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Although the media are continuing to beat up the Sydney and Melbourne property markets, reporting on 'cooling conditions' and the 'bubble that is about to burst', supply vs. demand in both markets still remains strong.
Property prices are driven by a number of factors, supply vs. demand being one of them. Essentially when a market is hot, one of the key indicators will be not enough properties on the market compared with people wanting to buy. The price of the property is then pushed up as people fight it out to secure the property, increasing capital growth. When the ratios flip, there are more properties on the market then people wanting to buy, therefore prices stagnate or drop as there is plenty of choice for buyers and more room to negotiate.
According to research undertaken by SQM, Australia wide residential listings have fallen by 11.1% YoY. In April 2016 there were 366,151 houses and apartments for sale in Australia, in April 2017 there were 322,400. In Sydney and Melbourne (Australia’s hottest markets), listings over the 12 month period have fallen 8.7% and 23% respectively.
Let’s take a look at each capital city:
- 2016: 39,536
- 2017: 30,434
- Representing a YoY change of -23%
- Estimated population of 4.0M
- Estimated growth rate: 1.44% p.a
- 2016: 27,080
- 2017: 24,735
- Representing a YoY change of -8.7%
- Estimated population of 4.4M
- Estimated growth rate: 1.23% p.a
- 2016: 30,152
- 2017: 28,082
- Representing a YoY change of -6.9%
- Estimated population of 2.0M
- Estimated growth rate: 1.6% p.a
- 2016: 3,843
- 2017: 3,103
- Representing a YoY change of -19.3%
- Estimated population over 211,000
- Estimated growth rate: 0.47% p.a
- 2016: 3,603
- 2017: 3,472
- Representing a YoY change of -3.6%
- Estimated population of 380,000
- Estimated growth rate: 1.4% p.a
- 2016: 18.053
- 2017: 15,579
- Representing a YoY change of -13.7%
- Estimated population of 1.2M
- Estimated growth rate: 0.83% p.a
- 2016: 2,143
- 2017: 2,010
- Representing a YoY change of -6.2%
- Estimated population of 120,000
- Estimated growth rate: 1.08% p.a
- 2016: 26,645
- 2017: 25,397
- Representing a YoY change of -4.7%
- Estimated population of 1.7M
- Estimated growth rate: 2.14% p.a
As you can see from the data, Brisbane has half the population of Sydney and Melbourne. However more property listings than Sydney and only marginally less than Melbourne, we also see a similar story in Perth.
Does it make sense as to why our two hottest property markets are as hot as they are? As mentioned earlier there are many factors that influence property prices and they can be different depending on the region. However, whilst demand levels are higher than supply we will continue to see bullish prices.
Milk Chocolate was founded seven years ago by Richie Ragel and Michael Cleary, to purchase residential and commercial property in Australia on behalf of our clients, looking for a home or investment property. To see how we can help you get in touch here.
Sources: SQM/Herron Todd White/Population Australia/Australian Bureau of Statistics
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