Home sales on the rise despite struggling market

According to data released by property research group CoreLogic, the number of homes sold increased last month as the number of new recorded listings also rose in May. 

In the 28 days to 31 May 2020, new listings rose 22.4 per cent on the previous period, but total listings fell by 2.9 per cent, meaning that even as more new stock came onto the market, buyer activity offset the additional stock.

Notably, while a 20.4 per cent jump in sales volumes in May is significant, it is off a low base. In April, the number of transactions across the combined capital cities market was estimated to be just 16,115. 

That is the lowest monthly sales volume since 1991, excluding January results, and comes in way below the decade average of 24,700 sales per month across these markets, according to CoreLogic. 

A 20.4 per cent rise since April only brings sales volumes to an estimated 19,400 over May, again well below the decade average.

The uptick in sales volumes is still good news, amid a month of poor economic growth.

CoreLogic speculates that increased consumer sentiment as the country acknowledges low numbers of confirmed COVID-19 cases and moves out of enforced government restriction conditions contributed to the increase.

The ANZ Roy Morgan weekly consumer confidence index has risen consecutively for the past nine weeks. At the week ending 31 May, the index is 50.5 per cent higher than when it bottomed out in late March. 

In fact, the index is now just 9 per cent lower than when Australia confirmed its first case of coronavirus in January. 

“The easing of social distancing policies and low COVID-19 case numbers in Australia mean people may be feeling more confident about the future of the Australian economy, their personal finances and property purchases,” said CoreLogic.

Another factor impacting a positive results for sales volumes is the fact that the workers most impacted by COVID-19 are the least likely to have mortgage debt, according to the property research group.

Between 14 March and 2 May 2020, 27.1 per cent of payroll jobs have been lost across accommodation and food services, and 19.0 per cent of jobs have been lost across arts and recreation. 

CoreLogic previously noted that this fact would mean renters would be disproportionately affected, rather than owner-occupiers, with the number of households who rent and work in food and accommodation services, and therefore in a more precarious financial situation currently, is around 40 per cent.

“This suggests that for now, conditions have been relatively stable in the housing market because those most impacted by the economic slowdown of COVID-19 may be less likely to have a mortgage obligation,” said CoreLogic. 

“With stability emerging in the property transaction space, it is evident that additional housing stimulus is less urgent among those that can already afford property, and is another case for addressing housing costs for low-income earners.”

[Related: Government unveils housing stimulus]