2022 sees home buyers ‘return to the capitals’

Despite some speculation of the property market softening in 2022, more than $150 billion of property was settled across the east coast of Australia in the first three months of 2022, new data from the property settlements platform revealed.

One of the “more interesting” trends seen was the return to the capital cities, PEXA Insights’ head of research Mike Gill said.

“Throughout the COVID pandemic, regional areas boomed, however with restrictions significantly relaxed, it appears Australian homebuyers have refocused on the metropolitan regions in Queensland, New South Wales and Victoria,” Mr Gill said.

The report found property settlements in Greater Melbourne, Brisbane and Sydney outperformed regional areas in volume growth, with most regional areas losing ground (except for Western Australia).

In the Greater Melbourne area property settlements went up 7 per cent YoY, while regional areas took a 12 per cent dip over the corresponding period, Brisbane went up 4 per cent and Sydney up 3 per cent YoY, while Western Australia “bucked the trend" with settlements in regional areas up 13 per cent YoY, with greater Perth remaining “stagnant”.

Property settlements remain at record highs

Although at first glance the market seemed to show signs of weakening, following seasonal declines recorded for the March 2022 quarter, the report found property sale settlements remained at “record-breaking” numbers as seen in the prior year, with levels ahead of those recorded in 2020 and 2019.

Meanwhile, aggregate value of sale settlements was “well up” across all states on the year prior, with Queensland, NSW, Victoria and Western Australia all recording at least 20 per cent growth in aggregate value when compared to the first quarter of 2021.

Across the states, Queensland continued to lead the country for a third successive quarter for volume with 51,458 sale settlements, valued at approximately $39 billion, compared to 51,771 in the prior year.

NSW saw the highest aggregated value for settlements at $62.3 billion, recording 48,100 settlements, which was slightly down on the same period the previous year (48,605).

Victoria experienced the highest YoY growth (36 per cent) in aggregate sale settlement value, recording $50.9 billion from 50,702 sales settled.

As Western Australia opened its borders it saw a resurgence at the start of 2022, with 2.5 per cent growth for the quarter when compared to the same period in 2021.

PEXA’s chief data and analytics officer Scott Butterworth said although Australia’s property market continues to demonstrate its resilience, there are many variables yet to play out in 2022.

“A level of uncertainly remains across global markets with new variants of COVID emerging, the Russian invasion continuing, and rising interest rates,” Mr Butterworth said.

March records busiest auction market

The continued high levels of property settlements were also reflected in CoreLogic’s quarterly market review on auctions, which showed 23,748 homes went under the hammer in the March quarter 2022 – making it the busiest March quarter since records began in 2008.

For example, in the first quarter of 2021 there were 19,004 capital city homes taken to auction and 18,902 over the March 2020 quarter.

CoreLogic’s research director Tim Lawless said the first quarter of the year saw the trend in auction volumes and clearance rates heading in different directions.

“While the number of auctions held reached a March quarter high, the clearance rate gradually drifted lower through the quarter,” Mr Lawless said.

As demand becomes more thinly stretched, lower clearance rates on higher volumes are a fairly normal trend, he explained.

Sydney and Melbourne saw higher overall listing numbers, but a slowing in the rate of sale, which impacted market conditions.

Sydney’s auction clearance rate over the March quarter was 69.1 per cent (with 8,283 auctions held), compared to 69.9 per cent over the previous quarter, and 84.4 per cent over the March quarter 2021.

Melbourne’s clearance rate was 68.5 per cent over the March quarter (recording 10,315 auctions), down from 69.7 per cent over the previous quarter and 77.5 per cent over the March 2021 quarter.

Of the smaller capital city markets Adelaide was the top performer with a clearance rate of 80.6 per cent for the March quarter from 1,797 auctions. Canberra recorded a clearance rate of 77.9 per cent from 1,227 auctions and in Brisbane 1,916 homes went under the hammer resulting in a clearance rate of 67 per cent.

“With such strong selling conditions, we’ve seen a progressively larger portion of homes being taken to auction in Adelaide; a city that has historically favoured sales campaigns by private treaty rather than auctions,” Mr Lawless said.

Easter week was the busiest on record

While Easter is traditionally one of the quietest auction period, this year was the busiest on record with 937 homes taken to auction across the combined capital cities.

Despite the busy Easter period, Mr Lawless predicts the trend won’t last into winter.

“This is a seasonal trend we see through the winter months, but as selling conditions gradually swing towards a buyer’s market, we could also see clearance rates trending lower,” he said.

Mr Lawless said the three months to December 2021, saw 42,918 homes under the hammer, setting a new benchmark and carrying through to an earlier-than-usual pickup in this year’s auction volumes.

[Related: New mortgages slipped in January: PEXA]