In news that may come to the relief of would-be buyers battling it out at auctions, over a third (35 per cent) of homeowners are planning on selling in the next five years, according to new research from Westpac.
The Westpac survey of 2,086 Australians aged 18 and over also found that over one in ten respondents (12 per cent) were already taking steps to put their house on the market or had intention to do so in the next 12 months.
Westpac also noted that selling intentions rose 5 percentage points from last quarter, with more than double the number of homeowners now planning to sell since before Covid-19.
For those looking to buy, the pressure is on, as the latest CoreLogic figures found that national property prices grew by 2.1 per cent in February 2021: the fastest recorded growth rate since 2003.
Further, according to figures from the Australian Bureau of Statistics (ABS), new home lending hit $28.75 billion in January, an increase of 44 per cent year-on-year (in seasonally-adjusted terms). The total value of owner-occupier home loans settled in January surged by 52 per cent, year-on-year, to a record-high of $22.11 billion.
Meaning, there has been an influx of new homebuyers eager to win at the auction and get a foot on the property ladder.
Westpac’s Managing Director of Mortgages, Anthony Hughes, emphasised this point, noting that the “low interest rate environment, upbeat consumer sentiment, and improving economic outlook is also underpinning stronger seller confidence as we head into 2021.”
“This will no doubt be welcome news for buyers eagerly awaiting more homes to come on the market,” said Mr. Hughes.
Clearance rates and competition are up
It’s no secret that it may be becoming a seller’s market, particularly in capital cities.
CEO of Real Estate Institute of NSW, Tim McKibbin, stated that the “run up to Easter” may be particularly busy, with the “market intensity of recent weeks set to continue”.
“Vendors are taking confidence from the strength of buyer demand and month-on-month price increases, with many bringing their plans to sell forward to capitalise on the rising market.
“This includes many investors who, if not for the prices currently being achieved, would not necessarily be considering selling,” said Mr McKibbin.
CoreLogic data shows that capital cities hosted 1,587 auctions this weekend. While this was lower than last week’s 2,437 due to a public holiday in four states, the activity was still higher than the same period of time last year.
According to CoreLogic, the Sydney clearance rate was 86.7 per cent, up from 75.2 per cent at the same time last year. Melbourne also hit a clearance rate of 80.9 per cent, up significantly from 66.1 per cent at the same time last year.
CoreLogic analyst, Jade Harling, noted that “last week, a higher 844 auctions were held with an 85.3% final clearance rate and one year ago 830 auctions took place, and a 75.2% success rate was achieved”.
Thirty per cent of Westpac’s surveyed respondents pointed to competition with other buyers and a lack of supply (21 per cent) as the top challenges for would-be buyers.
While there’s little to be done to slow down competition between buyers, increased seller intentions may help knock the issue of lack of supply on the head.
“It is absolutely a seller’s market at the moment,” said Westpac Senior Economist, Matt Hassan.
"Sales have seen a big lift over the last four months and are up over 36 per cent on a year ago, resulting in a significant tightening in supply with listings across the major capital cities now at a 12-year low.”
“The research suggests the situation will rebalance in coming months as more sellers come onto the market, however demand is still expected to remain strong, driving a sustained lift in prices this year and next,” said Mr Hassan.
Tips for your first home in 2021
Until this rebalance occurs, first home buyers will need all the help they can get to compete with experienced investors and next-home buyers.
That being said, here are seven tips buyers may want to keep in mind to try and nab a property this year:
- Save your deposit in an account you won’t be tempted to dip into.
- Check your credit score early, and work to improve it now.
- Calculate your borrowing power so you know how much you can comfortably afford in mortgage repayments.
- Discover if you’re eligible for government first home buyer assistances.
- Consider a regional move for a more affordable property.
- Compare your home loan options carefully and look outside your childhood bank to ensure you’re getting a competitive deal.
- Talk to a mortgage broker for expert insights and tips.