I can’t vouch for it. It’s a black box. But Cameron Kusher is a good analyst:
What is this index about?
The REA Insights Weekly Demand Index is a weekly index that looks at the volume of high-intent buyer activity on the realestate.com.au website and app and tracks that activity over time.
Specifically, it looks at how users are behaving when they interact with live property listings.
The characteristics of serious buyer activity includes but is not limited to; the number of visits to a listing, looking at the photos for a listing multiple times, saving the property, sharing the property and/or making an enquiry with the agent.
Who is it useful for?
For property owners considering selling the index gives a good indication of the level of buyer demand they can expect when they list. Higher buyer activity on a listing would suggest greater competition and an increased likelihood of a successful sale. The same can be said for the real estate agents wanting to understand the likelihood of a successful sale in this market.
For buyers it’s the inverse and serves as an indicator of the amount of competition they’re likely to face in market.
Why REA Group is well placed to tell this story
Realestate.com.au is Australia’s number one property portal. In April 11.2 million Australians visited the platform* creating an unparalleled view of consumer demand for Australian property. This vast onsite activity sends millions of signals of intent that allow the experts at REA Insights to model behavioural demand.
What is the latest data actually showing?
The latest data shows that the number of highly-engaged listing interactions on realestate.com.au has increased by 0.7 per cent last week. That means that serious buyer activity has now increased for the past nine weeks and is up 100.8 per cent from its low at that time. The 0.7 per cent weekly increase was the smallest weekly increase any time over the past nine weeks.
One of the likely drivers of such high volumes of serious buyer activity is the fact that there are so few properties listed for sale. With less stock, serious buyers narrow their focus much more and are likely to be more highly engaged with the listings that are on the site.
The data indicates that it isn’t just search volumes that are climbing, we are also seeing a significant increase in the volume of people searching that are in the late stage of their purchase decision.
All states recorded an increase in the volume of high-intent listing interactions last week except for New South Wales and Australian Capital Territory, which slid slightly.
Since the recent low related to COVID-19 serious buyer activity has more than doubled in most states and territories. The largest increases have been recorded in Western Australia (117.3%) and Queensland (117.1%), while the smallest gains have occurred in Tasmania (71.8%) and Australian Capital Territory (81.0%). It should be noted that Australian Capital Territory saw nowhere near the same slump in high-intent activity through COVID-19 as the other states and territories.
What about compared to last year?
A year ago the Australian housing market was in the aftermath of the federal election, macroprudential controls on the housing market were being eased and interest rates were being cut which, along with the election result, was a cue for the recovery in housing demand.
It should be noted that last year search volumes on realestate.com.au were much lower than they are today and there were also significantly more properties listed for sale.
Nationally, serious buyer activity is up 33.8 per cent higher on last year.
The heightened buyer activity is being felt in all states and territories with the largest annual increases in Northern Territory (57.8%) and Australian Capital Territory (56.5%), while Tasmania (21.6%) and Victoria (26.4%) recording the smallest increases.
With low volumes of properties listed for sale and audience at an all-time high, realestate.com.au is seeing a high volume of serious buyer activity on site.
Of course, the challenge remains supply; while many consumers may be close to purchasing, the lack of stock to choose from may be leading to some hesitancy on their part.
The number of new properties being listed for sale on realestate.com.au is beginning to lift, however, it remains at very low levels and much lower than a year ago.
We expect the demand from serious buyers to remain at these elevated levels until such time as enough vendors decide to capitalise on said demand by listing their properties for sale.
There’s sure to be a bit of pent up demand but I remain bearish on:
- falling rents;
- tightening lending standards;
- no immigration, and
- high unemployment.
There’s no FOMO in that and no rush to buy.