- Queensland concerns – drop in rental demand suggests the market will take time to absorb current supply
- Demand for rental properties on realestate.com.au hit a record high in March
- Buyer demand for NSW units weakened in March – affordability issues beginning to impact the state
- Victorian first home buyer measures have further accelerated demand
Cooling measures pushed through by Australian Prudential Regulation Authority (APRA) and banks continuing to increase rates independently of the Reserve Bank of Australia have failed to stem the skyrocketing prices in Sydney and Melbourne.
REA Group chief economist Nerida Conisbee said the group has yet to see any impact on consumer demand for property on its website realestate.com.au.
“Borrowers are shrugging off rising interest rates and restrictions to lending, continuing to search for property on realestate.com.au,” Conisbee said.
“With the impacts from these measures likely to take some time to flow through, people can expect to see continued property price increases throughout April.
“On realestate.com.au we’ve seen a 25 percent increase in demand year- on-year from consumers looking for property. Increasing demand in the market is driving record property prices.
“Concerns about affordability will continue to gather pace in 2017, with the record price growth in 2016 set to continue,” she said.
Meanwhile, here is the buyer demand index broken down by states:
New South Wales
Continuing to attract high levels of interest. Given the relatively low development of apartments in NSW, it was surprising to see that unit demand weakened in March. It’s likely that affordability issues are beginning to impact demand in the state.
Victoria
The measures to encourage more first home buyer activity have led to renewed confidence in the market, further accelerating demand. After Northern Territory, Victoria saw the strongest level of growth in demand over the month of March. In Melbourne, despite concerns about oversupply of apartments, buyer demand remains elevated.
Queensland
A drop in demand for units suggests that high levels of supply, particularly in Brisbane, are having a more negative impact. On the positive side, the pipeline of new apartments in Brisbane remains low, which will give the market time to absorb current stock.
South Australia
Demand from buyers remains stable in South Australia with apartment demand seeing higher rates of growth than houses. This perhaps reflects a slowing new development market in Adelaide where a large number of new apartments have now been completed.
Tasmania
Continues to be the strongest market in Australia, attracting interest from local buyers, interstate and overseas.
Western Australia
Demand levels continue to decline in Western Australia, however the number of people looking to buy on realestate.com.au is as its highest level since last Ma, with this demand offset by an increase in listings on the index. Confidence in the market from sellers and buyers appears to be improving, although it is difficult to predict if this will be sustained.
Australian Capital Territory
There was a small decrease in demand in the month of March in Australian Capital Territory, but overall it remains strong with the index seeing a 50 percent increase year-on-year.
Northern Territory
The market is now showing sustained increases in demand, suggesting that the Northern Territory is on the way back up.
While, rental demand remains strong, but an over-supply is a concern in Queensland, here is the report according to the states:
New South Wales
Sydney is now the least affordable city for renters in Australia. Despite high costs, demand from renters remains high and continues to accelerate. This may be partly to do with buyer un-affordability, but it’s also likely that jobs growth is a factor.
Victoria
Surprisingly given the high levels of development in Melbourne, Victoria saw the strongest growth in demand after Australian Capital Territory. Demand continues to increase for both apartments and houses suggesting that the level of development taking place in this state is being absorbed by the market. This has been supported by recently released jobs and population growth numbers.
Queensland
Queensland is the country’s most concerning market. Buyer demand declined slightly over the month, but there was a larger drop in rental demand on realestate.com.au. Brisbane in particular is seeing high levels of development and dropping rental demand suggests that the market in Queensland will continue to take some time to absorb the supply.
South Australia
Rental demand softened slightly in March, likely reflecting a recent high number of new apartment completions. Given that the pipeline of new development has now slowed, it is likely that this will be a short term decline.
Tasmania
This state has seen very little development for some time and high rental demand combined with high buyer demand suggests that more new housing could be developed.
Western Australia
Conditions in Western Australian remain challenged with a slight decrease in renter demand in the month of March.
Australian Capital Territory
There was a small decrease in demand in the month of March in Australian Capital Territory, but overall it remains strong with the index seeing a 50 percent increase year-on-year.
Northern Territory
Demand from renters in Northern Territory is now also seeing sustained demand. Like the buy market, it’s likely the rental market is on the way up.
