A recent CoreLogic Property Pulse showed a significant drop in property turnover through the year to July, affirming the worsening condition of the market.
It was reported that the number of properties purchased within a given year cover a very small part of the overall market, with trend even tracking lower over previous years. Through 12 months to July, only 4.6% of national dwellings were transacted – down from 5.3% in 2017.
Citing declining home prices during the period, as well as the low number of newly listed stock added to the market since 2012, CoreLogic Analyst Jade Harling said that the downward shift in property turnover was expected.
The study found that the slowdown was driven by decreasing housing affordability in the country. Sydney and Melbourne, for instance, registered high growth in values, while household incomes only saw slight growth.
Ffteen years ago, dwelling prices across the nation were 5.1 times as high as the gross household income. However, recent data showed that the dwelling price to income ratio hiked to 6.8. In Sydney and Melbourne, where affordability has been an issue for potential buyers, the price to income ratio currently sits at 9.1 and 8.1 respectively.
Consequently, housing has become less affordable across some capital city markets and buyers preferred seeking properties in regional areas – the more affordable option.
Another factor that pulled down the number of properties sold was the expensive transactional cost to both purchase and sell property.
“From the sell side there are marketing costs, agent fees and commission, legal costs and potentially some costs associated with getting the property ready to present to market. From the buy side, stamp duty costs as percentage of the purchase price are a major barrier to entry, especially in the more expensive markets as well as the costs associated with building and pest inspections and conveyancing,” the report stated.
Finally, credit rationing has recently played a part in stifling housing activity.
While overall property turnover decreased, the report also highlighted that 4 out of 7 of the rest of state regions saw a higher level of turnover compared to their capital city counterpart. This trend was headlined by New South Wales. Sydney, Australia’s most expensive property market, saw a turnover rate of 4.1%, while outside of the metro area, turnover stood at a higher level, with 5.6% deals logged over the year.
