According to CoreLogic, the last week of February transactions were the busiest for a February, since their records began in 2008! Strong buyer and seller activity and strong auction clearance rates indicate it’s still a seller’s market.
However, while there were many transactions, the wind has certainly been knocked out of the “sails”, stemming property price growth in Sydney and Melbourne.
Sydney recorded the first negative growth (-0.1%), posting the first decline in housing values since September 2020. Melbourne’s housing values were unchanged (0.0%) over February.
Advertised stock in Sydney and Melbourne has returned to more normal levels, giving more choice and less urgency for buyers, thus softening the demand and consequently, slowing the price growth.
Brisbane, Adelaide, and Hobart were recording considerably “stronger” housing conditions, mainly attributed to lower stock. Brisbane’s housing values rose 7.2% over the last quarter to February, while South Australia’s capital was up 6.4% over the same period. Combined regional areas continue to record a substantially higher rate of growth than the capital cities.
Nationally, the total number of properties advertised for sale over the four weeks ending 27 February was 13.3% lower than the same period a year ago.
Total listings across Brisbane and Adelaide remain more than 20% lower than a year ago and more than 40% below the previous five-year average. There is a direct correlation between low stock and housing values rising more rapidly.
Will the floods impact property values?
The flood situation has worsened over the past week and people are asking whether this will impact property values in South East Queensland and Northern New South Wales.
It is difficult to isolate the impact of flooding on property values. If we use the 2011 Brisbane floods as a roadmap, the city’s dwelling values sustained a decline with most suburbs seeing a recovery in prices within 3 to 5 years. In comparison, a negative impact on property values, due to the current floods, may be buffered slightly by Brisbane’s current strong value growth rate.
Perhaps one of the biggest differences between the market in 2011 and 2022 is the length of time between these devastating extreme weather events. In 2011, major flooding had not affected the region since 1974 and was considered a “once in 100-year-event”.
The short time frame between significant flooding events could shift buyers’ attitudes towards housing in low-lying areas and see markets with low flood risk attract greater demand over time.
The cost and implications for the housing market of the current floods are difficult to determine given that for many coastal areas, clean-up and assessment are yet to come.
Closer to home – if you are experiencing hardship or financial difficulty due to the floods, please contact your bank or lender for information about their flood relief policies.
Stay safe, stay dry.