INDUSTRY NEWSNationalReal Estate News

REA Property Demand Index Falls in April

Attempts by the banking regulator to put a brake on an overheated housing market may finally be working after the latest REA Group Property Demand Index released yesterday revealed a 4.3 per cent drop in buyer demand for April.

The biggest fall was in NSW (7.8%) followed by Queensland (5.4%). However, REA Group Chief Economist Nerida Conisbee said demand in both markets remained well above the level recorded at the same time last year and was still above the previous peak of November 2016.

She said it was impossible to predict whether the downward trend would continue or if buyers might once again crowd back into the market as they did after the short cooling off last December, sparked by banks increasing interest rates independently of the RBA.

“Are we finally at the peak? It’s unlikely in Sydney, but lower levels of demand means that price growth will moderate,’’ she said.

“April median national house price data suggests the market slowed considerably during the month.”

She said the latest figures indicated tougher lending practices by the banks, along with cooling measures applied by APRA – to put a ceiling on investor credit and limit interest-only loans – might be starting to cut in.

She also highlighted the affordability crisis in Sydney as a factor in the big dip in demand in NSW.

There were some bright spots in the April data, with an increase in demand recorded in the ACT (5.8%) and WA (2.7%) while Victoria posted a much smaller decline than the other states (1.6%).

Ms Conisbee said rental demand had also declined in the month, suggesting high levels of investor activity had now provided sufficient rental housing. “It’s likely that rental rates will also continue to moderate as a result,’’ she said.

The most notable results on the rental front were drops of 19.9% in demand for apartments and 12.2% for houses in the ACT, while WA was the only state to record an increase in demand for rental apartments (4.3%).

State-by-state

New South Wales

Biggest fall but still well above demand 12 months ago.

Despite low levels of development compared with Queensland and Victoria, unit demand has continued to decline, dropping 10.5% in the month.

Rental demand is also down.

Victoria

Despite very high levels of supply, Victoria recorded only a modest drop in buyer demand, but rental demand declined by 6.6%.

Price growth for buyers and renters should continue to slow.

Queensland

High levels of demand for Gold Coast property has offset declines in Brisbane. Demand overall is down but still higher than this time last year.

South Australia

Decline in demand consistent with other states but remains slightly above where it was 12 months ago.

Rental demand remains steady.

Tasmania

Still very strong buyer demand for housing stock but demand for units declined by 4.8%.

Western Australia

Bucked the national trend, recording increased demand from both buyers and renters, but still too early to determine whether the market has turned the corner, with year-on-year declines still occurring.

ACT

The stand-out performer in April, recording an increase of 5.8% in buyer demand but rental demand declined by 17.2%.

Northern Territory

Buyer demand dropped over the month but the annual rate is still positive, suggesting the housing market is in the early stages of recovery. Rental demand declined on the back of weak jobs growth.

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