Sellers are freezing up. The boom loop is in effect.
So the boom keeps on booming. And we’re now in a feedback loop that will keep prices growing quickly through to the end of the year.
I call it the ‘boom loop’.
So we’ve got the latest results from Corelogic. Monthly price growth is down a bit from the spectacular numbers we saw in March, but still growing very, very quickly month on month.
Nationally, prices were up 1.9% in the month, with Sydney continuing to lead the charge.
The regions continue to grow strongly as well, given us a very decent clip from coast to coast.
There is something a little weird with Perth’s numbers. I’m not sure I trust them. Mortgage growth, rental growth and the vacancy data all tell us that Perth should be outperforming the other capitals, not underperforming them
So I’m not so sure what’s going on there. I’ll have to look into it.
But if you look at the annual growth rates, we’re well into double digit growth now.
And most of that has come in the past six months. Dr Andrew Wilson highlighted the strength in 2021 in this table here:
Take a look at Sydney! 17.8%! That’s mammoth.
If it keeps that pace up we’re looking at 36% year on year.
And as I said at the start, it is likely to continue.
And that’s because there’s a real absence of stock on the market right now. There are very few homes for sale.
The number of new listings coming on to the market (left hand side panel of the chart below) are about normal, but we’re churning through the stock so quickly that the total number of listings (right hand panel) is way down on ‘normal’ levels.
That creates a bit of a feedback loop.
With prices rising so quickly and very limited stock available, that really discourages would-be sellers.
Potential sellers are worried that if they sell, they won’t be able to find another place to move into, or that prices will run away from them and they won’t be able to find what they want.
When prices are growing quickly, sellers freeze up, and you get even less stock coming on to the market.
Which in turn pushes up prices even higher.
That’s the feedback loop I’m talking about.
And it’s why prices will continue to grow strongly for the next six months as well.
2021 is shaping up to be one of the most epic years in the property history.
What a time to be alive.