Positive buyer sentiment bolsters market: Weekly Market Wrap with Sam Dodimead
Canberra’s property market has put COVID-19 in its rear-view mirror, as positive sentiment roars back into the market. Both established and new markets are showing signs that good buying opportunities in April are now just a distant memory.
Auction results from last weekend (Saturday 13 June) show strong buyer demand for established dwellings. Domain’s preliminary auction clearance rate in Canberra was 70%, up 26% compared to the same time last year. There were six more auctions scheduled than the week prior and the clearance rate was up 13%. All properties proceeding to auction (none were withdrawn prior) clearly shows both buyers and sellers are confidently making decisions in current market conditions.
Last week recorded an increase in the number of established properties advertised for the first time on Allhomes, up 24% week on week. Astute sellers have noticed the low stock environment creates opportunities to capitalise on strong buyer demand. Time will tell if increased listing activity is sustained.
Incentives drive demand for new homes, despite less activity
Interestingly, even with the Federal and ACT Governments providing significant incentives for people to buy new properties, there was less developer and project marketing activity on Allhomes. The number of project listings appearing as new reduced by one, week on week, while demand for new dwellings has increased significantly since 4 June. Those who already had intentions to buy, face competition from a wave of people who are now able to buy with the new incentives or are looking to buy as the financial benefit is too good to pass up.
To illustrate how strong buyer demand has become, in 72 hours commencing at 7.30am on Saturday 13 June, I received deposits on six properties I was selling; half were investors seeking medium-density apartments and townhouses to expand their portfolios. I expect demand to remain for some time, potentially increasing significantly once ACT Revenue provides clarity on the definitions how the HomeBuilder Scheme is to be applied.
Some ambitious developers with non-qualifying stock have started offering equivalent or larger cash rebates than the HomeBuilder Grant. This is a case of buyer beware as the incentive is built into the price unlike other projects where lack of changes to pricing show the grant and stamp duty discounts can be received as genuine benefits to buyers.
Australian Bureau of Statistics new dwelling approvals data showed there were 907 approvals during April. Monthly new dwelling approvals data is very lumpy, however, recording a 6.8% quarterly increase to April. On an annual basis, new dwelling approvals are down 27.7%, a significant reduction in supply.
The last 11 weeks have shown how resilient property values are in Canberra. Reduced stock levels combined with huge increases in buyer demand make it important for those seeking to own property to be decisive. Add exceptionally low costs of borrowing into the mix and we start to see positive signs of residential property heading into a growth cycle.
Weekly Facebook Live series
Each Saturday at 9am I host a Facebook Live for Canberra Weekly to answer your property questions. This week’s topic is ‘things to consider when selling your home’. You can send through questions in advance via email to [email protected] with ‘Facebook Live’ in the subject line, and tune in via the Canberra Weekly Facebook page.
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