This year has witnessed one of the most largest and broadest booms in the Australian property market’s history.
Australian dwelling values have risen by an extraordinary 20.9% so far in 2021, with every capital and region experiencing strong growth:
There are several factors behind this strong price growth. Record low mortgage rates and an acute shortage of homes for sale created ‘FOMO’ [fear of missing out] in the market. Household finances are in rude shape after they banked $200 billion worth of pandemic stimulus. Finally, jobs opportunities are plentiful with the number of job vacancies per unemployed and underemployed tracking near record lows.
However, as we finish 2021 momentum is now slowing, with FOMO leaving the property market.
According to data released today by CoreLogic, new listings are running at their highest level in at least six years:
And with new listings running faster than absorptions, total listings are now rising; albeit from depressed levels:
The same can be said for auctions. A record 4260 auctions took place last weekend, pushing Sydney’s clearance rate to its lowest level this year and Melbourne’s to its lowest level since mid-September.
Thus, after a prolonged period of FOMO whereby demand overran supply, supply has finally caught up, driving the slowing price growth.
On top of that, mortgage growth has also turned lower, suggesting property demand is waning.
The combination of slowing demand and rising supply points to one thing: slowing price momentum as we head into 2022.
FOMO is finally leaving the Australian property market.