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While sales activity slumped during the housing downturn, new research has found turnover has levelled out “as home values rise and mortgage rates reach the lowest level since the 1950s”.
According to CoreLogic head of research Tim Lawless, housing turnover has stabilised following improved housing conditions.
“Although the housing market appears to have moved through the bottom of a near two-year downturn, sales activity remains well below normal levels,” Mr Lawless said.
“Nationally, CoreLogic estimates that there were 367,630 settled sales over the 12 months end[ed] August 2019, 17 per cent lower year-on-year, and about 30 per cent below the recent peak level of annual sales recorded over the 12 months ending September 2015.
“The good news is that home sales appear to be stabilising, albeit at a low base. The six-month trend has found a floor at around the same lows recorded during the previous two downturns in 2008 and 2010–12. The six-month trend has been tracking higher since June 2019, in line with a recovery in home values.”
Mr Lawless said such a large reduction in market activity has implications for the economy, “especially from a consumption perspective”.
“Reduced housing activity implies less spending on retail items such as home furnishings, white goods and appliances,” he said.
“With both values and volumes falling, state government stamp duty revenues have experienced a big hit, and of course, we see real estate industry and finance sector participants receiving less income based on lower rates of sale and lower values.
“The drag on economic growth is compounded when housing values fall, as the wealth effect moves into reverse and households are less inclined to spend on discretionary items.”
ABOUT THE AUTHOR
Emma Ryan
Emma Ryan is the deputy head of editorial at Momentum Media.
Emma has worked for Momentum Media since 2015, and has since been responsible for breaking some of the biggest stories in corporate Australia, including across the legal, mortgages, real estate and wealth industries. In addition, Emma has launched several additional sub-brands and events, driven by a passion to deliver quality and timely content to audiences through multiple platforms.
Email Emma on: Emma.Ryan@momentummedia.
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