Azura Financial | Credit Advisory Services

Property market update – November 2021

November 14, 2021

NOVEMBER RBA UPDATE: CASH RATE | 0.1%

The volume of auctions reach record highs

Last weekend, auction markets were tested, with a record number of capital city auctions held. However, according to CoreLogic’s preliminary numbers, demand hasn’t kept up the same pace as clearance rates continue to decline, recording just over 70%.

Although auction clearance rates have trended lower, they remain above average across every capital city. Conditions are still favouring sellers, but buyers are slowly getting some leverage back as listing numbers rise.

Australian property market may have reached its peak

With clearance rates now falling across major capital city auction markets, CoreLogic has suggested that the Australian property boom may have finally reached its peak.

ANZ has also released research this month suggesting that house price growth looks likely to peak in the next few weeks at just above 21%, followed by a slow to just 6% next year, and a further drop to 4% in 2023.

The report cited concerns over housing affordability, increasing interest rates and a rise in supply through listings will see prices flatten out and then drop slightly.

The accompanying construction boom will also likely begin to taper off, with the end of government stimulus the key driver in the decrease. With clearance rates now falling across major capital city auction markets, CoreLogic has suggested that the Australian property boom may have finally reached its peak.

Data from the ANZ CoreLogic Housing Affordability Report

Last week, ANZ launched the ANZ CoreLogic Housing Affordability report, presenting comprehensive numbers to the magnitude of affordability challenges in Australia using four different dimensions. Currently, the report highlights that nationally:

House price to income ratio is currently at a record high of 7.7
The time it would take to save a 20% deposit is currently at a record high of 10.2 years
The portion of income required to service a new mortgage is approximately 37.2%
The portion of income required to service rent is at a record high of 29.4%

You can access the full report here.

What will happen to mortgages in 2022?

NAB predicts that mortgage applications will remain strong through to the end of 2021. This is before an increase in home listings and new regulatory measures are predicted to begin to slow the market next year. NAB’s base-case scenario shows house-price growth slowing to 5.5% in the year ending September 30, 2022 – a significant drop from the 20.6% growth rate we have seen this last year as of October 2021.