Amidst the pandemic and lockdowns, frustration and stress, the Australia property market continues to forge on, even as an eventual slowdown is inevitable.
And, as predicted by CoreLogic research director Tim Lawless, the property market that has been on a strong growth path from late 2020 until the autumn season of 2021 has been gradually losing steam. But the keyword here is ‘gradually’, as the market still managed to surprise industry insiders with its performance in recent auction results.
Despite the extended lockdowns and COVID restrictions, Sydney’s weekend auction market performed exceedingly well. Stiff competition among buyers has pushed clearance rates up in never-before-seen levels (86.3%) since March this year.
Another positive trend is the lower number of auction withdrawals, which also supports higher clearance levels. However, experts caution that the higher clearance rates in the past weekend also reflect the reduction in the number of listings.
Meanwhile, the Melbourne auction market recorded a lower clearance rate of 64.9%, which is still substantially higher than the 55.1% outcome during the same period last year. This time, listing numbers were also higher compared to the number of lockdown-impacted ones last year.
COVID restrictions and lockdowns being imposed all across Australia will inevitably impact the property market in the short term. Aside from affecting business operations and eroding consumer confidence, the lockdowns also make it more difficult to schedule inspections and sell property.
In mid-August, the latest wage figures published by the Australian Bureau of Statistics showed an increase in the average weekly earnings for full-time workers, with a 1.7% increase compared to the same time last year. This translates to weekly earnings averaging at around $1,844, or $96,000 per year. Moreover, unemployment rates fell in July 2021.
The problem now, of course, is that whatever gains we experienced earlier, the new spate of COVID outbreaks could disrupt such developments.
This is especially true since 4.160 million Australians were recorded to be working part time as of May this year. Out of this number, there would be part-time workers who opted for this work setup as a matter of choice – such as mums and students who want shorter hours. There will also be others whose working hours were shortened because of COVID.
One silver lining of this, though, is that interest rates are unlikely to be increased until 2024, according to the Reserve Bank of Australia (RBA).
On the whole, however, the limited ability of some Australians to work full time will dampen labour market activity and halt or slow down the growth of wages. This, in turn, will impact the ability of some Australians to buy property and the level of activity in the market.
Unsurprisingly, as mentioned earlier, listing numbers are also starting to reduce due to COVID lockdowns – a pattern already being observed in key cities.
Even with COVID-19 still around and lockdowns being imposed across the country, industry experts still believe that the fundamentals count the most when it comes to the property market.
Having experienced crisis after crisis, the Australian housing market is expected to withstand and recover – whether it’s a pandemic like COVID or something else.
Also, market fundamentals like demographics, regulations, taxation, affordability, financing, consumer confidence, and supply and demand are the ones most likely to remain and influence the market – the way they’ve always done in the past.
If and when Australian property market prices do fall, it would be such a great opportunity for those who are ready to ride the wave.
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