House prices are rising at the fastest rate in 32 years, and while there is strong demand from buyers, one of the main factors driving prices is low stock levels.
Across Australia, we’re still seeing the lowest levels of stock that we’ve seen in more than five years. That includes the most recent house price boom between 2015 and 2017.
Now that sentiment in the housing market is improving, why are stock levels so low?
One of the major reasons stock levels in Australia continue to dwindle, is the high transaction costs involved in buying and selling property. The main issue for many is stamp duty, which is particularly relevant in our two highest-priced cities, Sydney and Melbourne. Stamp duty is a disincentive for people to change properties, and we see this commonly with potential down-sizers who choose to stay in their current property because of the costs involved.
Over the past 12 months, we’ve also seen a big push from vendors looking to sell off-market. An off-market transaction occurs when a property is not listed on a real estate portal. Initially, these types of transactions began occurring because of the uncertainty in the property market. However, because of the strong demand and record low interest rates, we’re now seeing aggressive buyers looking to purchase a property before an agent lists it.
Over the past decade, we have seen an increasing number of people decide to renovate their properties and upgrade. With the high transaction costs involved, when moving to a new house, it makes sense that many would prefer to put that money into upgrading their own homes. Similarly, in the last 12 months, there have been a number of government incentives aimed at getting people to renovate or build, and this has seen many choose to stay rather than sell.
Since COVID, we’ve seen many Australians who have been living overseas returning home. This specific demographic of the market is typically well-paid and prefer to own property. Because of their return, we are seeing the high-end of the property market in Australia with the largest price gains, and much of it is being driven by strong buying interest from Australians returning home.
If you or any friends or family would like us to know more about a home loan, please give me a call on 0411 216 849 or book an appointment.
Although we are located in Crows Nest, we service clients from St Leonards, Artarmon, Wollstonecraft, Cammeray, Northbridge, Naremburn, Neutral Bay, Greenwich, North Sydney, Waverton to Willoughby and all areas of Greater Sydney.
PS This article is prepared based on general information. It does not take into account individual financial or property objectives or needs and is not financial product or investment advice.