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Property Market Update – March 2021


Mortgage rates continue to fall while property prices sky rocket 

Following the RBA’s decision to hold the cash rate at 0.1% – banks are competing for record levels of low interest rates. As of last week, Westpac is the latest major bank to up the ante in the ongoing home loan rates war offering 2 year fixed for 1.79%..

As mortgage rates continue to fall, Australian house prices have posted their strongest monthly increase in 17 years in the month of February. A number of economists have forecast strong growth in prices over the next two years.

The combination of government support and record low interest rates have played two key roles in supporting such strong housing market activity.

Tim Lawless from CoreLogic notes that; “Despite the rapid pace of capital gains since October last year, national housing prices are only 2.8% higher than their previous peak in 2017 and the most unaffordable capitals, Sydney and Melbourne, are still recording dwelling values that are slightly below their record highs.”

Without a catalyst to slow this market down, we expect the momentum to continue to at least the 4th quarter of 2021.


Sydney auction market – biggest result in 24 yrs

The month of February saw Sydney’s preliminary clearance rate reach almost 90% across the entire city, the highest we have seen since 1997. Agents have reported a huge increase in buyers at auction, as well as reserved prices being smashed by hundreds of thousands of dollars.

As of week ending 7th of march, REA has recorded 89% and Domain 87% clearance rates based off 665 auctions across Sydney. This was the 5th weekend in a row the clearance rate remained over 85%;  the longest streak since 2017.

End of JobKeeper is driving both employment and unemployment higher

Due to Australia’s strong fiscal policy during COVID-19, almost 93% of jobs lost at the height of the pandemic have now been restored. As business confidence continues to rise, unemployment has sunk to 6.4%, the lowest rate since April last year. According to the head of labour statistics at ABS, January 2021 was the fourth consecutive monthly rise in employment.

However, as JobKeeper is due to end March 28, there are to be an estimated 110,000 job losses followed. The forecast comes from Commonwealth Bank economists Kristina Clifton and Nicolas Guesnon, who expect more than half of those to come from high risk industries like transport, accommodation and the arts. That being said, the report argues the overall impact will be “minimal” as slack in the labour market stops unemployment from rising sharply.

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