Eased restrictions affect clearances: Weekly market wrap with Sam DodimeadBack
Eased restrictions, school holidays affect clearances
Over the last four weeks, the volume of established listings advertised for the first time on Allhomes has increased by 13.77%, showing early signs of improved vendor sentiment. The unfortunate timing of school holidays and relaxation of some state border controls coincided with last weekends’ auctions, leading to a significantly lower clearance rate of 53%, down from 65% the same time last year.
Conveyancers preparing contracts for vendors have indicated typical spring market conditions may start sooner this year as vendors who deferred transacting in March and April start putting their homes on the market and commence auction campaigns in August.
During the past week, it has become evident Victorians are dealing with the fallout of their COVID-19 containment policy, resulting in new reported cases in Canberra. This may have caused a greater percentage of buyers to question if they should delay purchasing, especially apartments and townhouses.
Allhomes ACT Real Estate Market Trends Report short-term view tracks month-to-month changes to the median property values and interest rates. From February to May 2020 (most recent data), falling interest rates have caused the median unit value to increase each month. The median unit value has increased by 5.88% over four months starting at $465,000 in February and increasing to $492,322 in May. Buyers who were considering making their decisions earlier this year but postponed are facing the prospect of having to pay significantly more to secure similar properties.
Stimulus influences purchasing decisions, lowers barrier to ownership
In the new market, ACT Government stamp duty concessions are influencing purchasing decisions of downsizers and upgraders, who previously would not have qualified for any assistance to buy. Once ACT Revenue provide further detail on how the HomeBuilder Grants will be administered, and developers adjust their marketing to heavily promote their projects qualifying, the initial wave of demand created upon the announcement is anticipated to re-appear. These buyers initially looked to enter the market with gusto, however were disappointed by the lack of information and certainty created by a combination of premature announcement by Commonwealth Government, lack of enthusiasm to participate by ACT Government, or both.
Leading private sector support, St George Bank has taken the initiative to help first home buyers into the market. They have announced discounting Lenders Mortgage Insurance to just $1 for first home buyers with a 15% deposit. Whilst 15% might sound like a big hurdle, if you’re a first home buyer seeking a new home to live in and have saved 5%, purchase an off-plan property for $500,000 and are eligible to receive a HomeBuilder Grant, you’ve effectively got a 10% deposit with 12-24 months to save the difference, and do not pay stamp duty in the ACT. This has significantly lowered the barrier of entry to property ownership and provided first home buyers with the ability to take control of their purchasing decision without having to rely on securing a place in the First Home Loan Deposit Scheme.
Our current environment has a combination of historically low interest rates plus public and private sector assistance to lower barriers of property ownership. Increasing demand without an equal increase to the volume of stock indicates delaying purchasing decisions could prove an expensive lesson, as those who made that decision in March will start to realise as they recommence their property search.
Weekly Facebook Live series
Each Saturday at 9am, I host a Facebook Live for Canberra Weekly to answer your property questions. This week’s topic is ‘property market chat’. You can send through questions in advance via email to firstname.lastname@example.org with ‘Facebook Live’ in the subject line, and tune in via the Canberra Weekly Facebook page.
With Sam Dodimead, local property professional and host of Canberra Property Podcast where you can get to know the consultants contributing toward deliver of new buildings. Stream from wherever you listen to podcasts.
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You can check out the market wrap from last week here.