Construction activity around Australia may be at record high levels, but according to CoreLogic, a lower proportion of housing stock is selling, leaving housing turnover close to the record low.
According to CoreLogic, in the 12 months to September 2017, just 5% of Australia’s national housing stock transacted – the lowest figure since 4.9% in April 2012. The September 2017 figure is also lower than the average of 5.5% for the nine years of available data.
This 5% figure combines the annual housing turnover recorded across the combined capital cities (4.7% – a record low, well below the 5.6% average for the cities) and across the combined regional markets (5.6%, slightly higher than the regional average of 5.5%). In both the capital city and regional housing markets, stock turn-over was found to be slowing.
Several Australian capital cities saw housing turnover at historic lows, including:
- Sydney – 4.7%
- Melbourne – 4.4%
- Perth – 3.6%
- Canberra – 4.8%
CoreLogic head of research, Cameron Kusher, described the figures as stark, given just how little of the Australian housing market actually sells in any given year, and added that high property purchase costs such as stamp duty were a significant contributing factor:
“The impost of stamp duty discourages turnover as we have recently seen with the removal of stamp duty for first time buyers under certain price thresholds in NSW and Vic. Once removed there has been a surge in housing finance commitments by first home buyers.”
Other major drivers of the low level of turnover over the past year mentioned by Mr Kusher were the relatively low levels of stock for sale, particularly in the largest capital cities, and the high cost of Australian housing putting off potential buyers.
Supply and demand factors were also found to affect housing turnover figures, including new housing construction and the availability of stock for sale on the supply side, and population growth, household income growth, investor demand and access to credit on the demand side. Other contributing factors include the costs associated with buying and selling properties, and government policies such as incentives for first home buyers.