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CoreLogic Property Pulse: housing stock under $400k declines

A budget of $400,000 used provide a decent range of housing options for a buyer looking for property, but as housing becomes more expensive and stock dwindles in that price range, buying a property is even harder.

New research by CoreLogic shows properties in the $400,000 price bracket have declined. The research shows that across Australia, 31.2% of houses and 37.3% of units sold transacted for less than $400,000. By comparison, a year ago the proportions were recorded at 32.8% for houses and 38.6% for units.

A decade ago, 62.4% of all house sales and 68.9% of unit sales were priced below $400,000. Almost seventeen percent of all house sales and 28.4% of all unit sales over the 12 months to June 2017 were below $400,000.

Research analyst Cameron Kusher said, “Even comparing these figures to just a year earlier the decline in the proportion of sales under $400,000 is extremely noticeable for houses (19.0%) and somewhat less so for units (29.6%). A decade ago, more than half of all capital city house (53.1%) and unit (66.3%) were less than $400,000.”

Outside of the capital cities, 52.0% of houses and 60.5% of units sold over the 12 months to June 2017 were priced below $400,000. A year earlier the proportions were recorded at 54.3% for houses and 63.2% for units. If we go back 10 years more than three-quarters of regional house (75.6%) and unit (75.2%) sales were less than $400,000. Over the past year, less than 3.5% of all house sales in Sydney and Canberra were below $400,000 compared to 35.5% and 40.0% respectively a decade ago.

In a market like Sydney, the unit market doesn’t even represent much of an alternative with 7.4% of all unit sales over the past year below $400,000 compared to 53.9% a decade ago. Looking specifically at houses, a decade ago only Sydney (35.5%) and Canberra (40.0%) had fewer than 50% of sales below $400,000. Comparing that to the last 12 months, Hobart was the only capital city to have more than 50% (53.2%) of house sales below $400,000.

Today’s research shows a similar, but not quite as dramatic decline in the proportion of units selling under $400,000. A decade ago, only Sydney (53.9%) and Perth (60.4%) had fewer than 70% of units selling for less than $400,000. Over the past 12 months, Only Adelaide (59.2%) and Hobart (78.3%) had greater than half of all unit sales below $400,000.

Mr Kusher said, “As dwelling values continue to increase, we anticipate that over the next 12 months the proportion of properties selling for less than $400,000 will further reduce and in the way that the rising number of sales of properties for at least $1 million shows the deteriorating affordability, so too does the significant reduction in the availability of properties priced under $400,000.”

“Although the Federal Government attempted to address housing affordability in the Budget this year, in order to improve housing affordability, clearly there is much more work to be done on both supply and demand drivers of the market.

“A greater supply of stock which could potentially reduce prices would at the very least be a good start however, the supply needs to be supported by sufficient infrastructure and employment opportunities.”

Upcoming auctions

The number of auctions scheduled across the combined capital cities this week is expected to see a slight fall, with 1,878 properties scheduled to go under the hammer, after last week saw volumes reach their highest levels since June (2,040).

Across the two largest auction markets, Melbourne and Sydney, volumes are expected to decrease, with 907 homes scheduled to go to auction across Melbourne and Sydney set to host 666 auctions, down from last week’s 955 and 798 auctions respectively.

Across the smaller markets, activity is to be varied this week, with Brisbane, Canberra and Tasmania set to see an increase in activity week-on-week, while Adelaide and Perth the number of auctions scheduled this week are slightly lower. When compared to last year, volumes continue to track higher each week than what was seen over the corresponding July- August period last year (1,795).

Victoria has all the busiest suburbs for auctions this week, with 19 homes scheduled to go to auction in Craigieburn and Reservoir, while Pakenham will host 15 auctions and Bentleigh East with 14.

Summary of last week’s auction results

Capital city auction clearance rates fell last week, down to 67.5 per cent, compared to 68.2 per cent over the previous week. The number of auctions increased last week, with 2,040 capital city auctions held, which was the highest volume seen since June this year, up from the 1,857 over the previous week.

Last week saw Melbourne’s clearance rate weaken to 69.8 per cent, from 73.9 per cent the previous week, the last time Melbourne’s clearance rate recorded below 70 per cent was in July last year. While for Sydney, final results show that the clearance rate for the city increased to 67.6 per cent from 66.4 per cent the previous week. Volumes across each market were higher week-on-week, with 955 auctions held in Melbourne, increasing from 911 the week prior and Sydney volumes increased to 798 last week, up from the 620 the previous week.

Across the remaining capital cities, clearance rates improved in Adelaide and Canberra, while Tasmania’s clearance rate remained unchanged and Brisbane and Perth’s final clearance rate fell over the week. The Gold Coast region was the busiest non-capital city region last week, with 49 auctions held, however, the clearance rate for the region was the lowest (32.3 per cent), while the Hunter region recorded the strongest clearance rate with 88.9 per cent of the 36 auctions successful.

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Azal Khan

Azal Khan was a in-house features writer for Elite Agent Magazine.