Issue 4 | Thursday 23 February 2023 | How’s this for some interesting facts?
Hi Andrew Bell with you, and as we head towards the end of February which marks one sixth of the year over already, I have got some quick facts that will give some insights into the real estate market at present.
First up we know how important demand is for real estate and population growth is one of the key components that drive real estate. After two years of our borders being closed, they are open again, and migration certainly is starting to pick up. It’s not only international migration that adds to any state’s population growth, but it’s migration as well. The latest figures from the Australian Bureau of Statistics show that Queensland is a clear winner in population growth, with 55,418 people migrating to Queensland from other parts of Australia in the Financial Year 2022, together with, 23,430 net overseas migration giving us a huge boost of 106,495 people. The second largest growth in the country was Victoria at only 67,000, so you can see why the demand for real estate in Queensland remains so strong. That shows up in numerous ways, but I was fascinated to see the latest stats from the weekend before last from the International Ray White Group with 307 auctions scheduled for 1 weekend alone, and the clearance rate was 72%. 72% that sold! That’s the highest since April last year. The average attendance at the auctions was 34 people which is quite remarkable when you see it’s a higher number than the average number of attendees at auctions throughout 2022. It certainly shows the continued interest in real estate, although we know interest rates are having some effect. Before touching on that, another interesting stat.
New listings throughout Australia continue to reduce in volume. Year on year new listings is down 42% compared to the 3 months to January 2022. The drop in listings is on a gentle decline, as opposed to, the huge price rises that occurred in 2020 and 2021. It’s quite possible that we are going to be in low-stock environment for quite some time to come, and when you match that with this constant increase in population it certainly suggests there is going to be this underlining support for real estate.
The purpose of interest rate rises was to slow price growth, and quite frankly the Reserve Bank would indeed like to see softening in real estate prices and that has been occurring. Capital city house prices are now down 6.1% from their peak of March 2022, and whilst we don’t believe we are at the end of price declines, the rate of price decline is clearly slowing. The decline in pricing started in March 2022 even though interest rates didn’t start increasing until May 2022. What we see in all the data coming through now is that there are some markets throughout the country that are less sensitive to interest rate movements. Sydney, Melbourne, and Canberra are the most expensive cities in the country, and therefore far more sensitive to the cost of debt. No surprise that Sydney prices have dropped by 10.8% from their peak, whilst you look at an area like Adelaide, where the median price is half that of Sydney and prices are only down 1.8%.
With inflation likely to have peaked, or near its peak, it is expected that price declines will continue to slow, particularly with the population growth mentioned above and the shortage of stock in the marketplace.
Another interesting factor is that Surfers Paradise has been named in Australia’s “Billion Dollar Club” for 2022, racking up the third-highest total volume of sales in the nation. With just in excess of $1.079 Billion last year it shows our flagship suburb, not only of the City of the Gold Coast but of Queensland continues to attract huge interest from around the country.
So, most probably some surprising stats for many, but it does paint a picture of the factors that are driving the real estate market and potentially shaping how 2023 will unfold here on the Gold Coast.
As I sign off, please don’t forget our Business Meets Sports Luncheon. We have the amazing Bruce Mathieson as the business guest speaker. He is a remarkable human being, having left school at 13, and now the Head of an Empire that serves one out of two alcoholic drinks every year in Australia. An amazing story and he clearly paints what it takes to be a huge success. Come on your own, come with some friends, book a table, whatever it may be as it will be a fun afternoon with Comedians. You will be with a large group of fellow Gold Coasters helping put more rescue equipment on the beach in Surfers Paradise, particularly when we see so many deaths have occurred on our beaches around Australia in the last year.
Enjoy the last days of summer before we start heading into our autumn months. Be with you again in a fortnight’s time.
Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group