Australia’s housing market may be showing signs of slowing down, with an increase in supply and a slight downturn in search activity, according to the latest REA Insights report.
REA Group has launched the REA Insights Housing Market Indicators Report May 2021, which combines eight key metrics to provide a timely view of the property market and emerging trends.
The report found that although search activity on realestate.com.au was up 46.3 per cent compared to the same period a year ago, it has decreased 8.4 per cent from the historic highs of recent weeks.
REA Group Director of Economic Research Cameron Kusher, who authored the report, said although housing activity remains undoubtedly strong, there are signs that some of the heat has come out of the market.
“Many of the metrics remain at elevated levels compared to a year ago, albeit they have eased back from their recent historic highs,” Mr Kusher said.
“We don’t expect the market to come to a grinding halt, prices are expected to keep rising but we expect that the second half of this year will not see the market quite as strong as it has been over the first half.”
The report found email inquiries had fallen for the third successive month in April.
“Although there has been a recent drop-off in inquiry volumes, it was still significantly higher in April 2021 than it was a year ago, up by 24.6 per cent for houses, 33.4 per cent for units and 31 per cent for vacant land,” Mr Kusher said.
“An increase in the supply of new stock available for sale, coupled with a drop in search activity and sales volumes, has resulted in slowing demand (based on views per listing), suggesting that the next wave of potential buyers may not be as large as what we’ve seen early in 2021.
“Preliminary weekly sales volumes are still significantly higher than they were a year ago, but they have not yet returned to their pre-Easter high and look unlikely to do so before spring.”
Investor inquiries increasing
Inquiries from investors are on the rise, while searches from first-home buyers are continuing to fade, according to the report, a trend Mr Kusher has attributed to the end of the HomeBuilder scheme.
Mr Kusher said that although low borrowing costs remain a strong lure for prospective buyers, many first-time buyers have already purchased property.
He noted that search volumes remain significantly higher than they were a year ago.
“However, there has been a pullback in volumes from the historic highs reached earlier this year,” he said.
“New homes inquiry is still very strong but predictably fell in April as HomeBuilder came to an end. Further falls over the coming months are likely.”
Days on site
According to the report, the typical property that sold on realestate.com.au during April 2021 was on the site for 38 days.
This was up from 34 days in March but down from 52 days at the same time last year.
“It is important to note that the rise is likely seasonal, with public and school holidays during the month,” Mr Kusher said.
Western Australia and the ACT were the only state and territory in which days on site didn’t rise in April 2021.
Higher-priced property remains popular
The report found searches for higher-priced properties were continuing to rise across both capital city and regional markets.
“This is evidenced when looking at the change in filtered price searches for dwellings by the maximum price,” Mr Kusher said.
“In April 2021, 42.6 per cent of filtered searches in capital city regions and 22.5 per cent of them in regional areas had a maximum price of at least $1 million compared to shares of 34.1 per cent and 14.4 per cent at the same time last year.”
“Unsurprisingly, the shift to more expensive searches has seen a large decline in the share of searches under $500,000, which have fallen from 18.8 per cent a year ago to 12.7 per cent this year in capital city areas and from 35.3 per cent a year ago in regional areas to 27 per cent this year.”
Mr Kusher said although low borrowing costs and a lack of international travel has driven more demand for housing, one area worth monitoring in the months ahead would be whether affordability pressures rise alongside strong price increases.