Australian Housing Market Remains Strong Despite Pandemic & Massive Unemployment
Published 5:25 am 20 May 2021
The latest data may show a drop in housing auction volumes, but the market remains strong, especially in major cities. Melbourne, for instance, reported a higher success rate even when the actual number of units fell in the last week.
Sydney, on the other hand, holds firm, maintaining a final clearance rate of over 80% in Q2 so far. The data is provided by CoreLogic. A spokesman of the firm commented that “this week is likely to be no different once the remaining results are collected”.
Regions like Lake Macquarie and Newcastle were also hot markets during the pandemic. Surprisingly, people moved into new homes to seek better lifestyles despite the hit the Australian economy took last year and rising unemployment in the country.
In both these regions, all properties put up for auction were sold, which include both homes and apartments.
Cities with the highest clearance include:
- Sydney
- Melbourne
- Brisbane
- Adelaide
- Perth
- Tasmania
- Canberra
In Perth, the clearance rate was just 60% for reported auctions. Whereas Canberra touched almost 88% in preliminary clearance rates. Overall, 2892 homes were auctioned in the capital cities last week, with a 79% preliminary clearance rate.
Commercial Property Trends
Other data released on Monday showed that commercial properties like malls are doing well. However, Morgan Stanley takes a more sceptical approach, going as far as to call it an ‘illusion’. Visitors returned to the mall in large numbers, but it doesn’t tell the complete story.
What’s missing in the equation, the researchers noted, is what’s known as the trade debtors balance (outstanding invoices). The pandemic created a trade debtors ‘imbalance’, so to speak. When it comes to shopping malls and supermarkets, rent payments are usually paid in advance.
“Much of the focus on the post-COVID snapback has been on recovering visitations across the shopping malls and the improving rent collection statistics,” as per the Australian.
Real estate investors are also coming back strong after 2020. In terms of housing finance, investor growth remains higher than owner-occupants in Q1.
Frequently Asked Questions
Who is buying?
The data also shows that the surge in the housing market is mostly due to owners and occupants, but investors are also jumping into the game. Data also shows that new construction is focused more on houses than apartments.
It coincides with a large number of approvals for building apartments. At the same time, there has been a notable increase in home loan approvals for investors. These trends will also create jobs in the construction sector.
Why did the property market remain steady during the pandemic?
The data also shows that the surge in the housing market is mostly due to owners and occupants, but investors are also jumping into the game. Data also shows that new construction is focused more on houses than apartments.
It coincides with a large number of approvals for building apartments. At the same time, there has been a notable increase in home loan approvals for investors. These trends will also create jobs in the construction sector.
What are the future speculations?
There are two main reasons why the country came out of a recession and is surviving a pandemic with a strong property market. Firstly, you have record low interest rates, and secondly, the government’s desire to support the market in the worst of circumstances.
As a result, the number of Australians who took out mortgages last year increased from the pre-pandemic days despite the staggering economy and soaring unemployment.
Where to find mortgagee listings?
Experts predict that the country’s housing boom will eventually wane. Economic factors include an oversupply of property along with a decline in interest rates in the long run. Demographic shifts can also lead to a housing market crash, thanks to the “escape from the city” phenomenon.
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