Gross Domestic Product
This week we will look at the tightening real estate data for Perth and the September GDP figures.
Sales this week recorded above 1000 for the second week in a row. The 4% increase to 1074 sales was driven almost exclusively by a 44% increase in vacant land sales signifying the government building stimulus plan is having an effect on the market. However, anytime the government distorts a market there is usually a flow-on effect to be seen sometime in the future.
The red trend line in the graph below shows how closely sales have followed the upward trajectory except for three periods. There was a large decline in sales around the Christmas holidays last year so that will be of particular interest to compare with Christmas sales this year. Perth then experienced another large drop in sales while in coronavirus lockdown followed by a surge in sales as we exited lockdown. Either side of Christmas and coronavirus affected periods, the upward trend in sales has been relatively consistent indicating a long-term increase in demand from first homebuyers, but not investors. However, at some stage investors will be enticed back into the market with low vacancy rates, increasing rents and increasing property prices, along with the current affordability of the Perth market and historically low interest rates. This increased demand will put further upward pressure on Perth prices in the future.
Listings this week fell below 10,000 with Perth recording a 4% decrease to 9723. The graph below illustrates the radical change in Perth’s market over the last 18 months with listings down 43%. It must also be acknowledged over the same period sales have approximately doubled providing a very clear rational for the recent increase in dwelling prices.
Rental listings have remained flat for the last couple of months even though they are at historically low levels. The stability of rental listings will be of some small relief to tenants. There were 2983 properties listed for rent, a 2% increase on the previous week.
Australia is technically out of recession with Australia posting 3.3% growth in GDP for the September quarter. Household spending was a strong contributor to the growth. After falling a record 12.5% in June quarter, household spending rebounded in September quarter, rising 7.9%. The relaxing of social distancing measures and other restrictions, encouraging spending on services which rose 9.8%. Hotels, cafes and restaurants, recreation and culture and transport services rebounded with spending on goods increased 5.2% this quarter and up 3.5% through the year. Whether the recession feels like it is over or not, there is no denying the economic recovery is well underway. The biggest impediment to the recovery at the moment is the price of the Australian dollar that no doubt will be of concern to the RBA