Australian housing market stepping carefully into recovery over spring
The spring housing market covers the final four months of the year and is typically, but not always, a period of heightened buyer activity. Last year’s spring selling season ran out of steam as concerns over a weakening economy flattened confidence.
This spring, however, has followed the usual pattern of increased buyer activity, with auction clearance rates firming in both Sydney and Melbourne despite higher numbers of listings.
Although some solid growth has been recorded through the year, activity was nonetheless mixed and patchy among markets and sub-markets, with overall confidence remaining fragile.
This is not surprising, as recoveries are likely to be gradual after the effects of significant market stimuli abate – the Australian housing market has stepped cautiously rather than striding confidently into recovery mode. However, spring has certainly provided a solid foundation for further improvement through 2013.
As a result of increased buyer activity, median house prices have risen modestly over 2012 in Perth, Sydney, Canberra and Darwin. Melbourne and Brisbane house prices have been relatively flat, whereas Adelaide and Hobart house prices have continued to soften under the impact of weakening local economies.
Perth houses prices have responded to pressures from record levels of immigration, a tightening rental market and rising incomes and confidence driven by Australia’s strongest economy.
In Sydney mid-price range change-up buyers continue to be active through spring, particularly in the inner-west, middle-west and south-west suburbs. Sydney’s upper north shore and north-west suburbs were also popular with these buyers. Investors were also active in the Sydney market thorough 2012, driven by a tight rental market.
Melbourne inner-east, inner-urban and inner-bayside prestige housing markets gathered momentum throughout 2012, with high levels of activity being recorded by year’s end in the best spring performance for years. However, other areas in Melbourne remained subdued.
The Brisbane housing market had pulled itself of the floor by the end of 2012 after two years of subdued buyer activity and declining prices. This revival was driven by buyers in the established inner and middle north and north-western suburbs and increased activity by investors particularly in the apartment market.
Expect the steady buyer momentum evident in most capital city housing markets through spring to continue in a similar nature into 2013. Markets will, however, perform at different levels according to the characteristics of the local underlying drivers, with activity remaining fragmented.
Prestige markets will generally follow Melbourne’s lead in 2013, particularly the Sydney prestige market, which is beginning to show early signs of a revival.
Strong population growth will continue to activate Perth, with upward pressure on prices to accelerate through the year. The performance of the middle markets in Brisbane and Melbourne will be largely dependent on sustained jobs growth.
Andrew Wilson is senior economist at Australian Property Monitors.