Welcome to this month’s edition of the Dot Monthly!
There is renewed confidence in the housing market as the cycle transitions to the recovery phase after 2 years of losses. The National property market recorded its biggest monthly increase in the last 24 months – 0.8% rise in Dwelling values.
Things are starting to sway in the favour of property buyers and sellers however the national economy is destined to record its worst performance in almost 3 decades with GDP growth at it’s lowest since the 1991 recession. Interesting times indeed!
Let’s get into this month’s topics:
House Prices Rose 0.8% in August
The national property market has recorded its largest monthly increase in two years as Australians capitalise on rising confidence, an easing in lending standards, lower interest rates and tax cuts. The average situation across the nation was a 0.8% rise in house prices in August, according to one research source, while another has reported a 1.9% monthly rise.
Sydney was the best performing city in the three months to August, with its median rising 1.9%, according to CoreLogic. Melbourne is recovering also, with a quarterly rise of 1.8%. Both major cities are still more than 6% lower year-on-year, according to CoreLogic – although figures from SQM Research have them down only 3-4% year-on-year.
Canberra, Hobart and Brisbane also recorded rises in the house prices in August, while Sydney, Melbourne, Brisbane and Adelaide all saw uplift in their apartment markets.
“The significant lift in values over the month aligns with a consistent increase in auction clearance
rates,” Corelogic research director Tim Lawless say
Clearance Rates At 2yr High
Melbourne’s clearance rates spiked at 81% last weekend, the highest rate since April 2017, while Sydney recorded its highest rate in two and a half years. The results put the big city markets back to levels achieved in the 2016/2017 boom, but with fewer properties for sale.
Brisbane and Adelaide also reported higher clearance rates than the previous week. Domain economist Trent Wiltshire says the surge in sales has surprised many.
“Undoubtedly, more buyers are out there and the increase in clearance rates has jumped faster than most people expected,” he says. Melbourne’s clearance rates have gradually risen in the past two months, but last weekend’s result was exceptional, compared to the previous week’s 70%. “It’s a very strong result and it continues the trends of clearance rates rising over the last couple of months,” Wiltshire say
Sydney’s preliminary clearance rate was 85% on the reported results of 500 scheduled auctions in the week to Saturday, up from the previous week’s preliminary 82% figure – a number CoreLogic subsequently reduced to 76% once more of the 446 auction results were included.
Westpac Wins In Landmark Case
Westpac has had a win over ASIC in the Federal Court, which experts believe will prompt borrowers to celebrate. The Federal Court dismissed allegations made by the corporate regulator ASIC that Westpac breached responsible lending obligations in issuing home loans more than a quarter of a million times through the use of the Household Expenditure Measure (HEM) benchmark.
Justice Nye Perram found a bank could never fully assess a borrower’s expenses because a borrower had the power to change some of their expenses after taking on a loan so that they could make payments.
Speaking of the judgement, associate professor Mark Humphery-Jenner from UNSW Business School says ASIC should be cautious about being too litigious.
Many people spend more than they need to because they can. When they have to budget, they can reduce expenditure. In short, the decision was eminently sensible and a great win for common sense.
What has Dot been up to for the month?
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