Property news tends to dominate the media headlines, and it is often difficult to obtain a clear picture of the market because media outlets can cherry pick data and make bold predictions. To add to the complexity, there are numerous local and global economic and influences that can affect how the property market performs. To narrow the focus and help buyers understand how the property market is performing at the city and suburb level, we have created a summary of the key property statistics to pay attention to.
Monthly price movements in property values.
This measurement tracks the movement in property prices across capital cities. Tracking the monthly changes over a longer period adds more meaning to the figures. For example, from October 2020 to January 2022, Sydney recorded 16 months of growth whilst the city has since recorded a decline in property values month on month as sourced from CoreLogic. Tracking the trends provides context and builds a broader picture of the market, particularly when reflecting on the size of the monthly movements. Following the trend rather than focusing on one or two months’ worth of data provides a more reliable view of market performance, especially if one month is more severely impacted by external factors.
Right now, we are noticing in Sydney that while the market is still in a rate of decline, the rate of decline is slowing. This tells us that the current decline is not as significant as what we have been experiencing in recent months. CoreLogic has commented that it is still too early to say if the worst of the downturn is behind us, but it is a notable trend.
Even though we continue to see price reductions, trends leave clues about where we are headed in the property cycle.
Suburb performance.
Buyers can assess what is happening at the suburb level and break the data down by examining data for houses and units. Capital city level information provides useful context. However, a buyer who searches in a handful of suburbs, can obtain more relevant information by reviewing the price movements at a suburb level.
Buyers can visit CoreLogic’s “Mapping the Market” tool to select a suburb of their choice and review the 3 month and 12-month price movement. For example, in the last 3 months to October 2022, house prices in Balmain fell by 5.9% and over the past 12 months to October 2022, house prices fell by 15.4%. This heat map is useful to build knowledge as to which areas are trending upwards or downwards at a rate faster than that of their neighbours. Over time, this helps the savvy buyer recognise long term patterns in price movements. A noticeable trend occurs within the most expensive suburbs: these suburbs experience the largest gain when property prices grow and conversely, experience the largest fall when the market declines. This is evident in the graph courtesy of the RBA and sourced from CoreLogic:
Listings volumes.
Tracking the number of properties on the market is another useful indicator of how the market is performing because it reflects current supply levels. Typically, the greater the supply, the more choice for buyers and the greater their negotiating power. Conversely, if there is a shortage in supply, there is less choice for buyers, creating stronger competition for existing, and especially quality, stock.
As in the case of price movements, it is helpful to track the trends in changes to listing volumes. In the current market for example, Sydney is experiencing an increase in total stock levels by 1.1% against the previous five-year average. However, the flow of new listings is below the previous five-year average. This signals to the market that properties are taking longer to sell which increases the overall level of stock. The shortage of new listings is even more notable considering Spring is typically the time of year when vendors are more likely to list their property on the market. Tim Lawless at CoreLogic notes, this shortage in new stock is likely due to vendors holding off on selling until selling conditions strengthen.
Auction clearance rates.
Tracking the percentage of properties that sell at auction provides a valuable insight because once again, this data can be an indicator of what’s in store for the property market. Historically, there is a correlation between auction clearance rates and property prices. To provide a sense of the auction clearance rates in Sydney for example, the weekly results are creeping up into the 60% clearance range which is considered an indicator of a stabilising market. To learn more about how to interpret auction clearance rates, read our article here.
Volume of sales.
The number of sales occurring in the market indicates the level of buyer demand in the market. If we consider the recent results in Sydney, we can see that volume of sales has been trending lower, indicating a reduction in buyer demand. From the recent CoreLogic data we can see that Sydney and Hobart were the only capital cities to record a lower quarterly volume of sales compared to the previous five-year average. The trend in Sydney is partially influenced by affordability constraints, considering the Sydney market rose so aggressively in the Covid growth phase. It will be interesting to see the volume of sales over the course of the spring season as the five-year average shows volumes typically increasing towards the end of the year before a slowdown for the holidays.
These key market indicators are easy to access and track and should help buyers understand the market they’re transacting. This can be extremely useful when handling the vendor, the selling agent and the competition. Buyers can build their knowledge and in turn, their confidence as they understand key market factors. Data driven conversations will help buyers during the negotiation process. If buyers can highlight the current market conditions in their favour and help the selling agent educate their vendor when presenting a reasonable offer, this can help the buyer in price conversations and put the power back into the buyer’s hands.
We think it is fascinating to reflect on the previous 30 years of property price movements across the country. Even when various economic and political and socio-political shocks are factored in, the overall trend is undeniably upwards.
If you don’t have the time to be tracking and interpreting data, and you are keen to buy ahead of the rest of the pack, call us today on 02 9568 6330 or email us at nick@buyersdomain.com.au.
