{"id":6299,"date":"2015-11-10T01:00:37","date_gmt":"2015-11-09T14:00:37","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=6299"},"modified":"2015-11-10T01:00:37","modified_gmt":"2015-11-09T14:00:37","slug":"what-the-market-is-really-up-to","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/what-the-market-is-really-up-to\/","title":{"rendered":"What the market is really up to? – Michael Yardney"},"content":{"rendered":"

 
\nThere are mounting signs that Australia\u2019s housing market may be moving through the peak of the cycle. In today’s show Michael Yardney<\/strong><\/a>, from Metropole Property Strategists,\u00a0outlines the factors that are hinting at a market peak.
\n <\/p>\n

Transcript:<\/h4>\n

Kevin:<\/b>\u00a0 There\u2019s a lot of news about what the market is up to. We\u2019re seeing reports of downturn in the Sydney market. Auction clearance rates are certainly falling in both Sydney and Melbourne, which are the two benchmark areas, of course. So, what is going on?
\nMichael Yardney from Metropole Property Strategists. Michael, how are you reading all of these signs out of the market at present?
\nMichael:<\/b>\u00a0 There are lots of messages aren\u2019t there, Kevin? Clearly we\u2019ve reached the mature of the stage of the property cycle, and the growth that Melbourne and Sydney experienced over the last couple of years \u2013 double-digit growth \u2013 was unsustainable in the long term.
\nThe markets in Melbourne and Sydney have gone from fifth gear to maybe third or fourth gear. They\u2019re not in reverse. The rest of Australia\u2019s markets are fragmented, and we can have a talk about each of them as we go on. It\u2019s going to be different next year than it was this year, Kevin.
\nKevin:<\/b>\u00a0 It\u2019s never the same, Michael. What sort of research are you using to help you determine this? What are you reading?
\nMichael:<\/b>\u00a0 What we\u2019re looking at is a combination of things. Some are lagging indicators \u2013 things that have happened in the past \u2013 and some are forward or leading indicators \u2013 things that will give us an indication of what\u2019s happening in the future.
\nOne of the things you mentioned was auction clearance rates. They\u2019re particularly interesting in Melbourne and Sydney where there\u2019s quite a depth to the auction markets. They seem to have peaked around April\/May this year when in Sydney, auction clearance rates were consistently in the 80s, and in Melbourne, they were in the 70s. Now they\u2019ve gone down to what I think people would consider a normal market than a booming market, but it is a sign that the exuberance in the market is slowing. Kevin, that\u2019s a good thing.
\nKevin:\u00a0 <\/b>I saw a report recently that listings are on the increase, as well. Is that having an impact?
\nMichael:<\/b>\u00a0 It\u2019s a combination of the time of the year when more people think they should be putting their properties on the market because they\u2019ve heard that spring is the best time to sell. I\u2019m not sure I agree with that. The other thing in these high-performing markets is that people see the houses around them going up in value, so a lot of people considering getting in, taking advantage of that, and moving up \u2013 upgrading their homes.
\nI think there is a sense in Sydney that the market may be nearing its peak. Yes, there\u2019s lots more properties on the market in Sydney \u2013 there\u2019s actually 4% more than there was this time last year, close to 5% more \u2013 as more people are trying to get in before it\u2019s a little bit too late.
\nInterestingly, in other markets that are not performing as strongly, there\u2019s 20% less properties for sale in Perth, 12% less in Darwin, and 5% less in Brisbane, which is one of the reasons those markets are not performing the same as the Sydney markets.
\nKevin:<\/b>\u00a0 I don\u2019t want to necessarily sidetrack you from our conversation, Michael, but you made a comment there about spring not necessarily being the time to sell. You don\u2019t think that\u2019s the case?
\nMichael:<\/b>\u00a0 A lot of people do, but as we just saw in the Sydney market, there are lots more properties for sale. If you\u2019re a purchaser that gives you more choices, and if you\u2019re a vendor or seller, in fact, you probably have more competition. I wouldn\u2019t be necessarily trying to time the best time to sell my property on the market, Kevin. I\u2019d be doing it when it suits me.
\nKevin:<\/b>\u00a0 That\u2019s good advice. Back to our topic, investment demand is moderating; does that have a lot to do with the tougher lending criteria?
\nMichael:<\/b>\u00a0 Yes, it has. Before we get onto that, if I could also mention that when we look at listings and how many properties, we also look at another statistic that you can get from websites like CoreLogic RP Data that show the month of supply on the market. In other words, how long it would take the average properties to sell.
\nIf that\u2019s rising, as it currently is in Sydney, it would be a suggestion that the market isn\u2019t as strong, there isn\u2019t as much depth to it. But in Sydney, it\u2019s taking two and a half months to sell the average property. If you go to Perth, Kevin, it\u2019s seven months, and much the same in Darwin.
\nSo the research we\u2019re doing is looking at listings, how many people are in the market, and how long it\u2019s taken to sell. Then, as you said, investor demand is moderating. APRA\u2019s tightening of the screws is working, and investors are finding it a little bit harder to get finance.
\nDefinitely one of the things that we\u2019re suggesting is saying that we\u2019re reaching the peak. By the peak, it doesn\u2019t mean now it\u2019s going to fall over the edge and keep dropping; it means it\u2019s not going to rise as fast in the future.
\nKevin:<\/b>\u00a0 What\u2019s going to happen to rents, Michael?
\nMichael:\u00a0 <\/b>Interestingly, despite all the new properties and apartments being built, rental vacancy rates haven\u2019t gone up much. It\u2019s been keeping in sync with the supply of properties. But rents have been on the low side for a while now. In fact, according to CoreLogic, our rental growth has been the lowest it has been for about 20 years.
\nI think that\u2019s going to start pulling some other investors out of the market, those chasing yields, because it\u2019s going to be harder for them to service their loans because rental yields are low considering that properties have gone up in value but rents haven\u2019t.
\nKevin:<\/b>\u00a0 Bottom line, Michael?
\nMichael:<\/b>\u00a0 Bottom line is you can\u2019t just buy any property. The property markets are moving through one stage to the next. They are fragmented as each state is in its own stage of the cycle. Do your homework carefully. It\u2019s still a good time to buy, but don\u2019t count on as strong capital growth next year as we have over the last couple of years.
\nKevin:<\/b>\u00a0 Michael, good talking to you. Thank you for your time.
\nMichael Yardney from Metropole Property Strategists. Don\u2019t forgot Michael\u2019s blog site: PropertyUpdate.com.au
\nThanks, Michael.
\nMichael:<\/b> My pleasure, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"

  There are mounting signs that Australia\u2019s housing market may be moving through the peak of the cycle. 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