NationalReal Estate News

CoreLogic Property Pulse 24 August: Housing turnover remains low

Housing turnover remains low despite strong selling conditions in Sydney and Melbourne, according to latest CoreLogic data.

CoreLogic data confirms  over the 12 months to May 2017 only 4.8 per cent of all houses nationally actually sold, highlighting just how little stock sells in a given 12-month period.

Across house sales over the past 12 months, Tasmania recorded the highest proportion of stock turning over with 5.6 per cent of all houses in the state selling. Western Australia saw the lowest proportion of turnover with just 4.0 per cent of all houses selling over the past year.

According to CoreLogic research analyst Cameron Kusher, the current lower volume of housing stock turnover highlights why caution should be taken when interpreting median sale prices.

“With such a small fraction of housing actually transacting over a given period, median prices can be biased. Furthermore, median prices may not be reflective of the whole market. When making a comparison between periods they may compare two very different bundles of housing types and quality,” Mr Kusher said.

Concerned about housing stock levels, REINSW President John Cunningham said the results signal warning bells for the housing industry.

“It shows just how little has been transacted over the past year,” he said.

“We know from a variety of property data sources that stock levels are steadily declining and a key reason why the affordability issue presents a bigger-picture problem, particularly for Sydney and Melbourne.

“When we have stock on market, it keeps the property market competitive and in balance. Without stock we see less vibrancy and activity across the market and much more buyer competition taking place as opposed to activity between properties.”

Ultimately, he said, “the knock-on effect damages the supply and demand chain”.

According to Mr Kusher, lower housing turnover is being influenced by a variety of factors.

“Advertised stock levels remain low across those cities where capital gain conditions are strong. Additionally, high transactional costs, which are based on a percentage of the selling/purchasing price, have become a larger disincentive across those markets where values have shown a material rise.”

Zuccoli in Darwin had the highest proportion of stock turnover across the country, with 38.5 per cent of all houses in the suburb selling over the past year. Clyde North in Melbourne had the second highest level of turnover, with 17.6 per cent of all houses in the suburb selling over the same period.

Mr Kusher said, “While the data shows the suburbs with the greatest turnover of houses, each of the suburbs listed have seen substantially less than half of all houses selling.”

Another characteristic of note is that most of the suburbs shown are in areas where there is, or has been over recent years, a substantial injection of new housing stock; average hold period data which shows that in new housing estate areas housing stock tends to turn over with greater regularity.

“Housing turnover in any given year reflects only a small proportion of the total housing stock. It further highlights that taxes on transactions such as stamp duty are heavily reliant on collection from only a small pool of overall housing stock,” says Mr Kusher.

Auction activity

Auction activity is expected to see a slight increase this week across the combined capital cities, with 2,086 properties scheduled to go to auction, up from last week’s final of 2,064 auctions held.

Volumes have remained relatively steady throughout most of July and August, and have continually tracked higher each week when compared to the equivalent weeks last year. However, while volumes are to increase this week, it will be the first week since early May where volumes are expected to be lower than those seen one year ago, with results from last year reporting a slightly higher 2,153 auctions held.

Across Melbourne and Sydney, the number of properties scheduled to go to auction this week is set to be higher than last week, with 1,039 and 760 auctions currently being tracked, increasing from last week’s 1,001 and 720 auctions held respectively. While the larger markets are to see an uplift over the week, activity across the smaller markets is set to fall by varying degrees, with Adelaide expected to see the most notable decrease in activity: down by 32.7 per cent when compared to last week, followed by Tasmania (28.6 per cent), Perth (14.3 per cent), Canberra (10.3 per cent) and Brisbane (7.4 per cent).

Bentleigh East and Reservoir in Victoria are the busiest suburbs for auctions this week, with each set to host 17, followed by Mount Waverley (Vic) with 16, and Mosman in NSW with 15 auctions scheduled.

Summary of last week’s results

Last week, the final auction clearance rate across the combined capital cities rose to 69.8 per cent, across a higher volume of auctions week-on-week. There were 2,064 capital city auctions held last week, higher than the 2,040 auctions held over the week prior when 67.5 per cent cleared.

One year ago, volumes were lower with 1,795 auctions recorded over the corresponding week last year, although the clearance rate was a higher 75.2 per cent. Melbourne’s final auction clearance rate improved last week, up to 75.6 per cent after final figures saw the clearance rate for the city drop to its lowest levels since July 2016 over the week prior (69.8 per cent). Melbourne also saw an increase in volumes last week with 1,001 auctions held, up from 955 the previous week; while in Sydney volumes were lower over the week with 720 auctions held across the city, down from 798 the week prior. Sydney’s final clearance rate improved slightly, increasing to 67.8 per cent last week from the 67.6 per cent the previous week.

Performance was mixed across the remaining capital cities, with clearance rates improving in Brisbane, Perth and Tasmania, while falling in Adelaide and Canberra. However, all saw an increase in volumes over the week, with the exception of Perth where volumes were unchanged. Of the non-capital city regions, Geelong recorded the highest clearance rate with 88.0 per cent of the 29 auctions clearing last week, while the Gold Coast had the highest volume of auctions (53).

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