Auction Rates, Rentals & Property Prices: Winners & Losers in Australia’s Housing Market

26th Aug, 2022 | Articles, First Home Buyer, In The News, Investor

In this article:
Mark Bouris appeared on First Edition with Peter Stefanovic to discuss the ever-changing housing market in Australia.
mark bouris talks about RBA and interest rates

Mark Bouris appeared on First Edition with Peter Stefanovic to discuss the ever-changing housing market in Australia and recently released data that suggests tough times ahead for renters.

As reports throughout the last month have come in with worrying signs for auction clearance rates and many commentators suggesting it’s a difficult time to be selling your house, Stefanovic asked Bouris about current auction clearance rates and whether there is cause for concern.

“Well, nationally auction rates are slightly up in terms of clearances, which means that there is an improvement”, said Bouris.

If you look at Sydney by itself, the auction rates from last weekend are up significantly by about 5% in terms of clearances, which is a very good thing given that we have virtually doubled the number of places for auction currently compared to say one year ago in Melbourne. So we’re tracking quite well in terms of auction clearance rates.”

As a stand-alone statistic, Bouris says that it “doesn’t mean too much for borrowers.” Coming into the period where Australia’s housing market often starts to pick up the pace, what can we expect to see this time around with increased interest rates?

“I talk to all the agents all the time, and someone like Tom Panos is telling me his clearance rates are really high, in other words, eight out of nine properties at the auction on the weekend were sold.”

“That doesn’t necessarily mean sold under the hammer that could be sold straight after the auction or maybe a day later. I’ve got a gut feeling that when it comes to investors at the moment that they are starting to feel a little bit more positive about things. In other words, I know that the interest rate cycle is not at the end. We’ve got more to go, but we’re close to the end.”

It’s not just a feeling that the interest rate hike cycle might be ending soon, but it’s rental data that makes Bouris believe that it’s an attractive housing market for Australian investors.

“Investors can get a good return from rents right now. So there’s a big attraction there. We’re getting a lot of data that’s coming out saying that currently across Australia, there are 40% fewer properties available for rent than there were one year ago.” 

“We now have 80,000 properties available for rent across Australia…50,000 less than a year ago, in capital cities.

Why is that? Bouris says any answer would mostly be speculative but offered: “I just think perhaps we’ve lost a lot of supply of new housing over the past 12 months and with rising interest rates, there are a lot fewer people who qualify to buy a property now compared to say a year ago, and therefore they have to rent.”

What will an increase in migration mean for the property market?

In the current post-pandemic era, Australia’s migration rate is expected to pick back up to pre-2020 levels, which can certainly impact our property market.

Bouris said he expects that an increase in migration levels would likely further decrease the availability of rentals and skyrocket rental prices even further.

“Rentals have already increased over the last 12 months by 9%. That’s one of the biggest rental increases we’ve seen in 30 years over a 12-month period, which means the investors work that stuff out very quickly and they start bouncing back into the property market. And that’s one of the reasons why we’re getting better clearance rates.”

Tune into Mark Bouris’ entire interview on Sky News in the video above. 

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