Market Update on Australian Properties

As we move into mid-February, more and more properties are getting listed on auctions and are generating steady results. However, buyers remain cautious as ever with their purchases. Therefore, sellers must have a proper understanding of the property market and use the correct real estate selling strategies to increase buyer engagement.

We at Ham Kerr Properties collated the recent auction data, and the following was indicated:

• Melbourne reported a clearance rate of 68% across 613 auctions
• Sydney reported a clearance rate of 70% across 657 auctions
• The capitals combined reported a clearance rate of 70.7%
• Across major capitals, 2,051 properties were auctioned

The median prices were as follows:

• $906,100 in Melbourne
• $1,707,500 in Sydney

A run-down on the Australian auction market 

 As the selling season intensifies, auction activity across the country has boosted to massive levels.

As an interpretation, clearance rates of 60 – 70% mean the market is balanced, and neither party (buyers or sellers) has dominated.

When it’s above 70%, the sellers have it dominated

When it’s below 60%, the buyers are in control

Currently, the market seems to be balanced, with prices slowly rising. 

A summary of the Melbourne auction results 

• 828 scheduled auctions
• 613 reported auctions
• 418 properties sold
• 123 passed-in
• 72 withdrawn
• Median pricing is $906,100

What does this indicate?

• Buyers are starting to negotiate more
• Sellers are pricing their properties realistically
• Properties presented well are performing the best

Buyers are more interested in entry-level properties, gaining the attention of multiple bidders, whereas the expensive properties only have a few. This is quite expected of a market that is currently stabilising after steady growth periods.

A summary of the Sydney market

• Gained a clearance rate of 70%
• Median pricing is $1,707,500

What does this indicate?

Even if the prices are comparatively high, sales remain strong, indicating consistent demand, especially when the land is scarce, as it is with suburban areas. Buyers see potential even in run-down properties because they can renovate them.

Analysis of regional Victoria

Geelong

• Property prices rise consistently, as Melbourne buyers relocate here due to affordability issues.
• Family houses under $900,000 get sold the fastest.

Ballarat

• Property prices are relatively affordable, and with government incentives, competition remains steady.
• The market is growing steadily as more first-home buyers are attracted to properties here.

Bendigo

• Investors are quite interested in the properties, as they generate higher rental income than properties located in metro Melbourne.

All this data indicates that these regional markets don’t get affected by brief trends, but are backed by steady population shifts.

Was the pass-in rate good?

As a percentage, the Melbourne rate was about 20, whereas in the previous flourishing years, it was below 10%. The current numbers show there is demand, but buyers are more cautious and not willing to overpay. So yes, this helps keep the market healthier and sustainable for the future.

Perspectives of buyers and sellers

Buyers:

• Have concerns when it comes to affordability.
• The limited property supply urges them.
• Cautious about how much they should borrow.

Sellers:

• Opting for realistic prices compared to the 2021 – 2022 peak periods.
• The majority of them go ahead with deals after auctions.

Overall, both parties are much more professional and aware of the market conditions, so they don’t make any subjective decisions.

Economic contributors

On a wider note, global markets are fluctuating from time to time, but the Australian market remains steady because of:

• Financial governance
• Limited supply of properties
• Increase in population
• Low unemployment

On a deeper dive into these factors, the following information was observed

Interest rates

• The cost of borrowing has increased due to rising interest rates, which makes the buyers more cautious.
• The clearance rates were above 70%, showing that buyer interest is still present even when loans are expensive and that the demand is stable.

Increase in population

• As more people fly into Australia, the demand for properties increases.

Supply constraints

• Strict planning guidelines delay the construction process, which slows down the supply of properties; with this limitation, prices tend to rise.

Market predictions

In the next 3 months

• Clearance rates would stay in the range of 65 – 72%.
• Melbourne prices are expected to have modest growth.
• Sydney will continue to be stable and strong.

In the next 12 months

• Property prices nationwide are anticipated to increase.
• Auction volumes will rise in the autumn.
• Properties in the regional areas will perform better than apartments.

Actionable advice

Buyers:

• Should work on getting their finances approved early on.
• Concentrate more on long-term value.
• Focus a bit more on regional areas that have the potential to grow.

Sellers:

• Listing properties with realistic prices is crucial.
• Should focus on presentation strategies.
• Auctions are bound to be successful when the correct real estate selling strategies are incorporated.

Investors:

• Focusing on properties where they earn a good rental income is smarter than flipping the property for easy money.
• Should pay attention to suburban areas where there’s any infrastructure planned to be built or has any at the moment.

Core insights

• The Melbourne market is strong and cautious.
• Comparatively, Sydney is slightly stronger.
• Regional areas of Victoria have significant buyer interest.
• The rise in interest rates is slowing the growth, but not stopping it.
• Prices are steadily increasing due to balanced markets.

Considering all, the Australian property market is expected to grow consistently as a result of population growth clashing with housing supply constraints. Therefore, the sellers who price their properties realistically and incorporate strong real estate selling strategies will achieve great results.

We at Ham Kerr Properties, will continue to monitor Australia’s property market so buyers and sellers are aware of the current market situation.