- Australia now has more than 10 million homes, the highest number on record.
- Housing sales are falling sharply in Australia’s largest cities.
- The Commonwealth Bank says higher transaction fees are contributing to the decline.
There are now more than 10 million homes in Australia, according to the Australian Bureau of Statistics (ABS).
However, as the size of the country’s housing market has grown, helped by low interest rates and strong population growth, it’s not translated into an increase in property sales.
As seen in the chart below from the Commonwealth Bank, rather than mirroring the lift in total housing stock, turnover has gone the opposite direction, especially in the major capitals, the most expensive markets.
To Kristina Clifton, Senior Economist at the Commonwealth Bank, it’s likely that continued growth in house prices over recent decades meant many have been put off moving due to substantially higher transaction costs.
“One reason for lower housing turnover is the fact that rising house prices mean that the transactions costs involved in buying and selling property have increased in dollar terms,” she says.
“For example, the stamp duty on the median property in Sydney worth $800,000 is now about $31,800. But back in 2012, when the median property was worth $500,000, stamp duty was around $18,200.
“So there is now an extra cost of $13,600 involved in the purchase of the median property in Sydney.”
Along with higher transaction costs, acting to dissuade mobility in living arrangements, other factors such as tighter restrictions on investor lending, soft wage growth and market conditions in individual locations could also explain some of the recent weakness in turnover levels.