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Apartments Clearly Outpacing Houses - November 2022

Spring has concluded with housing markets reporting mixed results over November although generally remaining on track for a sustained revival, particularly with units (apartments).

 

Asking Prices for Houses Lower over November as Units Continue to Rise

Monthly asking prices for established houses were lower over November reflecting the usual end-of-year season easing in activity for higher-priced homes.     

Asking prices for established houses listed for sale for Sydney overall were down by 2.2% over November compared to October.

All other capitals also reported falling asking prices for houses listed over the month, with Melbourne down 1.1%, Brisbane lower by 0.8%, Brisbane down 5.7% and Perth lower from 1.2%. 

Monthly asking house prices in Brisbane remain significantly higher than recorded over November 2021 up by 13.1% followed by Adelaide up 8.7% and Perth higher by 6.6%. Sydney and Melbourne house prices however were down over the year, falling by 5.0% and 0.7% respectively.  

 

Monthly Median Established House Asking Prices November 2022

Capital

Price 

Month

Annual 

Sydney 

$1,382,505

-2.2%

-5.0%

Melbourne

$989,642

-1.1%

-0.7%

Brisbane

$799,941

-0.8%

13.1%

Adelaide

$694,479

-5.7%

8.7%

Perth

$662,678

-1.2%

6.6%

 

Nonetheless, asking prices for established units listed for sale over November continued to produce positive results, with all capitals reporting growth over the month.

Adelaide was again the top performer with median unit prices increasing by 2.7%, followed by Brisbane up 1.2%, Melbourne higher by 0.8%, Perth up 0.4% and Sydney where asking prices increased marginally by 0.3% over November compared to October.

Adelaide and Brisbane also again reported the highest growth in November asking unit prices over the year, higher by 16.5% and 13.7% respectively, followed by Perth up 4.4%. Melbourne however was down 0.5% with Sydney unit prices falling by 2.5% over the past year.

 

Monthly Median Established Unit Asking Prices November 2022

Capital

Price 

Month

Annual 

Sydney 

$672,364

0.3%

-2.5%

Melbourne

$504,271

0.8%

-0.5%

Brisbane

$475,220

1.2%

13.7%

Adelaide

$396,721

2.7%

16.5%

Perth

$371,376

0.4%

4.4%

 

Average Days on Market Still Falling 

The average days on market for all capitals for houses fell again over November compared to the previous month, however Adelaide reported increases for units in average days on market over the month.

Adelaide remains the top performer for average days on market for both houses and units, with Brisbane the underperformer.

 

Average Days on Market November 2022

Capital

House

Change

Unit

Change

Sydney

29.9

32.1

Melbourne

30.1

30.3

Brisbane 

37.0

36.5

Adelaide

25.8

27.6

 

Auction Clearance Rates Ease Over November

Weekend auction markets generally eased over November, with clearance rates lower in all capitals compared to October. The only exception was  Sydney, which saw a marginal increase over the month. Clearance rates also remained well below the results recorded over the generally strong conditions reported in November 2021.   

 

Weekend Auction Clearance Rates

Capital

Nov-22

Oct-22

Nov-21

Sydney

67.1%

66.5%

76.9%

Melbourne

63.7%

64.8%

73.8%

Brisbane

44.6%

54.7%

82.8%

Adelaide

75.1%

81.9%

83.0%

 

House Rents Resume Upward Surge – Units Still Rising 

The recent pause in monthly house rent increases has predictably ended, with asking rents for both units and house rising sharply over November. 

All capitals reported higher house rents over the month with most capitals recording significant rises on house rents over the year ending November.  Perth was the top annual performer, higher by 20.2%, followed by Brisbane up 18.1% and Sydney rising by 16.8% over the year.

 

Median Weekly Asking Rents November 2022 (Houses)

 

Rent

Month

Year

Vacancy Rate

Change

Sydney

$660

1.5%

16.8%

0.9%

Melbourne

$495

1.0%

12.5%

1.0%

Brisbane

$555

0.9%

18.1%

0.8%

Adelaide

$510

2.0%

13.3%

0.4%

Perth

$550

1.9%

20.2%

0.3%

 

Sydney remains the most expensive capital for weekly asking house rents at $660 followed by Brisbane at $550, with Melbourne the most affordable at $495.

Capital city house rental vacancy rates for houses remain at record low levels overall, with Melbourne continuing to fall and now at just 1.0%. With vacancy rates at 1% or less across all capital cities, we now have a “national rental crisis” - creating great yield opportunities for investors and some further pain for tenants.

Unit rental markets again reported higher rents over November with the exception of Brisbane where rents were steady.

All capitals have reported remarkable increases in unit rents over the year ending November with Sydney recording the highest unit annual rental growth up by 25.0%, followed by Melbourne up 23.3% and Perth higher by 15.9%. 

 

Median Weekly Asking Rents November 2022 (Units)

Capital

Rent

Month

Year

Vacancy Rate

Change

Sydney

$600

3.4%

25.0%

0.8%

Melbourne

$450

0.6%

23.3%

1.7%

Brisbane

$500

0.0%

13.6%

0.7%

Adelaide

$400

0.3%

11.5%

0.4%

Perth

$475

1.6%

15.9%

0.6%

 

Sydney recorded the highest weekly unit rent over the month at $600 with Adelaide the most affordable at $400. 

Vacancy rates for units also remain generally low, with a tightening Melbourne market now falling to 1.7%. As noted earlier, vacancy rates below 2% indicate a very strong “landlords market”, and its expected to remain that way for some time especially with units given the relatively low supply pipeline of new projects in most capitals.

 

New Home Building Lower Over October

New home building was lower again over October with the ABS reporting a 5.9% decrease in seasonally adjusted dwelling building approvals.

Both houses and units reported monthly falls in dwelling building approvals, with a sharp decline in units - down by 11.3%.

Dwelling approvals are now 18.4% lower over the first 10 months of 2022 compared to the same period in 2021, with houses down 22.6% and units lower by 10.4%.

 

The underlying quarterly trend for both house and unit building approvals continues to flatline.

 

 

Melbourne remains the clear leader in dwelling approvals over the 10 months ending October and ahead of Sydney for both houses and units.

 

 

All capitals have reported declines in building approvals for houses over the first 10 months of this year compared to the same period in 2021. Melbourne and Adelaide however have recorded increased approvals for units over the year-to-date comparisons, with the other capitals reporting declines.

 

 

Home Loans Fall Again Over October

Home lending was down again over October although the rate of decline was lower compared to the previous month’s result.

The ABS reports that the value of home loans seasonally adjusted (excluding land and alterations and additions) decreased by 2.7% over October compared to the previous month, and is now 18.1% lower than reported over October 2021. 

Home lending over the first ten months of 2022 is 5.5% lower than recorded over the same period last year.

 

 

Most states recorded falls in seasonally adjusted owner-occupied home lending over October, with WA the exception rising by 1.5%.

 

 

Jobless Rate Down Again

The national unemployment rate fell to a record monthly low 3.4% over October and continues to reflect a booming economy with continuing strong demand for labour.

 

All capitals continue to record low unemployment rates and well below the results recorded over October 2021. Sydney is now recording the lowest capital city rate with Adelaide the highest at 3.9%.

 

 

RBA Raises Rates Yet Again

The RBA predictably increased official interest rates by 0.25% again over December – the 8th consecutive rise in the current tightening series. The outlook for rates remains fluid and is clearly dependent on upcoming data on inflation, wages, the labour market and other geopolitical factors. The RBA next meets in February 2023, so all eyes will be on the outcome of that meeting, with most commentators expecting at least one further rate rise.

 

 

Comment and Outlook

Capital city housing markets produced mixed results over November although clear indications of an emerging revival in activity following the winter downturn remain 

Asking prices for established houses were lower in all capitals over the month influenced by the usual end-of-year easing in listing activity from higher-priced homes as the holiday season beckons.

The unit market however continues to report generally positive results, with all capitals again reporting higher asking prices over the month. Although the unit market is less exposed than houses to seasonal changes in listing price mix, underlying demand for units is clearly continuing to rise reflecting affordability and amenity advantages, and a growing lifestyle preference for higher-density accommodation.

Average days on market also continued to fall in all capitals for both units and houses over November with the exception of Adelaide units and although still well ahead of results generally reported earlier in the year, a downward trend has clearly emerged over recent months.

Weekend auction markets were marginally lower over November with easing clearance rates again reflecting the usual waning of buyer activity distracted by the upcoming holiday period. However, the Sydney market has again reported higher clearance rates over the month and is now tracking well above the winter results.      

Rental markets remain at record tight levels for tenants generally, with remarkably low vacancy rates for both units and houses now reported in all capitals. Following the recent pause driven by affordability constraints, house rental increases have predictably resumed with unit rents continuing to rise strongly.

The chronic shortage of housing across the nation remains an issue, and the tight rental markets reflect this. Dwelling building approvals were again lower in October with activity continuing well below the same time last year.

House-building costs also continued to rise over October and remain significantly higher than recorded a year ago, acting to further constrain home-building activity.

A strong national economy continues to support underlying housing market activity with the unemployment rate falling to a record monthly low, pushing up wages and supporting robust consumer confidence as evidenced by still-booming retail sales - although now slightly lower than recent results.

The RBA has predictably continued to increase interest rates over December to tackle high inflation, with the rate outlook dependent on the nature of upcoming local inflation, wages and labour market data. Early signs are emerging however that rates may peak earlier and lower than expected with monthly inflation lower, retail sales now falling and the latest GDP data below expectations with economic growth likely to be impacted by a weakening international economy.     

Although the outlook for rates clearly remains fluid, current levels remain well below the peaks of the previous rate-raising cycle a decade ago, and continue to be largely shrugged off by consumers immersed in a booming labour market generating higher wages.

Housing markets are also working through the affordability and confidence impacts of recently sharply rising interest rates with activity clearly rising through spring. Although markets are now exhibiting signs of the usual end-of-year slowdown, the prospects remain positive, as an imminent wave of migration is set to drive demand in undersupplied markets        

Dr Andrew Wilson - Chief Economist My Housing Market

 

If you'd like to discuss the current property market or better understand how we can assist you with purchasing a new or off-the-plan property, please contact us on 1300 123 463 or book a call back.

Published on 18th of December 2022 by Dr Andrew Wilson
Dr Andrew Wilson
Dr Andrew Wilson

Dr Andrew Wilson is Chief Economist for My Housing Market. He provides comprehensive property market intelligence and holds a PhD and Masters by Research each in Housing Market Economics together with graduate qualifications in Econometrics and Construction Economics. Formally Chief Economist of Domain, he is also one of Australia’s highest profile property market commentators.

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