Housing Turnover Stabilises Amid Improving Conditions

Recent trends show housing turnover is levelling out as home values rise.

But while the housing market appears to have moved through the bottom of a two-year downturn, Corelogic says sales activity remains “well below normal levels”.

Across the country, Corelogic estimates there were 367,630 settled sales over the 12-month period to August 2019, this is 17 per cent lower year-on-year, and about 30 per cent below the recent peak level of annual sales for the 12 months to September 2015.

“The good news,” Corelogic head of research Tim Lawless says, “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 2010-2012.”

Lawless says the six-month trend has been tracking higher since June this year, which is in line with a recovery in home values.

In an economic update this week the Reserve Bank of Australia’s governor Philip Lowe said that weak growth in household spending was partly attributed to the adjustment in the housing market.

“As housing prices have fallen, there has been a marked decline in housing turnover, with the turnover rate having declined to the lowest level in more than 20 years,” Lowe said in his address.

“With fewer of us moving homes, spending on new furniture and household appliances has been quite soft. So too has expenditure on moving costs and real estate fees.”

Looking forward, the RBA says there are some signs that, following a soft patch, the economy has “reached a gentle turning point”.

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Lawless says most of the capital cities have seen either a stabilisation in settled sales activity or a rise in the trend rate of sales.

“Housing turnover is rising the most sharply in Adelaide, with a more subtle improvement across Sydney, Melbourne and Canberra.

While the trend in sales has stabilised across Brisbane, Perth and Darwin but is still trending lower in Hobart.

“The fact that housing values are now under some upwards pressure while housing turnover remains low presents somewhat of a paradox,” he said.

“As housing values continue to recover and the seasonal rise in listing numbers gathers pace we are likely to see sales activity also trend higher.”