The REA Group’s REA Insights Housing Market Indicators Report for July 2021 has revealed that preliminary weekly sales have risen by 60.7 per cent over the first 27 weeks of 2021 compared with the same period in 2020 and 68.7 per cent compared with the same period in 2019.
Sales have surged in 2021 despite COVID-19-induced lockdowns, including circuit-breaker snap lockdowns.
There were 8.7 per cent more preliminary sales in the week to 3 July than the previous week despite the COVID-19 lockdowns across Australia, and 43.9 per cent more than over the same week in 2020.
The report stated that after some recent declines in weekly sales, numbers have returned to similar volumes from recent months but remain lower than they were earlier this year.
“Supply, demand and, therefore, sales volumes tend to trend lower over the winter months, which is what we’re seeing,” the report said.
“Sales volumes are likely to remain fairly steady or fall slightly in the coming weeks.”
Signs of a cooling market
The REA Insights monthly report – which combines eight key metrics to provide an updated view of the property market and emerging trends – revealed that email enquiries to agents on realestate.com.au fell in June by 7.8 per cent to be 10.8 per cent lower year-on-year.
Houses have dominated the type of property enquired about (61.7 per cent) but this was its lowest share since June 2020.
Other types of properties enquired about were units (27.2 per cent) and vacant land (11.1 per cent).
All property types recorded month-on-month declines in email enquiry while houses and land also recorded year-on-year declines.
The report said: “Most indicators point to some of the heat having come out of the market, and winter is typically a quieter period for activity.
“Given this, we would expect that email enquiry will continue to trend lower over the coming months and will then pick up again in spring.”
Investors staging a comeback
Investor enquiry is trending higher year-on-year, up 47.1 per cent, while total email enquiry from investors is at its highest share since February 2020 (18.2 per cent).
However, email enquiry volumes declined from buyers (down 7.9 per cent) and first home buyers (down 37.2 per cent).
While investor email enquiry reduced slightly (down 2 per cent) in June, the decline was steeper for buyers (down 10.4 per cent), and first home buyers (down 5.2 per cent).
Buyers have continued to direct the largest proportion of email enquiries (59.9 per cent), but this is the smallest since March 2020, while FHBs accounted for 21.9 per cent of email enquiry.
“Demand from first home buyers is likely to continue to wane, and we’d expect their share of enquiry to also fall,” the report said.
“Investors are staging a comeback in the market and, as such, enquiry from them is expected to increase.”
Searches for higher-priced properties surge
Searches for properties over $1 million have increase sharply, with 39 per cent of price-filtered searches in June 2021 for properties listed for at least $1 million, compared with 27.1 per cent in June 2020.
Conversely, 15.5 per cent of searches for properties listed were below $500,000 in June 2021, compared with 24.1 per cent last year.
“With low borrowing costs and prices continuing to rise, we would expect an increasing share of property seekers to be looking for properties priced at least $1 million over the coming months,” the report said.
Commenting on the findings, REA Group director of economic research Cameron Kusher said the housing market remained buoyant in June amid rising prices and strong sales activity.
“All indicators have continued to outperform previous years and remain at historically high levels,” he said.
“There has been a clear cooling of the market over recent months, which is to be expected at this time of year during what is typically a quieter period for the housing market. COVID-19 lockdowns across the country may have had some impact, but activity is relatively strong despite the market not returning to its pre-Easter strength.”
He also said that demand has eased slightly but property stock has remained tight and are expected to continue to sell quickly.
He added that demand for higher-priced properties is largely driven by the current supply of higher-priced properties and low borrowing costs, and warned that this could increase housing affordability challenges during spring.
He concluded: “Over the coming months, it is reasonable to expect some further slowing as we move deeper into winter.”
Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.