, views per listing, weekly sales of properties listed for sale on realestate.com.au, days on site of properties sold, filtered searches by price and by bedroom, and developer inquiry.
The report indicated the national housing market has continued to see prices rise due to strong demand, as well as an increase in the rate of sales, sales volumes and levels of inquiry.
But the report also noted the return of lockdowns had a moderate dampening effect of the many of these metrics in July.
The search is on
Mr Kusher said recent lockdowns had led to an increase in online property searches and email inquiries.
“We’ve seen a big jump in email inquiry from investors, which is now at levels last seen in early 2019,” he said.
Each of the three states in lockdown last month recorded an increase in search volumes, with Queensland reaching historic highs. Only Western Australia and the Northern Territory territory recorded falls.
Mr Kusher expected New South Wales and Victoria, who are still in lockdown, to continue with heightened levels of search volumes.
Email inquiries on the rise during lockdown
REA recorded a 7.2 per cent national increase in email inquiries to real estate agents last month. This was the highest volume since March this year.
Email inquiries have been 0.9 per cent higher year-on-year.
Mr Kusher suggested this increase was likely due to the lockdowns and people being unable to physically inspect properties.
First-home buyers and investors were the most prominent demographics, with inquiries rising 33.4 per cent and 26 per cent respectively in July.
Investor inquiry is a staggering 89 pet cent higher year-on-year and the highest it has been since the beginning of 2019.
First-home buyer inquiry is down 8.5 per cent lower year-on-year, but the highest it’s been since January 2021.
However, Mr Kusher expected the higher first-home buyer inquiry rates in July to be an anomaly and suggested it would fall again in August.
Reduction of stock supply for sale
Mr Kusher suggested the moderation of new listing supply in July provided evidence it would tighten further in August as lockdowns continue.
“Buyer demand remains strong and with increasing search activity, the number of views per listing on realestate.com.au increased 4.9 per cent in July to be 46.1 per cent higher year-on-year,” he said.
Mr Kusher explained the views per listings were rising because of the low stock, as potential buyers had fewer alternatives to look at.
The Northern Territory was the only state in which views per listing fell for the month, while across each state there has been a year-on-year increase in the metric.
Median days on site
Despite lower supply levels, the median days on site rose for the second consecutive month.
The median days on site was 39 days in July, while June’s median was 38 days on site.
However, this is still a significant improvement from July last year, which had a median of 61 days.
Days on site fell over the month in Victoria, Tasmania and the ACT but rose elsewhere. Days on site in July 2021 was lower than in July 2020 across all states and territories.
Aspirational filters take the lead
Throughout the combined capital cities, more than three times as many filtered price searches were for properties listed for at least $1 million (42.5 per cent) compared to those for less than $500,000 (13.5 per cent) in July 2021.
A year earlier, the number of searches for properties priced at $1 million-plus (36.2 per cent) was just over double the amount made for properties available for less than $500,000 (16.8 per cent).
People looking at luxury homes above $3 million also increased. In 2020, the $3 million-plus filter was 4.2 per cent in capital cities, but rose to 5.4 per cent this year.
Regionally, 2.1 per cent of potential buyers looked into $3 million-plus properties in 2021, compared to 1.4 per cent in 2020.
On the other end of the spectrum, both metro and regional searches saw a decline in people looking for properties lower than $250,000 in 2021.
In July 2020, 32.3 per cent of price filtered searches in regional Australia were for properties available below $500,000 compared to 25.4 per cent in July 2021.
Conversely, 16.2 per cent of searches in regional Australia a year ago were for properties priced at or above $1 million compared to 24.3 per cent in July 2021.
In addition to price filters, there was also an increase in potential buyers looking at properties with three or more bedrooms.
In capital cities, the use of the three bedroom search filter increased by 2.6 per cent between 2020 (48.4 per cent) and 2021 (51 per cent).
In regional markets, three bedroom searches increased from 51.4 per cent in 2020 to 52.1 per cent in 2021.
Across capital cities, 33 per cent of bedroom filtered searches in July this year were for one or two bedroom properties. Last year, the same search was at 34.6 per cent.
Mr Kusher suggested space has become an increasingly important factor for many buyers due to continued lockdowns.
Weekly sales results have weakened due to lockdowns
Preliminary sales volumes fell by 7.6 per cent last week, which was the lowest level in seven weeks.
Mr Kusher suggested this was primarily due to Australia’s three largest cities experiencing lockdowns during this time.
Although weekly sales volumes were down, they were still 24.2 per cent higher than over the same week last year.
Sales volumes were 23 per cent lower than their peak earlier this year in April.
“All indicators point to stronger housing market conditions than a year ago. However, there is a slowdown taking place, which is partly seasonal and also likely linked to lockdowns,” Mr Kusher said.
Over the first 32 weeks of 2021, preliminary sales are 53.3 per cent higher than over the same period in 2020, and 67.3 per cent higher than the same period in 2019.
Mr Kusher expected sales to weaken further with ongoing lockdowns.
Although this could be seasonal, the spring selling season will determine the market’s strength. Mr Kusher said that typical demand and supply would ramp back up again during spring.