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It is pretty much life as normal in Australia at the moment, except of course in Sydney which is now in the midst of lockdown. This week I take a look at the boom in renovations and where we are seeing the highest amount of spending per month, what the rapid decline in unemployment means to property and where we are seeing the biggest increases (and declines) in properties for sale.
Which suburbs are renovating the most in your city?
Lots of time spent at home during lockdown has sparked a renovation boom across Australia. Over the past 12 months there were more 116,000 alterations and additions to homes approved across Australia, the highest 12 month time period ever recorded. In May alone, renovations worth almost $1 billion were approved.
Victoria topped the list for number of renovations while home owners in NSW are doing the most expensive renovations, spending on average $166,535 per home approved. At a suburb level, it is not particularly unusual that the most is being spent on renovating in our most expensive suburbs. Topping the list nationally is Mosman where $87.2 million was spent in the 11 months to May 2021. This was followed by Point Nepean, the suburbs on the very edge of the Mornington Peninsula with $61.8 million being spent.
Jobs growth continues - what does it mean to property?
The unemployment rate hit 4.9 per cent and is now the lowest it has been in over a decade and there is particularly positive news for youth unemployment which is now at 10.2%, the lowest level since 2009. Youth unemployment has been disproportionately hit by lockdowns.
While great news for anyone who has been looking for work, or wants to change jobs, it is becoming increasingly difficult for businesses to find employees. Job ads are now at a 13 year high and while wages aren’t yet shooting up overall, there is likely pressure in some sectors. Regional areas in particular are likely to be more impacted than some capital cities.
What does this mean for property? There are a few implications. The first is that overall, it shows the strength of the Australian economy and this is great news for property.
The second is less positive and this is the impact it is likely to have on inflation and hence interest rates. The RBA has stated they do not expect wages to really start to increase significantly until the unemployment rate hits 4%. It is moving to that rate far more quickly than expected which may mean inflation creeps up more quickly as well. Higher inflation raises the risks of interest rate rises. Depending on how fast they increase, this could slow the market significantly.
The third is the impact on the construction sector. HomeBuilder and the strong housing market has been great for the construction sector however this strength has led to a shortage of workers. Wage rises will flow through to the cost of housing construction, already impacted by raising costs of materials such as timber.
Is Adelaide our auction market capital?
Adelaide is officially the hottest auction market capital as conditions continue to heat up in Australia’s most liveable city.
Adelaide has so far recorded the highest clearance rate in the entire Ray White network with 90 per cent of properties selling on auction day in July. Across Australia right now the average stands at 75 per cent clearance, with Sydney coming in second at 86 per cent.
While the clearance rate is impressive, more so are the number of bidders. Active bidders per auction has increased substantially over recent months. Per auction, there are currently 4.6 active bidders. This is almost 40 per cent higher than the Australian average of 3.4 active bidders.
The number of average active bidders has increased by 40 per cent since the start of the year and suggests that market conditions are continuing to accelerate in the Adelaide market.
This strength in demand we are seeing in auction number is not surprisingly flowing through to pricing.
Adelaide house prices have increased by 15 per cent over the past 12 months, while units have increased by almost six per cent.
