Welcome to the Hill & Viteri Property Market Round Up for the January to March Quarter of 2021.
The year has opened with arguably the strongest housing market ever seen. The demand for housing even stronger in the first quarter than it was in the last quarter of 2020.
Market Direction
In our last Market Round Up we commented that buyer confidence had returned. Well, confidence has turned to fear. FOMO has set in with buyers fiercely competing for housing and driving prices up rapidly in the quarter. It really is a two tiered market though, with the strata market and housing market moving very differently. We have seen gains of 20-30% on housing over the period where units have had a marginal improvement. So, the median price is not necessarily reflecting the real market movements.
Buyer Activity
Our auctioneer, Michael Virley from MVP Auctions reported clearance rates of 89% in the quarter. This is despite the number of transactions being significantly higher.
We have seen the volume of properties coming to market at twice to three times the normal rate this quarter. However buyers continue to state, ‘there is nothing on the market’. This is because the absorption rate is so high. What I mean by that is that despite the increased supply the demand is still stronger so the properties are being snapped up.
An example of how the market has moved in the housing sector is 22 Taft Place, Bonnet Bay. First assessed in mid January, hit the market early March and sold late March. This property had 220 inspections, 46 contracts issued and pre-auction offers ranging from $1,430,000 – $1,630,000.
These offers were comparable to recent sales in the area for similar properties. However, the auction saw 19 buyers register and the property sell for $1,935,000 being $235,000 over reserve and $400,000 over our initial appraisal some 10 weeks earlier. This is a great illustration of how the housing sector is moving.
Buyer Sentiment
We have also noticed more out of area buyers coming from the East & Inner West as well as the St George area as affordability pushes buyers further out and flexible work arrangements are becoming more the norm.
In the apartment market we have seen some promising signs. Our agent Chris Fellas selling 12/55-57 Glencoe Street, Sutherland for $613,000. This was a huge gain on the previous sale in the complex in February that sold for $540,000.
We are continuing to see buyers favour the older full brick walk ups over the modern hi rise apartments. We are also seeing a number of our landlords selling and ‘cashing in their chips’. This could also be a reflection of those who chose to hold through the depressed COVID period and see the current conditions as favourable.
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Rental Market Movements
Leigh Anderson, our head of Property Management has made the following observations in the rental market. ‘Quality houses are in short supply. This is due to owners moving in and investment houses being sold. This lack of supply is pushing prices some 5-10% for this type of property. Apartments have held steady. The lack of investors buying has seen less supply. Also tenants becoming first home buyers has seen a decrease in demand. For those with a deposit it, the low interest rates make it just as affordable to buy a property.’
So, I would say at this time the local property market is strong and all signs are pointing towards this continuing to be the case next quarter. In fact, most of the housing commentators and analysts agree on this for 2021.
Now this current rate of gain can’t continue for ever and eventually the pool of buyers will thin and prices will stabilise. But if COVID has taught us anything it was that nobody can really predict anything with certainty.
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