Weekly Insights Update -
January 25th 2023

Normally at this time of the year, the number of fresh listings is moving through a dramatic seasonal upswing, however, early indicators suggest the flow of new listings is starting relatively softly. After a lacklustre listings season through spring and early summer last year, vendors still seem reluctant to test the housing market at the start of 2023. 

The flow of new listings over the past four weeks was 25.9% below the previous five-year average and 20.3% lower than the same period a year ago. 

Treasurer Jim Chalmers says the 235,000 increase in net overseas migration forecast in the October budget is likely to be wrong, with the real figure expected to be much higher after a strong rebound in arrivals. Dr Chalmers said it was reasonable to expect migration to be higher given extreme labour shortages were creating strong pull factors and as the government worked to reduce a massive visa backlog. 

The cost of building a home has risen by its slowest quarterly pace in a year, climbing by just 1.9 per cent nationwide over the December quarter and is likely to slow further in the next 12 months as demand falls. The easing rate of growth over the December quarter - less than half the increase recorded in the previous three months - will be welcome news for new homeowners after residential construction costs surged by a record 11.9 per cent over the past 12 months, the Cordell Construction Cost Index shows. 

Tim Lawless, CoreLogic research director, said the growth in construction costs was likely to slow further in the next 12 months as demand fell, which would help cool inflation this year. Dwelling approval figures had dropped by 41per cent since moving through historic highs in March 2021, and despite a substantial pipeline of residential construction work still to be completed, the sharp decline in housing approvals will have helped reduce some pressure on the industry, Mr Lawless said. 

The NSW government expects to receive about 2500 retrospective applications for stamp duty refunds when its First Home Buyer Choice program kicks off on Monday, with 6000 expected annually. Under the scheme, first home buyers of properties under $1.5 million can opt into paying a smaller annual land tax instead of stamp duty; the Perrottet government hopes the move will cut the time it takes to save for a home by two years but experts warn it could pump up house prices. More than 160 first home buyers applied for the NSW government’s new voluntary land tax in its first day of operation, as new analysis reveals the average rate of stamp duty reached almost $50,000 per transaction last year.The three top postcodes for land tax registration were Box Hill in Sydney’s north-west, Camden in the city’s south-west and Dee Why in the northern beaches. 

NSW Premier Dominic Perrottet has pitched the voluntary land tax as a way for first home buyers to avoid paying stamp duty, which hit a record of almost $49,300 per transaction last year, or 55 per cent of the average full-time wage.Almost 500 first home buyers have opted into a NSW government scheme giving a choice between stamp duty or an annual property tax after just one week of operation, as political leaders target housing affordability for votes ahead of the March state election. The high profile Liberal initiative called the First Home Buyers Choice has also paid out stamp duty refunds totalling more than $1.28 million to more than 30 first homebuyers who bought homes in the two months before the program began. 

Sydney, Melbourne and Hobart also recorded a slight drop in the proportion of suburbs recording house price decline at 98 per cent each, down from 100 per cent from the September quarter as some areas started to rise. Signs Australia’s red-hot jobs market may be cooling will not be enough to head off a ninth consecutive interest rate rise at the Reserve Bank of Australia’s first meeting of 2023 next month, economists say.The jobless rate held steady at 3.5 per cent in December, with people in work falling by 14,600 and unemployment edging higher, according to the Australian Bureau of Statistics’ latest labour force survey. 

 Until next time.