Housing turnover reaches its highest level in nearly 12 years: Core Logic

Home sales this year have hit the highest number since 2004 with a buying frenzy fuelled by rock-bottom mortgage rates, a loosening of credit policies, government incentives and record COVID-19 savings.

Nearly 598,000 houses and apartments sold across the country over the year to August 2021, the latest report from CoreLogic has revealed. This is 42 per cent up on the previous 12 months, and 31 per cent above the decade average.

“It’s a real story of extremes, with record-low levels of listings this year and record levels of demand leading to a huge number of sales and the biggest price growth since 1989,” said CoreLogic research director Tim Lawless.

“But hopefully next year will be more balanced with more listings to satisfy demand, affordability problems, credit tightening and the exhaustion of buyer demand. Many people who wanted to buy will have already bought and we might see the tide finally turning, and the market that’s been so skewed to the seller seeing buyers getting a bit more of the power.”

The new research shows housing turnover – home sales as a percentage of the total number of homes – has now hit 5.6 per cent, the highest rate since December 2009. Just two years ago, it dropped to a record low of 3.7 per cent as a result of tighter credit conditions, difficulties with housing affordability and high transaction costs, such as stamp duty.

In NSW, the year-on-year increase in home sales was 38.9 per cent, in Victoria 34 per cent and Queensland 54 per cent. The biggest jumps were in Western Australia at 62 per cent and the Northern Territory at 58.5 per cent, both areas where the previously weaker markets have been playing catch up.

The number of homes sold in South Australia rose by 38.6 per cent over this year, in the ACT by 27.1 per cent and in Tasmania, which has been suffering an acute shortage of supply that‘s 35 per cent below average, sales were up by the smallest number, at 10.6 per cent.

“I think the numbers have surprised many as we haven’t had any migration through the pandemic that has traditionally helped drive sales,” said Mr Lawless. “But because demand hit a record low in 2019, a lot of the sales have come from previously pent-up domestic demand over the past couple of years.

“That demand, however, will have to gradually taper off. Already we’re seeing signs that a lot of people have bought homes and affordability issues are becoming increasingly compromising and banks are becoming more cautionary with buyers with smaller amounts of savings.”

Housing turnover will probably continue to increase in the short term as more spring listings come onto the market, with Mr Lawless saying he expected it to peak early next year, but then likely fall away.

The disruption caused by the lockdowns, however, has made trends harder to discern, with distortions – like Sydney, for instance, allowing in-person home inspections for purchasers, but Melbourne and Canberra both not permitting them – affecting sales and listings.

Yet the spring burst of listings is likely for now to keep numbers growing – and buyers interested. This week, there are 1894 homes in the capital cities scheduled to go under the hammer, up from 1453 last week, and up from 915 at this time last year.