National property update
Greville Pabst, CEO & Director, WBP Property Valuers
Following a substantial slump in the Australian property market in late 2008, auction clearance rates have bounced back. Figures show that national clearance rates have witnessed a positive trend since June, a welcome shift from considerably low rates in the preceding bleak months of November, December and January.
During this same period transaction volumes have also witnessed steady growth leading up to the spring selling season. The sustained improvement in performance is largely attributable to the looming deadline for the reduction of incentives for first home owners which will see grants for established homes fall by $3500 on October 1st.
Across the country, first home buyers continue to lead the recovery, accounting for 25.2 percent of all new loans for owner occupiers. Record low interest rates and the First Home Owners Grant lead to a record 18,939 buyers entering the property market for the first time in June, this figure taking total grant approvals to more than 137,000 since boosts were announced in October 2008. As a result of this activity, the lower end of the market is exhibiting boom-like behaviour with values rising strongly in the first half of the year.
In late 2007, the highest growth increases in median house prices were in some of Australia's most prestigious suburbs. In contrast, in 2009, increases in values are predominantly in suburbs with prices around or below the national median. However, despite the rapid and substantial falls in prestige property, improved sentiment has led to a marked improvement in values across all residential markets during the recent quarter, with established home buyers returning to the market in anticipation of spring market opportunities.
According to researcher RP Data, the national median value for units in July was $409,140, while for houses the national median was $505,580, a rise of 5.9% since the beginning of 2009. Although the apartment market has shown less volatility than detached homes both have demonstrated comparable performance over the longer term with existing differences becoming less apparent as demand for affordable accommodation continues.
Despite the significantly lower level of transactions throughout the first half of 2009 the spring selling season, together with moderate economic growth and stable interest rates, has created a positive outlook for property markets leading into 2010.