Data released by RP Data indicates a healthy first quarter for house and unit sales this year.
The house and unit sales data shows that for the first three months of 2014, there were 82,051 house sales and 30,417 unit sales recorded. According to research analyst Cameron Kusher, sales over the first quarter of this year were much softer than over the last quarter of 2013. However, March 2014 managed to record the strongest first quarter for house sales since 2009, and the strongest for units since 2010. House sales were 7.9 per cent higher and unit sales 4.0 per cent higher than for the same quarter in 2013.
According to Mr Kusher, sales volumes are generally lower over the first quarter of any year compared to the remaining quarters, which is largely due to a slowing in housing market activity throughout most of January and often well into February.
Across individual capital city markets, Mr Kusher said that the annual change in sales is quite varied and depended upon where each city was within the property cycle.
In the more subdued capital city markets of Brisbane and Adelaide where value growth has been limited, these two cities managed to record the greatest annual rise in sales - up 21.1% and 10.8% respectively. Perth and Canberra on the other hand, have recorded falls in sales over the year, down -8.2% and -4.2% respectively.
Analysing the variation between houses and units, RP Data reported that the pick-up in sales activity year-on-year has been greater for houses (7.9%) than it has been for units (1.2%). Over the first three months of this year, house sales were higher than in the same period last year across each city except for Perth (-5.9%) and Darwin (-6.0%). Focussing on unit sales, sales are lower over the first quarter in Sydney (-1.7%), Perth (-17.6%) and Canberra (-23.9%).
Mr Kusher said that historically there has always been a strong correlation between sales volumes and property values. If demand is greater and more homes are selling, the likelihood is that values will rise. Alternatively, if fewer buyers are active in the market, selling conditions become tougher and values fall.
The May RP Data-Rismark Home Value Index results released earlier this week confirmed that capital city home values fell by -1.9 per cent in May 2014. Though likely the result of a seasonal influence on the reading, Mr Kusher wondered whether volumes would continue to ease and value growth continue to moderate with quarterly value growth peaking and sales volumes tapering. It also remains to be seen whether the second half of the year would see a rebound in both sales and values much like the second half of 2013.
While the answers are not known yet, Mr Kusher says that last year’s values rose by 3.0 per cent over the first six months of 2013 followed by a 6.6 per cent capital gain over the second half. With interest rates set to remain low, it may provide enough stimuli to see values start climbing more rapidly once more. Although values are likely to keep rising, they will most likely do so at a more moderate pace, largely due to affordability constraints becoming more prevalent in the market in addition to consumer sentiment, which has been trending lower since September last year.