The start of 2017 has seen some hot weather across the state and a steady start for the real estate industry, as the property market returns to normal volumes in most markets, with future conditions as difficult to predict as ever.
As always, buyer sentiment is heavily influenced by the combination of local area market conditions and the overall macroeconomic environment.
The Sydney Morning Herald reported a survey of 27 leading experts by BusinessDay Scope has revealed Australia’s property prices are likely to continue rising this year, before slowly losing momentum and potentially dropping back slightly. An article in the Australian newspaper said housing affordability is now a serious problem in most parts of the country. In the early 1980’s, house prices in capital cities were around three times household median incomes except in Sydney which had a ratio of just above five. Today, the ratio is above twelve in Sydney, close to ten in Melbourne and around six in other capital cities. Interestingly, because interest rates are at an historical low, repayments as a percentage of household income are actually below the average of the last decade at 26 percent, but the ratio of debt to income has exploded from 90 percent in the early 90’s to close to 190 percent now. As a result, household balance sheets are said to be very fragile and vulnerable to future interest rate increases.
Meanwhile, the latest finalised auction report from CoreLogic has shown clearance rates at 75% in Melbourne, 74% in Sydney, 46% in Brisbane and 62% in Adelaide. Volumes in other capital cities were too low to yield meaningful averages.
The local property market has started 2017 well with high buyer enquiry and relatively tight stock levels. Our February in-rooms Auction saw a 50% clearance rate with the two houses selling and the two blocks of land getting bids on the floor but not meeting reserve. Ray White Blackheath’s 3rd Auction for the year is set for Sunday 19th March, with 2 properties going under the hammer.
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