Auctions continue strong winter clearance rates, prices bounce back from spring decreases
Home values rose by 0.7 per cent in Sydney, a marked and uncharacteristic reversal during the traditionally-sluggish winter sales period, according to RP Data. And this, on high volume and a clearance rate this week of 73.2 per cent, points toward a meaningful shift in sentiment. Prices similarly rose in Melbourne, by 2.1 per cent, on a clearance rate of 69.3 per cent. Melbourne’s prices had been falling all through the spring, erasing all gains for the year by the end of May. The national average clearance rate was 68.1 per cent in the capital cities, a rise from 65.4 per cent last week. Brisbane recorded a 43.9 per cent clearance rate, Adelaide 66.7 per cent, Canberra 63.6 per cent and Perth 50 per cent. Sales prices fell in Brisbane, Adelaide and Perth. Read the full story here.
UBS research shows much higher activity level for foreign buyers than previously estimated
Research release yesterday by UBS suggests that foreign investors may be buying as much as 40 per cent of new construction in the Sydney and Melbourne markets – and that the value of those purchases is up 93 per cent year over year, potentially driving up buyers’ costs in some of the most expensive markets in Australia. That runs counter to earlier academic studies which revealed that the proportion of foreign capital had remained more or less steady through the recent boom, with investors from Asia merely replacing investors from the U.S. and Europe. Geographic concentration for foreign investment may be creating a localised effect, however. Three-quarters of foreign investor purchases approved in 2012-13 went to new and existing homes in Sydney and Melbourne – disproportionate to the actual amount of housing represented there. Most of those purchases appear to have been newly built dwellings. While prices had been sliding earlier this year, house prices remain up 15.4 per cent year over year in Sydney and 9.2 per cent in Melbourne. UBS estimates foreign investment at around one eighth of all home sales in Australia right now, up from one-twelfth four years ago. Read the full story here.
Australian banks most profitable in the developed world
The Bank for International Settlements’ annual report shows once again that Australia's big four lenders are the most profitable in the developed world, but face risks in a rising interest rate environment. Banks have been lending on assets – particularly in the share market and real estate – that could collapse in value once again if interest rates rise quickly or some other exogenous shock strikes. Growth based on low interest rates alone is unsustainable, BIS leaders said, noting that borrowers are fully leveraged at current rates. Analysts predict interest rates will begin rising late this year or sometime next year. A rise to historical levels would leave many borrowers with unsustainable payments for home mortgages, which may lead to business failures and unemployment rates rising as consumers pull back on other spending. Read the full story here.
Vacancy rates rising in Sydney
The Real Estate Institute of NSW Vacancy Rate Survey reports that Sydney’s rental listings rose 0.2 per cent to 1.9 per cent. March’s 1.4 per cent vacancy rate was the lowest in 28 months, so the recent rise represents a substantial rebound in availability, putting pressure on rental yield. Recently-finished apartments appear to have enlarged supply, with about half of the apartments purchased by investors looking for tenants. Sydney’s middle ring had more open units than other areas, at a vacancy rate of 2.5 per cent. For every four units available in April in a ring 20km from the CBD, five are open now. Supply in the outer suburbs remains tightest. Read the full story here.
Want to buy a house in Sydney’s suburbs? Move fast.
RP Data lists the 10 fastest-selling suburbs in Australia, and seven of them are near Sydney. The national average time needed to sell a house is about 80 days. In the top 10 suburbs, it’s 16 days. In the fastest-market in the country, Old Toongabbie, a suburb just north of Parramatta, it’s 12 days. The others, in order:  Coolbellup, WA;  Lynwood, WA; Parklea, NSW; Quakers Hill, NSW; West Gosford, NSW; Willoughby, NSW; Lalor Park, NSW; Werrington Downs, NSW;  and Lane Cove North, NSW. Read the full story here.