04 Oct Soft start to Spring – Andrew Wilson
One month into Spring and how is the market faring? Dr Andrew Wilson says while it is still mixed it has been a good start.
Kevin: They do say, don’t they, that Spring is the peak selling time when we get a bit of an indication about how healthy the market is. Here are at the end of the first month into Spring, the end of September.
Kevin: Joining me to have a quick look at the first month into September, Dr. Andrew Wilson, from My Housing Market, a regular contributor for us. We look at the auction numbers every Monday in a live stream on Facebook. You can watch us there 12:30 every Monday, when Dr. Andrew Wilson gives us an excellent wrap-up on the cap city markets and the auction activity over the weekend. Hello, Andrew.
Andrew: Yes, hello, Kevin.
Kevin: Nice to be talking to you in an audio sense as opposed to seeing you, although I always enjoy seeing you. It’s always a bit of a thrill.
Andrew: That’s very nice of you to say.
Kevin: That’s a pleasure, mate. Andrew, here we are, well into Spring now. What’s your feeling about the Spring market … a bit of mixed result?
Andrew: It’s, I guess, no surprise that our Spring bounce as we usually see at this time of the year hasn’t been the type of bounce we’ve had in recent seasons, Kevin. The key driver of housing markets, of course, are interest rates and we have had interest rates on hold now for over two years. Of course, that’s a record period.
Andrew: Even though it’s been a little bit of mixed ups and downs from the banks in terms of their mortgage rates, those recent increases by the banks have really been quite small. There for existing customers and banks are still quite happy to offer good incentives for new customers. They’ve gotta maintain their profitability.
Andrew: In a market environment where we are certainly seeing fewer listings and that’s been the lesson so far in Spring, that numbers are well down on last spring in terms of listings, and of course, clearance rates are down as well. The numbers are certainly higher than Winter. We’ve just gotta get used to a more normal environment for our housing markets now that we’ve lost that extraordinary drive from falling and low interest rates of recent years.
Kevin: It’s interesting, Andrew, that when you look at the results that are coming out of each of the cap cities, it highlights, as the market bounces around, just how diverse it is across Australia where you see … Melbourne’s still performing reasonably well … some very patchy performance out of Sydney. Brisbane seems to be growing, but not probably as much as everyone would have predicted. Adelaide’s ticking along okay and even Perth seems to be having a bit of a recovery. It’s all over the place, really, isn’t it?
Andrew: To some degree, we have seen a convergence, Kevin. You’re not seeing those sky-high results we saw from the Melbourne, Sydney and Canberra markets recently. Those markets have come back to the past concerns of their clearance rates. We’ll see the same result in house price growth. I think that house price growth would generally be a couple of per cent above or below the line year on year … the higher prices in Spring and Autumn, lower prices in Summer and Winter. This is the seasonal effect. It’s because we don’t those external drivers anymore to be able to push up prices to higher levels, according to local factors, of course … that sort of convergence that we will see in prices growth.
Andrew: We can still, I guess, identify the better-performing markets and it’s no doubt that the Melbourne market. It’s up and running in Spring. Levels are, as I said before, lower than they were a year ago. Prices growth will certainly be a lot lower in Melbourne than it was a year ago, but it’s still tracking in quite a comfortable market, I think, to sellers, although it’s a much more balanced market with buyers having more choices … not as many choices as a year ago, but they certainly have a bit more leverage in the market place.
Andrew: I think sellers are becoming a bit more realistic with their price expectations, as well. That Sydney market certainly been… still a little slow over Spring, Kevin … hasn’t quite picked up at the level we would have expected. Listing numbers are flattish and so are clearance rates quite flat. Inner suburban areas are doing well, but the outer suburbs really are continuing to move sideways. I think we’re seeing much more activity in the private market, the private-
Kevin: Private treaty, yeah.
Andrew: … sales rather than the auction sales in those suburbs.
Kevin: Interesting, Andrew. I sometimes think as I work through Auction Insider with you … I get a distinct impression … Mind you, you’ve not told me this, but the Melbourne market seems to be quite mature … mature in terms of how they look at auctions, how they process the auctions, but also how the market is, so whether that’s through buyers and sellers, we get a lot more volatility in the Sydney market.
Andrew: Absolutely, Kevin, and we can see it in the results in Melbourne and it’s a very even spread … not a lot of losers in terms of lower clearance rates in Melbourne. The only one that’s been a little bit mixed is the southeastern suburbs of Melbourne, which is a bit counterintuitive, because that’s, I guess, the market where medians are lowest. Your prices lowest and we’ve had a lot of first-time buyer activity in Melbourne over the past year. It hasn’t seemed to have worked its way into higher clearance rates in the southeast. Most other areas are doing quite well.
Andrew: Really, the price reflections on Melbourne which have seen median prices down over the past year … I think it’s more got to do with the property mix that is being measured. There’s no doubt that the inner south, inner east and inner city, higher-priced areas in Melbourne came off the boil over the past year. I think largely that’s what we’re seeing impacting the models of prices growth looking like it’s falling. I think we’ll see it pick up in those higher-priced areas over Spring … seeing some early signs, but most areas are doing okay.
Andrew: Most are reasonably happy with their prospects in the marketplace in Melbourne over Spring. I think most markets are the same. Possible exceptions, as I said, Kevin … Sydney at the moment, still bit mixed, but Brisbane, not too bad. Numbers are around about where they were a year ago, a little bit lower. Adelaide certainly not as strong as it was a year ago, and the same for Canberra, but still a good, balanced market, and as you said, the Perth market is off its lows now and starting to move ahead, but gradually.
Kevin: Always good talking to you, Dr. Andrew Wilson, from My Housing Market. Thanks for your time, Andrew.
Andrew: Thank you, Kevin.