February set records. We’re just getting started.
The boom dynamics are in full swing right now.
Prices are rising, sales are surging, the stock on market is falling, and that’s driving prices even higher.
No wonder homebuyers have gone from “oh no!” to FOMO.
Let me step through those elements.
So prices are booming. They’re booming in a massive way.
CoreLogic has released its full dwelling values results for February, which shows a synchronised boom across every capital city market, and that’s before we even get to the boom that’s happening in the regions right now.
Check it out. Across the board.
And the 2.1% price growth we saw in February, nationally, was the strongest month-on-month increase since August 2003. That’s 17 years!
According to CoreLogic’s research director, Tim Lawless:
“The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand”.
Exactly right. We’ve got the exact same conditions that followed the GFC:
Tim Lawless also believes the mismatch between supply and demand is another key factor pushing prices higher:
“Housing inventory is around record lows for this time of the year and buyer demand is well above average. These conditions favour sellers. Buyers are likely confronting a sense of FOMO which limits their ability to negotiate. Vendor discounting rates were estimated at a record low of 2.6% in February, and auction clearance rates have consistently been in the high 70% to low 80%, which is well above average.”
This dearth of housing stock is illustrated clearly in the next chart showing listings levels well below 2016 to 2020:
Crickey. Check out little 2021 there, just peaking in on the total listings count. It barely rates the same scale.
Houses are rarer than hen’s teeth.
At the same time, the market is running super hot, and house sales volumes are running way above the decade average:
It’s classic supply and demand. Supply is massively reduced as we churn through the available stock, but demand is hot so sales are booming.
But when increased demand meets reduced supply, you get rising prices.
But it works like a virtuous circle. The hotter the market gets, the more sales there are, the less stock there is on the market, the higher house prices go.
And so that’s where we are. In Lawless’s words, “Australia’s housing market is now well entrenched in one of the strongest growth phases on record.”
And we’re only getting started.