JUNE PROPERTY MARKET UPDATE 2020
- SYDNEY RETAINS THE GAINS – ANNUAL TOTAL RETURN OF 17.8%
- DWELLING VALUES UP 1.1% ON QUARTER AND 14.3% OVER MAY 2019
- MAY MEDIAN DWELLING VALUE DIPS 0.4% ON MONTH TO $885,159
- JUNE 13 SHOWS STRONG 70% AUCTION CLEARANCE RATE, MATCHING 71% FROM 2019
(CoreLogic and REIA figures. RBA Charts)
Despite a long queue of economic naysayers spinning their usual doom and gloom, the actual message of the markets could not be clearer – Sydney property is doing just fine thank you very much!
This weekend’s preliminary auction clearance rate of 70% shows strong pent-up demand absorbing the lower number of auction listings coming to market.
Digging into the Sydney figures, most of this month’s 0.4% dip came at the upper end of the market, with top quartile values down 0.6%. Lower quartile values were actually up 0.1%. Median house values stayed above $1m at $1,016,726, with a median unit value of $772,204. Gross rental yields were 2.7 and 3.5% respectively. Both of these now exceed the cost of funding for most borrowers.
The fact remains that the housing weakness story is yesterday’s news. The dip came in 2019. Top quartile values have surged 16.5% since then, with lower quartile values also showing a healthy increase of 9.6%. Buyer activity jumped 29% in May from April.
Most telling of all are the selling time and discounting figures. May 2020 time on market came in at only 28 days, almost half May 2019’s 51 days, while vendor discounts were only -3.4% this year compared to -6.8% in May 2019.
Bottom line – we are in recovery mode. Interest rates remain at record lows of just above 2% for owner-occupiers and 3% for investment loans. Bank credit is tighter but lower interest margins mean banks are more eager than ever to lend to qualified buyers.
JUNE 2 2020 – RBA KEEPS INTEREST RATES AT A RECORD-LOW 0.25%
In his June 2 Monetary Policy Decision statement, RBA Governor Philip Lowe sounded an optimistic note, stating that “it is possible that the depth of the downturn will be less than earlier expected.” The RBA’s actions “are keeping funding costs low and supporting the supply of credit to households and businesses. This accommodative approach will be maintained for as long as it is required.”
Mr. Lowe’s statement reflects a unity of central bank policy around the world, including US Federal Reserve Chairman Jerome Powell, who categorically stated last Wednesday, “We’re not thinking about raising rates. We’re not even thinking about thinking about raising rates.”
It’s hard to overemphasize the importance of long-term record low interest rates for the housing market. Removing interest rate uncertainty allows buyers to plan for the long-term and enter the market, knowing they can meet their lower monthly repayments. Government programs, including HomeBuilder grants of $25,000, will further keep a floor under the property market. Co-ordination of fiscal and monetary policy is great news for borrowers, building approvals and residential developments.
Household wealth has retained the gains from the 2019 dip, reaching new all-time highs in early 2020.
The end result is another healthy graph confirming the recovery in housing prices Australia-wide since 2019.
With public gathering restrictions easing, this is the perfect moment for sellers to list their properties and tap into the pool of motivated buyers eager to re-enter the property market.
Call V-Mark Design today to discuss your listing needs. Be it video, drone or Sydney’s best real estate photography and imaging, our friendly team of marketing professionals will help your sales results reach the next level.