The year is ending on a high note with one of the strongest Spring markets I have ever seen coming to a conclusion this week.
As we all wind down for the Christmas holiday break, I think a lot of owners and investors will be considering a move in the new year. Spring provided ample evidence that Sydney and Melbourne are now well into recovery and other capital city markets are following.
There are signs of new strength in many regional markets, too, particularly the Illawarra, Newcastle and Lake Macquarie in NSW and the Sunshine Coast and Gold Coast in South-East Queensland.
CoreLogic data for the month of November shows prices gains in every capital city bar Darwin, with Sydney, Hobart and Melbourne at the front of the pack.
Sydney led the November price surge with an incredible 2.7% rise in median home values – the strongest monthly result since 1988. Hobart and Melbourne weren’t far behind at 2.3% and 2.2%, followed by Canberra (1.6%), Brisbane (0.8%), Adelaide (0.5%) and Perth (0.4%).
These results are more significant because they’re for November, when stock for sale always rises as the Christmas deadline approaches. SQM Research data shows a 6.3% increase in stock for sale nationally in November but this was still -6.3% down on November 2018.
The final Saturday of November was the busiest auction day of the year, with 3,206 auctions held across the capital cities and a very healthy final clearance rate of 73.6% recorded, according to CoreLogic.
We’ve had a rapid rebound for a couple of reasons. Firstly, it was clear to me at the start of the year that the correction had overshot, so this has led to a quicker recovery.
We’ve also had an extraordinary shortage of stock for sale, with every city recording year-on-year declines except for Canberra, which had a very small increase of just 0.4%. Sydney stock for sale is significantly down year-on-year at -19.3% and Melbourne is down -8.5%.
This has intensified competition for homes on the market, particularly as more buyers gained access to finance in the second half of 2019 after APRA loosened lending criteria.
I think stamp duty is among the reasons why listing levels are low nationwide. If you’re a typical upgrader in Sydney moving from a $1.2 million to $1.8 million home, there’s $85,000 to be ripped up in stamp duty.
I don’t see a resolution to this any time soon, as State Governments are completely addicted to the drug of duty. However, if you and your family need more space or you’re ready to downsize or invest, rock bottom interest rates will definitely make things easier in 2020.
I was talking to our mortgage broking team this week and they tell me it’s now possible to get loans at 2.75%. I’ve never heard that kind of number before. We’re in a new world of low interest rates, which are expected to remain low globally for some time ahead.
Your loan will always be the most expensive part of owning property and right now, that expense is probably the lowest it will ever get. Prospective sellers need to weigh the cost of stamp duty against the opportunity to upgrade, downsize or invest in this low rate climate.
This is my final column for the year. I’d like to wish you and your family and friends a fantastic Christmas and holiday season. I’ll be back on January 20 with my predictions for 2020.
I hope you’ll take some time out over the break to consider how you can benefit from the property market next year. If you don’t need or want to buy or sell, you should at least do a home loan health check to ensure you’re paying as little interest as possible.