A glimpse into the future?

The housing market has been a major topic of discussion across all sectors of the community over the past few years, with increasing frequency.

But what has actually happened in the first quarter of this year?

Here are some quick dot points with an overview of the state of the market.

• The lower-priced end of the market is recording higher rates of capital growth.

• On average, borrowing capacity is estimated to have fallen around 30% since the start of rate rises.

• Home values rose 1.6% in the March quarter, the largest quarterly increase since the three months to November (1.9%).

• Despite an uptick in the quarterly growth trend, the annual growth trend ticked lower in March (8.8%), down 20 basis points from the 9.0% rise seen over the twelve months to February.

• National sales activity was 6.0% higher than the numbers seen over the year to March 2022 and 4.8% above the average annual volumes seen over the previous five years.

• The time it takes to sell a home continued to trend slightly higher in March, with the median time on market rising to 36 days in Q1 but still roughly in line with those seen this time last year (34 days).

• Vendor discounting rates (lowering price expectation) went down slightly through the year's first quarter to -3.6%, down from -3.8% in December.

• Auction activity went up through March, peaking in the week before Easter, with the busiest auction week in almost two years.

• Auction clearance rates however declined through March, averaging 66.4% over the four weeks ending March 31st.

• Rent values continued to increase in March, up 1.0% over the month and 8.6% over the year to March.  

• Dwelling approvals continued to drop in February, with just 12,520 new dwellings approved. This was driven by a -20.8% decline in the more volatile unit segment, while house approvals rose 10.5% compared to January.

• The value of new housing finance commitments rose 1.5% in February, led by a 4.8% increase in first-home buyer lending. Compared to the same time last year, new loan commitments were up 13.3% in February, with investor and first-home buyer financing up 21.5% and 20.7% year-on-year, respectively. 

Generally speaking, the highest rates of capital growth are being seen in the lower-priced end of the market which is fairly unusual during an upswing. With borrowing capacity having been squeezed, prospective buyers have less financing to work with and may be targeting cheaper markets as a result.