Seven signs the housing market is going nuts
Aussies have always loved bricks and mortar but throw in a global pandemic, a ban on international holidays and a lockdown-induced desire for more space and it's no wonder housing has become a very hot commodity.
When COVID-19 arrived down under a year ago, the doomsayers declared that real estate prices would fall off a cliff, with predictions of a 30 per cent crash. Those property pessimists couldn't have been more wrong.
Soaring house prices in almost every corner of the country, buyers overwhelmed with FOMO, not enough stock on the shelves and banks practically giving money away has lead to one of the speediest post-recession recoveries Australia has ever seen.
Here are the seven signs that the boom is here and looks certain to stay for some time yet.
Home values are rising at lightening speed
Spurred on by the perfect storm of record low mortgage rates, improving economic conditions, government handouts and low supply levels, Australia's housing market has seen values rise at the fastest rate in 17 years. CoreLogic is calling it a "broadbased boom" after crunching the numbers and declaring that dwelling values surged 2.1 per cent in February - the largest month-on-month change recorded since August 2003.
"The last time we saw a sustained period where every capital city and rest of state region was rising in value was mid-2009 through to early 2010," said CoreLogic's research director, Tim Lawless.
Clearance rates are skyrocketing
Auction action is frenzied, even in cities where they aren't usually in favour, such as Brisbane, Adelaide and Perth. For the week ending March 7, CoreLogic recorded Sydney's auction clearance rate as 86.7 per cent, up from 75.2 per cent in the same week last year (just two weeks before a COVID-induced auction ban).
To put that into perspective, Sydney's clearance rate has averaged 65 per cent over the past decade.
Melbourne saw 80.9 per cent of homes sell under the hammer (up from 66.1 per cent last year) despite a long weekend.
For the non-traditional auction markets; Brisbane recorded a rate of 82.3 per cent (compared with 45.2 per cent in 2020), Adelaide's clearance rate was 81.7 per cent (up from 56.5 per cent last year), and Perth's sat at 81.8 per cent (up from 44.1 per cent).
People are buying without kicking the tyres first
More than ever before, purchasers have been virtually viewing homes and making multimillion-dollar offers without even setting foot in the property.
According to a recent survey by the Real Estate Buyers Agents Association (REBAA) and Property Talk Australia (PTA), 30 per cent of buyers said they would buy without physically inspecting a property.
"It's alarming to think that people are basing the biggest financial investment decision they're likely to make in a lifetime on a video and a few photographs that may or may not be showcasing the property's flaws," said REBAA president Cate Bakos.
Homes are turning huge profits in just months
National property prices are rising at such a fast pace, some homes have been flipped in a matter of months for eye-watering profits. One Gold Coast cottage earned a $340,000 profit in just six months. The modest unrenovated three-bedroom house was purchased for $1.35 million in September, 2020 but recently exchanged for $1.69 million.
In the Sydney suburb of Cherrybrook, a seller pocketed a tidy $480,000 profit, also in just six months. The house was bought in September for $1.9 million and after a minor renovation sold for a new suburb record of $2.38 million.
And a landmark riverfront home in Brisbane has fetched an incredible $500,000 profit for a would-be buyer who never actually owned the listing. The eight-bedroom 'Balaam' sold in late 2020 for $9 million. However, in an unusual twist, the buyer decided to on-sell his option for the property to another party before settlement for $9.5 million.
60 suburbs will have a $3 million plus median this year
Once it was a badge of honour for suburbs to have a $1 million median, but that once impressive price tag is pretty run of the mill these days.
Realestate.com.au chief economist, Nerida Conisbee, said the number of suburbs with medians over $3 million doubled during the pandemic and more than half of the 30 suburbs on the list experienced double-digit price growth.
And there is no sign the top end of the market will slow down any time soon. Ms Conisbee predicted the number of $3 million plus suburbs is set to double again - to 60 - during 2021.
Although most of the $3 million club is in Sydney, Bar Beach in Newcastle, Forrest in Canberra and Portsea outside of Melbourne are ones to watch this year.
Way less bang for your buck in "cheaper" cities
Adelaide was always one of Australia's more affordable capitals with a modest median house price of about $450,000 just 12 months ago. That median has now jumped to $509,000.
Since the pandemic began, several Adelaide homes have seen huge sales prices over their set reserves at auction.
A two-bedroom house in West Lakes recently attracted 36 bidders and sold for $1.475 million - $525,000 above the reserve.
Meanwhile a humble home in need of renovation in Glenunga drew a 500-strong crowd and 50 registered bidders to sell for $2.05 million, despite an advertised asking price of $1.3 million.
And Hobart, which was long considered Australia's cheapest capital has seen prices soar. CoreLogic's latest data revealed that Hobart's house prices grew by 2.5 per cent in February, and 8.7 per cent in the past year to $535,994 - that's higher than Adelaide, Perth and Darwin.
"If we look at Hobart's growth rate over a five-year period, we can see that housing values have risen about 52 per cent over five years," Mr Lawless said.
People are camping out to get first dibs on land
FOMO, or Fear Of Missing Out, has become so serious in some suburbs that keen buyers camped out prior to one land release in south western Sydney.
Security was called in February as 40 buyers had pitched tents outside the developer's offices for four days to be first in line for the Saturday release of 38 blocks at the Catherine Park Estate.
A land release in the same estate just one week earlier attracted buyers who were prepared to camp out for two nights.
Originally published as Seven signs the housing market is going nuts