James Weekly Snapshot – March 24, 2021
The biggest surprise to come out of the news in the past week or so was Australia’s job data figures.
A whopping 88,700 Aussies found jobs during the month of February, dropping the unemployment rate down from 6.3 per cent to 5.8 per cent.
Even more impressive was the fact that the February job data revealed that the total number of Australians employed at the end of February was just 1,800 less than pre-pandemic levels.
March 31 signals the end of JobKeeper so it is likely that we will see a spike in unemployment between now and the end of April.
However, the latest unemployment figures were incredibly encouraging because they exceeded all of the expectations and forecasts of economists and the Reserve Bank of Australia.
You might remember that around this time last year most states in Australia announced a moratorium on landlords evicting tenants who were unable to pay their rent as a result of the pandemic.
Well, those moratoriums are scheduled to end in the coming weeks. New South Wales ended its moratorium on March 26, Victoria and Western Australia on March 28 and South Australia on May 31. Other states and territories ended some time ago.
What is the end of the moratorium likely to mean for the property market?
Where the market is tight, conditions favour landlords. In those markets, we are likely to see vendors push their tenants out if they’re in default because there’s likely a line-up of strong tenants to take their place. In the markets where vacancy rates have blown out, we’re likely to see landlords try and work with their tenants, potentially even continue with payment plans or even drop rents to try and ensure cash flow keeps coming in.
Either way, it will be interesting to watch vacancy rates and rental yields over the coming months.
Vacancy rates increased from 1.9 per cent to 4.5 per cent in Melbourne between February 2020 and February 2021, and from 2.9 per cent to 3.3 per cent in Sydney during the same period, with the majority of that increase in the unit market.
Vacancy rates in Adelaide dropped from 1 per cent to 0.7 per cent between February 2020 and February 2021. Perth’s vacancy rate dropped from 2 per cent to 0.9 per cent over the same period.
Vacancy rates in Brisbane – where the moratorium ended in September 2020 – have dropped from 2.2 per cent to 1.5 per cent.
In other news, auction clearance rates are still soaring.
Heavy rain throughout Sydney failed to dampen its auction market, with CoreLogic reporting a preliminary clearance rate of 87.5 per cent based on the 1,048 auctions scheduled over the week.
Melbourne posted a preliminary clearance rate of 78.9 per cent, based on 1,319 scheduled auctions, although the pace of price increases had made some owners wary about selling, in case they are unable to buy back into the market.
It is house sales which are really firing up the market.
CoreLogic figures reveal across all capital cities, the clearance rates for houses was running at 84 per cent versus 76 per cent for units, over the previous four weekends.
The difference between house and unit sales was most pronounced in Brisbane, where house clearance rates were about 77 per cent versus 39 per cent for units.
In Sydney, auction clearance rates for houses were 90 per cent compared with units at 82 per cent while in Melbourne houses have been clearing at 81 per cent versus units at 74 per cent.
It goes to show it’s a hot market, but particularly if you’re in the market for a house today! I don’t think that’s a coincidence in this post-pandemic period where people are seeking a little more space at home.
In that respect, realestate.com.au (REA) reported property sales volumes were up by 33 per cent in the past year. Property searches are up 58 per cent so far this year compared with the same period in 2020.
Where are the searches going?
REA revealed 63 per cent of visitors to its website were searching for houses, an increase of 80 per cent year on year. The biggest increase came in the form of searches for land – up 90 per cent year on year. No doubt in large part to the looming end of the federal government HomeBuilder stimulus.
We really are at the starting line of a boom. That’s good news if you own property, but maybe a little daunting and perhaps even overwhelming if you’re trying to get into the market. In my view you should get in while you can, and don’t be too bothered if you’re paying a little more than you thought the property was worth. Such is the pace of growth in the market right now.