Weekly Economic Update

This week, we take a look at the state of auction markets and the most hotly contested suburbs so far this year. We also dive in to see what is happening with settlement times, with more people deciding against a settlement period of under 30 days.

Competition for property hit a record high in September

The number of active bidders at auction hit a record high of 4.1 in September across Australia. The drivers of this are well documented - lots of money, lots of buyers but relatively little on market, particularly in Melbourne and Sydney.

Will this high level of competition continue into the remainder of the year? It is likely that competition will remain elevated from previous years however there are two things that are looking to slow the market. The first is that we are heading into a late Spring listing boom. As of yesterday, listings authorities across Ray White were 14 per cent above the same week in 2020 and 17 per cent the level in 2021. More stock on the market will be a welcome relief for buyers.

The second is that APRA’s restrictions to finance come into place on November 1st. This will reduce borrowing capacity by 5% on average and is expected to moderate pricing most significantly in suburbs that are popular with first home buyers, as well as those that are more affordable.

So far this year, the region that has been most hotly contested at auction so far this year has been south-east Brisbane with Mansfield, Wishart and Greenslopes topping the list. The Central Coast of NSW also makes an appearance twice with Tascott and Ettalong Beach making the top 10 list.

Good luck getting into your new home before Christmas as settlement times blow out

Ray White data has shown a steady reduction in settlement times during the year. In September, only 5.9 per cent of properties settled in less than 30 days, compared to 9.4 per cent last year. Although we are still seeing strong competition for properties, buyers appear less of a rush to move into or take full ownership of their properties. Conversely, sellers could be deciding to hold on a lot longer before vacating the property.

What is driving this? It is likely that the main influence is the lack of stock on the market. Most sellers are subsequent buyers - a longer settlement period gives them more time to find a property to buy or rent. It could however also be driven by buyers wanting to take their time to sort out financing, or sell their existing property. Buying before selling not surprisingly becomes more popular in strong markets.