C21 Market Pulse | March 2023 | Australia

C21

WELCOME TO THE March 2023 ISSUE OF c21 M arKET PULSE

PUBLIS h E r

Century 21 Australia Pty Ltd

c ONT r IBUTO r S

Tim Lawless

Chris Gray

EDITO r I a L ENQUI r IES

Century 21 Australia (02) 8295 0600

a DVE r TISING ENQUI r IES

Century 21 Australia (02) 8295 0600

DIS c L a IME r

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Cover image: Jason Briscoe on Unsplash

c O r ELOGI c h OME

Va LUE INDEX: Va LUE DE c LINES FL aTTEN aS LOW a DVE r TISED STO c K LEVELS KEEP a

FLOO r UNDE r P r I c ES

CoreLogic’s Home Value Index (HVI) recorded a sharp reduction in the rate of decline through February.

The national index declined -0.14% over the month, the smallest monthly fall since May 2022 (-0.13%), when rate hikes commenced.

A 0.3% rise in Sydney dwelling values was the most significant driver of the national deceleration, however, the loss of downwards momentum was broad-based. Darwin (-0.3%) was the only capital city to record a steeper monthly fall in February, albeit from relatively flat conditions previously. Every other capital city except Hobart (-1.4%) saw housing values fall by less than half a per cent over the month.

CoreLogic’s research director, Tim Lawless, said the stabilisation in housing values over the month coincides with consistently low

advertised supply levels and a rise in auction clearance rates.

“The past four weeks have seen the flow of new capital city listings tracking -17.0% lower than a year ago and -11.9% below the previous five-year average,” Mr Lawless said. “This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”

Auction clearance rates also bounced back through February, with the capital city weighted average reaching the high 60% range through the second half of the month, while Sydney clearance rates rose to above 70% in the week ending 19 February, the first time since February 2022.

Bottom of the cycle or eye of the storm? Whether this improving trend can be sustained is highly uncertain. While listings currently remain low, we could see housing demand dented further under higher interest rates and lower sentiment.

BY TIM LAWLESS, HEAD OF RESEARCH, CORELOGIC

“Considering the RBA’s move to a more hawkish stance at the February board meeting, along with an expectation for a weaker economic performance and a loosening in labour markets, there is a good chance this reprieve in the housing downturn could be short-lived,” Mr Lawless said. “We also have the fixed-rate cliff ahead of us; arguably the full impact of the aggressive rate hiking cycle is yet to play out.”

Drilling into the data by value segment, the upper quartile of the combined capital city housing market drove this month’s stabilising trend, increasing by 0.1% in February. While still falling, declines across the lower value segments of the market also stabilised, down -0.1% across the lower quartile and -0.3% across the broad middle of the market.

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Hedonic Home Value Index

CoreLogic Home Value Index: Value declines flatten as low advertised stock levels keep a floor under prices

BOTTOM OF THE MARKET?

CoreLogic’s Home Value Index (HVI) recorded a sharp reduction in the rate of decline through February. The national index declined0.14% over the month, the smallest monthly fall since May 2022 (0.13%), when rate hikes commenced.

A 0.3% rise in Sydney dwelling values was the most significant driver of the national deceleration, however, the loss of downwards momentum was broad-based. Darwin (-0.3%) was the only capital city to record a steeper monthly fall in February, albeit from relatively flat conditions previously. Every other capital city except Hobart ( -1.4%) saw housing values fall by less than half a per cent over the month.

CoreLogic’s research director, Tim Lawless, said the stabilisation in housing values over the month coincides with consistently low advertised supply levels and a rise in auction clearance rates.

BY CHRIS GRAY, CEO, YOUR EMPIRE

Drilling into the data by value segment, the upper quartile of the combined capital city housing market drove this month’s stabilising trend, increasing by 0.1% in February. While still falling, declines across the lower value segments of the market also stabilised, down -0.1% across the lower quartile and -0.3% across the broad middle of the market.

This trend was most obvious across Sydney’s upper quartile, which recorded a 0.7% rise in values over the month, compared with a -0.2% fall in values across the lower quartile of the Sydney market.

Blink and you’ve missed it. Yes, that’s how quickly the market can turn, yet so many buyers and sellers think they can pick the bottom of the property market and delay making a decision. They think they’re being clever; I think they’re making excuses and will live to regret it.

Upper quartile housing values have led the downturn to date, dropping -13.5% in value across the combined capital cities over the past 12 months, compared with a 1.7% rise in values across the lower quartile. Previous cycles have seen a similar trend, where the upper quartile tends to lead both the upswing and the downturn.

“The past four weeks have seen the flow of new capital city listings tracking -17.0% lower than a year ago and -11.9% below the previous five-year average,” Mr Lawless said. “This trend towards a below average flow of new listings has been evident since September last year, coinciding with a loss of momentum in the rate of value decline.”

took off, rising 20-30% in around 12 months. Within 6 months of the first rise, many people then said “I’ve missed the boat, I’m too late, property prices are rising too quickly, it’s going to crash. Damn I’ve missed it!”

Auction clearance rates also bounced back through February, with the capital city weighted average reaching the high 60% range through the second half of the month, while Sydney clearance rates rose to above 70% in the week ending 19 February, the first time since February 2022.

The Corelogic results for February 2023 have just been released and Sydney recorded an increase in property prices, not a fall. Sure, it was only 0.3%, but it’s a sign and yet another example of how quickly the market can turn. No one was expecting it, no one was predicting it and then it just happened.

Bottom of the cycle or eye of the storm? Whether this improving trend can be sustained is highly uncertain. While listings currently remain low, we could see housing demand dented further under higher interest rates and lower sentiment.

Regional dwelling values were down -0.3% in February compared with a -0.1% fall across the combined capital cities. However, the weaker regional result relative to the combined capitals was mostly a factor of the monthly rise in Sydney housing values rather than a larger fall in regional market values. Each of the broad rest -of-state regions, apart from NSW, recorded a monthly outcome that was inline or stronger relative to their capital city counterparts.

A similar thing happened in 2020 – 2021 where prices were falling in Covid. Everyone was saying “Why buy now when it’s going to be cheaper tomorrow? I’m going to wait”. And then the market

“Considering the RBA’s move to a more hawkish stance at the February board meeting, along with an expectation for a weaker economic performance and a loosening in labour markets, there is a good chance this reprieve in the housing downturn could be short -lived,” Mr Lawless said. “We also have the fixed-rate cliff ahead of us; arguably the full impact of the aggressive rate hiking cycle is yet to play out.”

Whilst I’m not sure if it is the bottom, what I do think is: Not all the markets rose, it was just Sydney. However, the rate of fall in most capital cities did reduce, which indicates that things are slowing, and the ‘bottom’ is getting closer.

Index results as at 28 February, 2023

Since peaking in June last year, the combined regionals index is down7.7%, compared with a -9.7% drop in the combined capital cities index, which peaked slightly earlier in April 2022. Regional housing values remain 30.7% above levels recorded at the onset of COVID in March 2020, while the combined capitals index is 10.4% higher.

There’s still talk of further interest rate rises and that will continue to affect market sentiment (the biggest indicator of demand) as well as borrowers serviceability limits. However, Westpac talked about 7 rate cuts in 2024 - 2025 (read more) which is an about turn in the conversation from the banks. If more stories like this appear in the press, that is bound to affect confidence in the market that if you can afford to buy now, chances are that your mortgage will be cheaper in the future.

Dwelling values remain higher than they were at the onset of COVID across every capital city and broad rest-of-state region. Melbourne now has the smallest value buffer, with housing values virtually equal to March 2020 levels (currently sitting just +0.03% higher), followed by Sydney, where dwelling values remain 7.7% higher. At the other end of the spectrum is Regional SA (47.6%) and Adelaide (41.4%), where housing values surged through the upswing and have remained relatively resilient to value falls through the rate hiking cycle to-date.

Change in dwelling values

Another big consideration is the talk of the mortgage stress that might happen with a fixed rate cliff coming later this year and that many property owners won’t be able to afford their mortgages doubling or tripling and will be forced to sell. I’m not so sure that’s going to happen as they were still assessed by their lenders at 3% above current rates when they took the mortgage out. Many people aren’t on fixed rates, and many have already changed from interest only to principal and interest repayments. They might be under more mortgage stress than they were before, but they haven’t been forced to sell.

So do I think this is the bottom of the market? Not necessarily and I don’t really care to be honest. Why don’t I care? Well because I’m investing for the long term, and I’ve never tried to pick the market. I continue to

hold 100% of my wealth in property as I believe it’s going to be more expensive in 10 years’ time and I’m prepared to cash flow any negative gearing until that happens.

Yes, my costs of holding that property have risen rapidly recently but it’s not going to be up there forever. We’ve had it good for such a long time now as rates have been dropping for almost 15 years since the Global Financial Crisis in 2008 / 2009. We all knew it was going to rise and now it has.

I constantly remind myself of the best tip I’ve heard about property and that’s the law of supply and demand. The reason prices haven’t dropped massively is because in the main areas that people want to live, there is a large lack of supply. If there’s no property for sale and people still want to buy it, prices rise in the good times and stay pretty stable in the tough times.

So, whether this is the bottom or not, take it as advanced warning that things change very quickly and if you get in before the masses, you’ll probably end up with a better property in a better location for a cheaper price.

ABOUT THE CONTRIBUTOR

Chris Gray is CEO of Your Empire, a buyers’ agency that buys homes and investments for time-poor professionals – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the host of ‘Your Property Empire’ on Sky News Business channel, where he’s interviewed various heads of property research companies and major industry figures. Chris is a qualified accountant, buyers’ agent and mortgage broker. For more information, visit www.yourempire.com.au and follow Chris on Facebook: @ChrisGraySydney

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T IPS FO r cr E aTING a WEL c OMING ENT r YWaY IN YOUR HOME

Creating a welcoming entryway in your home is essential to make a great first impression on your guests. Whether it's a small foyer or a grand hallway, the entryway sets the tone for the entire house. It is the first thing people see when they walk in, and it should be warm and inviting. Here are some tips to help you create a welcoming entryway in your home:

CHOOSE A WELCOMING COLOUR SCHEME

The colour scheme of your entryway sets the tone for your home. Neutral colours like beige, white, or grey can make the space feel clean and modern. If you're looking to create a warmth in your entryway, consider using rich, earthy tones such as deep reds, warm oranges, and golden yellows. These colours can evoke feelings of comfort and relaxation and make your guests feel instantly at home. Consider the style of your home and the overall look you want to achieve when choosing a colour scheme for your entryway.

ADD A WELCOMING RUG

A rug can help define the space and add warmth to your entryway. Choose a rug that complements your colour scheme and is the right size for your space. A rug with a bold pattern can also add interest and texture.

PROVIDE AMPLE LIGHTING

Lighting is crucial in any space, but it's especially important in your entryway. A well-lit entryway not only creates a welcoming atmosphere but also makes it easier for guests to navigate the space. Consider adding a statement light fixture, wall sconces, or table lamps to create a warm and inviting ambiance.

INCORPORATE SEATING

Incorporating seating into your entryway can add both function and style to the space. Not only does it provide a practical spot for guests to take off their shoes or set down their bags, but it also creates a welcoming atmosphere. A bench is a popular choice for an entryway as it provides a convenient spot to sit and is easy to move around. You might consider a bench with built-in storage to keep shoes organised. If you have a larger entryway, you might think about adding a pair of chairs or a small sofa to create a

cosy seating area. When choosing seating for your entryway, be sure to consider the overall style of the space and choose pieces that complement your decor. Upholstered chairs or a plush sofa can add a touch of luxury, while a rustic wooden bench can create a more casual and relaxed feel.

DISPLAY ARTWORK AND DECORATIVE ITEMS

Adding artwork or decorative items to your entryway can make it feel more personal and welcoming. Consider hanging a piece of art, displaying a vase of fresh flowers, or placing a decorative tray or bowl on a console table.

Creating a welcoming entryway in your home is all about creating a space that makes people feel comfortable and at home. With these tips, you can create a beautiful and inviting entryway that sets the tone for your entire home.

T ra NSFO r M YOU r

Pa NT rY: a STEP BY STEP GUIDE

Are you tired of digging through piles of food items to find what you need in your pantry? Keeping your pantry organised can make a huge difference in the ease of meal prep and overall functionality of your kitchen. Here is our step by step guide to help you organise your pantry:

STEP 1: TAKE EVERYTHING OUT

The first step to organising your pantry is to empty it completely. This will allow you to see what you have and make it easier to sort and categorise everything.

STEP 2: CLEAN AND DECLUTTER

While your pantry is empty, take the opportunity to clean it thoroughly. Wipe down shelves and walls, and sweep or vacuum the floor. As you put items back in, take the time to declutter and get rid of anything that's expired or you know you won't use.

STEP 3. CATEGORISE ITEMS

As you start putting items back in, sort them into categories. This will make it easier to find what you need and keep everything organised. You can categorise items by type (e.g. canned goods, grains, snacks), by meal (e.g. breakfast, lunch, dinner), or by frequency of use (e.g. everyday items, special occasion items).

STEP 4. USE CONTAINERS AND LABELS

Using containers can help keep loose items together and make your pantry look neater. Use clear containers so you can see what's inside, and label them so you know what's in each container. This is especially helpful for items like pasta, rice, and cereal.

STEP 5. CONSIDER STORAGE SOLUTIONS

There are a variety of storage solutions available that can help you make the most of your pantry

space. For example, you can install additional shelves or hooks to maximise vertical space, or use a lazy Susan to make items in the back easier to reach.

STEP 6. KEEP IT TIDY

Once your pantry is organised, make sure you keep it that way. Take a few minutes each week to tidy up and put things back where they belong. This will make it easier to find what you need and help prevent clutter from building up.

By following these steps, you can create a pantry that is functional and easy to use. A well-organised pantry can save you time and stress in the kitchen, and help you make the most of the space you have available.