Real estate markets are driven by a number of factors however the two basic fundamentals of supply (the number of total properties for sale) and demand (the number of buyers active in the marketplace) play a significant role in establishing market conditions that favour sellers or buyers.
In general terms, when supply is low and demand is high, these conditions are favourable for sellers. Conversely, when supply is high and demand is low, these conditions are favourable for buyers. So what are we seeing now?
Throughout February we saw an increase in the volume of ‘New Listings’ coming onto the market. An increase of 10 per cent compared to the same period last year. However in saying this, the volume of sales are outweighing the volume of ‘New Listings’ hitting the market. This is having a significant impact on the ‘Total Available Listings’ that are currently on the market for sale. There are currently 15,750 properties for sale for buyers to choose from which is 8.31 per cent less compared to this time last year. These stock levels continue to favour our sellers.
Our record result for February was clearly driven by our record volume of buyer demand. Across all of our metrics, demand was up.
The initial buyer metric we take into consideration is the number of buyers viewing properties online. Over the past 28 days (to 8 March, 2020) we have seen over 5.27 million views across our Ray White websites. This is 65 per cent higher than this time last year. This has resulted in over 57,691 enquiries being sent, a volume which is 35.1 per cent higher than the same period last year.
The demand hasn’t stopped at online activity. Across our auctions since 1 January, we recorded an average of 7.1 registered bidders per auction and of these bidders an average of 3.9 were actively bidding. Vendors who proceeded to auction were rewarded with 11.78 per cent more under the hammer than the highest offer prior.
The final consideration that we look at when measuring the volume of demand in the market and arguably the most significant is the number of people obtaining pre-approvals for finance. Pre-approvals are a key leading indicator to buyer confidence knowing they have the financial capacity to buy the property. Our partners at Loan Market are seeing record numbers of pre-approvals across the country with 53.44 per cent more than this time last year.
As we continue to see strong numbers across these buyer metrics, we often ask ourselves why. So what factors are contributing to buyer confidence?
Interest rates are at record lows. Importantly, the general consensus among economists is that they will remain at these low levels for the foreseeable future. Banks and lenders remain very supportive of lending for residential property. Record levels of government stimulus continue to support buyer sentiment