BrokerPulse

RealTrends Q32021 BrokerPulse sees brokers still optimistic about the market, wary of competition and wondering when inventory will rise.

2021 RealTrends Brokerage Compensation Report

For the study, RealTrends surveyed all the firms on the 2021 RealTrends 500 and Nation’s Best rankings, asking for annual compensation data for the 2020 calendar year.

Knock.com’s Sean Black on the transaction revolution

Real estate is on its third revolution, from the digital revolution of the early 2000s to the information revolution kicked off by Trulia and Zillow to today's transaction revolution.

Newsletter

The RealTrends BrokerSource and HousingWire OpenHouse newsletters deliver twice weekly information on trends, strategies, analysis, people, and news shaping the real estate industry.

Sydney Leads the Decline of Australia’s Housing Market 

Three key areas are leading the change in the market

After a decade-long boom in the Australian property market, things have changed and buyers, sellers, and investors have to proceed with their eyes wide open. Three key areas are leading to the change in the market. 

Reduction in Demand 

The first is the reduction in demand for residential housing, especially the more expensive markets in Sydney and Melbourne. According to CoreLogic, national property values have fallen for nine months in a row with the most pronounced reduction in Sydney, where property values have dropped nearly 5 percent over the last 12 months. This is in addition to a drop of 22 percent in demand for the homes in Sydney, according to The Property Outlook report for July by realestate.com.au, which measured demand as the number of property views compared with the number of property listings on the premier property portal. 

The upward pressure of property prices in Australia has led to the reducing homeownership numbers. In the 30 years to 2016, the proportion of 25-to 34-year olds who own their own homes dropped from 60 percent to 45 percent. For those aged 35-to 44-years old, the proportion fell from 74 percent to 62 percent. People who had never purchased a home by the age of 45 probably will never own a home. 

In 2018, there appears to be a big move by buyers to consider living in regional cities and towns where prices are more affordable, and transport links have been upgraded. Demand has risen by nearly 50 percent in cities such as Geelong, Ballarat, and Launceston. Tasmania, an island off the South Australian coast, with the most interesting diverse economy, has seen demand rise by nearly 40% in recent months.  

Banks Stopped Lending 

Secondly, the banks in Australia have recently stopped lending for property investment purposes, and banks are scrutinizing borrowers’ spending closely. The ratio of house prices to median incomes in Sydney is now about 12 times and Melbourne 10 times. In most instances, households in these cities need two income earners to secure their mortgage. 

Rates are Rising 

Thirdly, rates are rising. The Reserve Bank has not moved rates for some time, and rates are rising above 6 percent with some banks. 

Australia also has a rapidly changing political climate with elections to be held again in the next six months with the Labour Party predicted to win by almost every poll. The Labour Party has already committed to important changes, including restricting negative gearing to new properties only, whereas it now applies to existing properties as well which are the preference for investors. They are also proposing to reduce investors’ profits on the sale of investment properties by cutting the discount on capital gains tax. 

Times of change are always interesting to watch and buyers, sellers, and investors will need to keep close to changes in the market in the next year. 

 

Most Popular Articles

Where is the housing market headed?

Rising incomes, low interest rates and all other factors, including the balance between families looking for housing and the availability of housing, point towards a continuation of the strong housing market of the last 15 to 18 months.

Oct 18, 2021 By

Latest Articles

DOJ needs to honor agreement with NAR

NAR President Charlie Oppler writes: You should be able to count on the DOJ to honor an agreement. And yet, in a complete breach of commitment and legal precedent, the DOJ backed out of an agreement with the National Association of Realtors (NAR) that would more explicitly state the spirit and intent of NAR’s Code of Ethics and MLS guidelines in some key areas.

Oct 22, 2021 By