In another sign that conditions are slowing in the Australian property market, analysis of dwelling transactions has revealed a slowdown in residential sales over the past year.
According to research by CoreLogic RP Data, in the 12 months to April 2016 339,026 houses and 132,081 units were sold.
Compared the previous 12-month period, those figures represent annual falls in sales of 3.7% for houses and 9.7% for units.
Over the year to April 2016 208,345 houses and 96,915 were sold in Australia’s capital cities, with capital city house sales falling by 5.7%, while capital city unit sales dipped 12.2%.
Annually, the proportion of house sales in a capital city (61.5%) is at its lowest level since January 2013 while for units (72.8%) it is at its lowest level since May 2008.
According to the CoreLogic analysis, the total 471,107 dwelling transactions in the past year are 25.7% lower than the annual peak, which was recorded in the 12 months to May 2002 when 633,904 transactions were recorded.
CoreLogic research analyst Cameron Kusher said strong capital growth has likely contributed to the transaction slowdown as costs such as agent commissions and stamp duty increase in line with dwelling prices.
“The high costs associated with exiting a property such as agent commissions, and stamp duty at point of purchase, are both likely to be major deterrents to an increased level in sales activity,” Kusher said.
“Consider this, in June 2002, the national population was estimated to be 19.5 million persons compared to current estimates at 24.1 million, yet transaction volumes are currently much lower than they were in mid-2002,” he said.
Kusher said affordability issues have been especially pronounced in Sydney and Melbourne; however transaction numbers could rise as apartment projects near completion.
“It is difficult to gauge exactly how strong the downwards trend is in Sydney, Melbourne and Brisbane given how many units are under construction. Keep in mind that those which are funded locally will typically need at least around 70% of the project pre-committed in order to commence construction,” he said.
“This would seem to suggest that the recent decline in sales is not quite as strong as represented here. Nevertheless, affordability constraints, particularly in Sydney and Melbourne, following consistent value growth in recent years is likely leading to a decline in sales.”
While capital city sales have been declined, Kusher said the rate of decline may be slowing in two capital cities that have been struggling recently.
are the two cities where values fell over the past year, the trend line suggests that the rate of decline in sales is starting to flatten.
“This change could indicate that the worst of the value declines have been experienced and a level of demand is now returning to the market.”
, Canberra and Hobart Kusher said declining sales reflect the slow rates of capital growth currently being seen.
“This trend suggests a fairly steady demand in each of these cities and is reflective of their moderate increases in home values currently.
“Despite home values rising, transaction volumes continue to languish well below their previous highs.”
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