The housing market continues to look strong, NAB Group Economists said this week.
NAB’s July 2020 Australian Housing Market Update reports that the past month has seen a further improvement in housing market activity from both a sales and listings perspective, although home values continued to drift lower across most capital cities.
Nationally, value declines have been mild to-date, but the pace of the downturn is accelerating, the report shows. Following a 0.4 per cent decline in May, the national index fell for a second consecutive month in June, down 0.7 per cent. Each of the five largest capital cities were down over the month, ranging from a drop of 1.1 per cent in Melbourne and Perth, to 0.2 per cent in Adelaide. Hobart, Canberra and Darwin, on the other hand, each recorded a subtle rise in values over the month. Market activity continues to rebound, with a 22 per cent surge in sales activity through May, followed by a further 30 per cent rise in June.
In the lead up to the Easter Long weekend, report volumes sank to 60 per cent below where they were at the previous year. By the end of June, the amount of reports generated tracked 5.4 per cent higher than this time last year. This real estate agent activity is highly correlated with new listings activity, with a two-week lead. Subsequently, this rise in real estate agent activity is flowing through to more fresh real estate listings. The rolling 28 day count of new listings remained lower than a year ago, but was 42 per cent higher relative to the recent low in early May. While new listings are ramping up, the total listing count has continued to trend lower, indicating a strong rate of absorption.
Consumer sentiment readings provide a further signpost for improving housing market activity, the report suggests. After plunging in late March and early April, consumer sentiment readings have rebounded, demonstrating the ability of consumers to make high commitment decisions. Consumer sentiment readings show a high correlation with housing market activity. Although these readings remain well below the long run average, improved consumer sentiment helps to explain the rise in listing numbers, and a strong rate of absorption via a higher rate of turnover.