Welcome back to everyone getting a head start on the year and to those still on Holidays enjoy your well-earned rest.
Last year we saw the below statistics across Manor Real Estate.
Average Days on Market 28.35
Auction Clearance Rate 87.21%
List to Sell Clearance Rate 76.22%
CoreLogic’s national Home Value Index fell -1.1% in December, taking values -5.3% lower over the 2022 calendar year.
The upper quartile of the housing market led the downturn through 2022, with most capital city and broad ‘rest-of-state’ regions recording weaker performance across the upper quartile relative to the lower quartile and broad middle of the market.
The more expensive end of the market tends to lead the cycles, both through the upswing and the downturn. Importantly, recent months have seen some cities recording less of a performance gap between the broad value-based cohorts.
Sydney is a good example, where upper quartile house values actually fell at a slower pace than values across the lower quartile and broad middle of the market through the final quarter of the year.
Despite the downturn across many areas of the country, housing values generally remain well above pre-COVID levels.
Across the combined capital cities, dwelling values remained 11.7% above where they were at the onset of COVID (March 2020), while values across the combined regional markets are still up 32.2%.
Melbourne is the only capital city where the current downwards trend is getting close to wiping out the entirety of COVID gains, with dwelling values only 1.5% above March 2020 levels.
The relatively small difference between March 2020 and December 2022 levels can be attributed to a number of factors, including a larger drop in values during the early phase of COVID, a milder upswing through the growth cycle and the -8.3% drop since values peaked in February.
At the other end of the scale is Adelaide, where housing values remain 42.8% above pre-COVID levels.
Adelaide dwelling values recorded a 44.7% gain through the upswing, and have held relatively firm since interest rates started to rise, down only -1.3% from the recent peak.
Advertised supply levels ended 2022 substantially lower than last year and well below the previous five-year average.
Over the four weeks ending Christmas Day, there were -7.8% fewer capital city homes advertised for sale than a year ago and total advertised supply was -19.0% below the previous five -year average. The lower than normal flow of fresh listings added to the market over the past few months has been a key factor keeping overall inventory levels low.
New capital city listings added to the market over the past four weeks were -30.6% lower relative to the same period in 2021 and almost -10% below the previous five-year average.
The trend in housing inventory showed a conspicuous lack of seasonality through spring and the first month of summer, with advertised supply holding reasonably firm post-winter.
Vendors have been reluctant to test the market through the downturn, with the number of new listings over the past four weeks almost -31% lower than a year ago when capital city homes were selling in around 20 days.
Today, the median time on market has increased to 31 days, leading to a blow out in vendor discounting rates from just 3.1% a year ago to 4.2% at the end of 2022.
While advertised supply is lower than usual, home sales have also declined.
Through the December quarter, estimated capital city dwelling sales were -30.1% lower than a year ago and -9.2% below the previous five-year average. In annual terms, capital city sales were estimated to be -16.5% lower relative to 2021, but 7.4% above the previous five-year average.
Despite the drop in sales activity relative to last year’s record sales volumes, Sydney (-7.4%) and Hobart (-18.9%) are the only capitals where the estimate of annual sales dropped below the previous five-year average.
The balance between the flow of new listings and number of home sales will be a key trend to watch through early 2023.
We typically see a seasonal surge in the number of new listings added to the market from early February through to Easter.
If this seasonal pattern plays out over the coming months against the back drop of higher interest rates and a further drop in buying activity, we could see housing prices responding negatively as advertised supply levels rise and vendors are forced to discount their prices more substantially.
I look forward to sharing focus topics for the year ahead with you all shortly.