Rising housing prices in Australia persist due to five key factors, including housing supply shortages and a substantial increase in population– Sydney auction clearance rate reaches 66%

Week’s Key Focus

A recent report in The Daily Telegraph highlights the ongoing surge in housing prices across Australia this spring, driven by a combination of favorable factors. Despite a slight rise in interest rates, the real estate market remains remarkably robust.

Key Reasons for the Continued Rise in Housing Prices:

Persistent Housing Shortages:
Over the past six months, residential construction approvals have averaged 13,355 units per month, a 23% drop compared to the ten-year average. This shortage, especially in apartment-style residences, necessitates a review of zoning opportunities in some regions to increase housing supply.
Strong Uptake of New Housing:
House prices increased by 3% in June and 2.2% in September, indicating a high absorption rate of new housing supply. Demand still outpaces supply in most markets, despite increased choices for homebuyers compared to early 2023.
Near-Peak Interest Rates:
The Reserve Bank of Australia has held interest rates steady for four consecutive months. Although inflation has slightly decreased, it’s expected to take until 2025 to reach the targeted 2% to 3% inflation rate. Therefore, another interest rate hike is anticipated before the current cycle concludes, but market participants seem to have adapted to higher mortgage rates.
Immigration-Driven Population Growth:
Government projections show an expected net increase of 715,000 immigrants in Australia over the next two years. Many of these newcomers are likely to choose Sydney and Melbourne, driving property prices and rents higher in these cities.
Urban Population Concentration:
Two-thirds of Australians reside in one of the eight major capital cities, providing solid support for long-term price growth. While some have left cities for remote areas due to the pandemic and remote work, this trend remains relatively small. Urban areas continue to maintain high population density.
Continued Interest in Remote Areas:
The pandemic has heightened interest in remote living, leading to homebuyers working remotely and moving to coastal or rural areas. Improved transportation links between cities and remote regions are further encouraging this trend.

In summary, CoreLogic suggests that market corrections have concluded in most capital cities and remote areas. This presents a limited window of opportunity for homebuyers in these markets to benefit from price adjustments before prices rise further. Experts anticipate that national housing prices will reach new highs by the end of November.

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Auction Results This Week

Sydney: A total of 800 properties went under the hammer, with 531 auction results reported. Out of these, 348 were successfully sold, resulting in a solid clearance rate of 66%. The overall value of the auctions reached a substantial AUD 406,540,300, and the median property price stood at AUD 1,510,000.
Melbourne: In Melbourne, a whopping 965 properties were up for auction, and 691 auction results were reported. Of these, 468 were sold, achieving a strong clearance rate of 68%. The total auction value amounted to AUD 362,395,426, with the median property price at AUD 960,000.