There’s a bit of a debate underway in Australia in relation to the housing market, specifically what’s happening with prices.
According to data from CoreLogic, house prices fell 0.3% across the country in January, largely reflecting declines of 0.9% and 0.2% in Sydney and Melbourne, Australia’s largest housing markets.
Prices also fell in four of Australia’s six remaining capitals , with the only increase recorded in the comparatively small market of Hobart in Tasmania.
Those broad-based falls left prices down 0.7% nationally between November to January, suggesting that it was a soft summer selling season for many vendors.
However, not everyone is convinced that prices are actually falling, or at least not to the same degree indicated by the CoreLogic data.
While Tim Lawless, head of research at CoreLogic, says that seasonality doesn’t typically exert much influence over the CoreLogic series, economists at Macquarie Bank and ANZ Bank aren’t convinced that prices are falling, indicating in two separate research notes released in January that prices may be actually be steady or pushing higher based on seasonal patterns applied in their modelling.
It’s muddied the waters as to what exactly is going on, and whether homeowners and policymakers should be concerned.
Summer hasn’t helped matters. The season is typically slow for housing market turnover as attention switches to other things such as family, friends, the beach, and Australia’s 4-0 trashing of the Poms.
Well, the seasonal slowdown in the housing market activity has now reached its nadir.
Australia Day has come and gone, and the market is starting to stir, hopefully providing a better indication as to what exactly is happening with prices.
The starting point will be this weekend.
Auction activity will pick up noticeably, even if still well below the levels seen late last year.
CoreLogic is currently tracking 688 auctions across the country, a steep increase on the 276 level of a week earlier.
258 properties will go under the hammer in Melbourne, up from 105 last week. It’s a similar story for Sydney where the number will lift from 42 to 181.
Activity will also pickup in other capitals, including in Adelaide where 91 properties will be put up for sale.
Even though the number of auctions is still well below the levels seen in November and December last year, it will provide an early litmus test of market conditions in 2018, especially after so many reports of falling prices seen in recent times.
Last week, a final clearance rate of 72.8% was recorded nationwide, a sharp improvement on the levels seen just a month ago.
However, it’s difficult to read too much into those figures given just how few properties were up for sale, especially as clearance rates tend to spike in early January each and every year.
But that’s all about to change with turnover set to increase in the months ahead, starting with this weekend.
We’re about to find out whether the seasonal weakness over summer was just that — seasonal — or the start of a more prolonged downtrend in prices.