Property transactions on a downward trend
While new home sales might be rising, overall transaction volumes are on the decline as the housing market cools.
While the Housing Industry Association has released figures showing a rise in new home sales, research from CoreLogic RP Data shows overall transaction volumes are lacklustre.
According to the figures, house sales fell 3.7% over the 12 months to April, while unit sales were down 9.7%. The proportion of house sales which occurred in one of Australia’s capitals fell to its lowest since January 2013, while the proportion of unit sales fell to its lowest level since May 2008.
CoreLogic RP Data research analyst Cameron Kusher said while sales in Perth and Darwin may have bottomed out, most other capital cities are seeing a downward trend.
“It is difficult to gauge exactly how strong the downwards trend is in Sydney, Melbourne and Brisbane given how many units are under construction. Keep in mind that those which are funded locally will typically need at least around 70% of the project pre-committed in order to commence construction. This would seem to suggest that the recent decline in sales is not quite as strong as represented here. Nevertheless, affordability constraints, particularly in Sydney and Melbourne, following consistent value growth in recent years is likely leading to a decline in sales,” Kusher said.
Adelaide, Hobart and Canberra were also seeing transactions trending slightly lower, but Kusher said the trend was nowhere near as strong as in Sydney and Melbourne.
The weak sales volumes are likely to see house prices moderate, Kusher suggested.
“With fewer transactions in the market and tighter mortgage lending conditions, we’re expecting to see less upward pressure on home values as we progress through 2016. It’s important to note that property transactions are recorded at the time of contract; however, they are not received until such time as they have settled. For this reason, the numbers displayed for units over recent years are likely to be somewhat undercounted and may be revised over the coming years,” he said.