The past few weeks have shown signs of a positive turn in the housing market. There has been a strong rebound in consumer sentiment, and outside of Melbourne, auction clearance rates and volumes are rising.
More recently, CoreLogic listings data has shown that in some cities, vendors are also more willing to test the market by listing their property for sale. Across the capital cities, ‘new’ listings, which are properties freshly added to the market over a period, increased 0.7% in the four weeks to the 20th of September.
This was driven by a particularly strong jump in new listings across Sydney, up by 382 listings over the period, followed by Perth, where new listings increased by 286.
The charts below show the rolling count in new listings at the combined capital city level over the past few years, and a capital city breakdown of the four-week change in new listings counts.
The combined capital cities chart shows a subdued start to the spring selling season, which is now gradually gathering pace. However, new listings volumes are still down 35% on the previous four-year average.
The capital city breakdown reveals Sydney and Perth as leading the new listings volume, while new listings across Melbourne fell by 935 listings. While this is a large drop in new listings, the decline has eased from the previous four week period, where the count of new listings fell by 2,976 in the four weeks to August 23rd.
All but two of the capital cities recorded an increase in listings. This signifies that vendors may be more confident in selling their property. The exceptions were Melbourne, where transaction activity is understandably constrained by stage 4 restrictions, and Darwin, where listing numbers are generally lower and more volatile.
CoreLogic valuation data suggests that there is so far little indication that these increases in listings may be a result of distressed sales.
Potential in the Perth market
While transaction activity is gradually improving across the country, Perth stands out as a market primed for recovery. For the four weeks ending 20th of September, Perth and regional WA were the only dwelling markets where new listings volumes exceeded the numbers in the equivalent four week period of the previous year.
Listings is not the only transaction data suggesting more confidence in the Perth dwelling market. This is shown in the chart below, which capered capital city sales numbers in August, with a 6-month average of pre-COVID sales volumes. Perth is the only capital city where sales numbers where above the pre-COVID average.
These higher levels of transaction activity are also showing up in mild value increases across the Perth dwelling market. In the 28-days to September 23rd, the Perth home value index increased 0.6%.
While a positive turn in Perth dwellings may be surprising during a recession, the WA economy has been supported by a 4.8% increase in mining investment over the year. ABS payroll data suggests since the start of the pandemic, payroll jobs across WA fell less than 1%, compared with national declines of 4.5%.
Perth dwelling values are also relatively affordable, sitting 22.2% below the record dwelling value in June 2014, and there is a strong mix of state and federal first home buyer incentives in place, which may be encouraging demand as well.
A consistent upswing in Perth property values will depend on the resilience of the market through the end of mortgage repayment deferrals, whether there are further reductions in the cash rate, and how successfully COVID-19 can be contained.