TIP: Pundits tipping now is best time to sell, deeper downturn possible, building reforms not enough
Weekend clearance rates beat 2018 results
Sydney auctions hit a 73 per cent preliminary clearance rate over the weekend, compared to 49 per cent same time last year - but at a lower volume. Melbourne hit 74 per cent, Adelaide 57 per cent, and Perth only 14 per cent.
Rock star economist, AMP Capital's Shane Oliver is tipping now is a good time for vendors to put their property on the market, with demand fuelling price growth and less competition compared to what the market is expecting to come in Spring.
We've seen a few headlines today screaming FOMO (fear of missing out), fuelled by lower stock and increasing demand stimulated by better lending conditions and improved market confidence. The stories we've been reading over the past couple of weeks are throwbacks to pre-downturn, where the biggest complaint among auction bidders was having to stretch beyond their budget to get a toehold.
Building sector will take a little longer to catch up
It's going to take longer for this emerging positivity to translate into better trading conditions for home builders. BIS Oxford Economics has released a report showing new building starts are expected to decline another 8 per cent in 2019/20, but rebound strongly in 2020/21.
According to the report, the biggest risk area in the sector is being faced by apartment builders, with the full impact of confidence issues around building and material quality yet to be felt by high-density developers.
Overall, tradies are taking this situation hard. NAB's latest business survey showed in Q2, tradies with four to five employees took a big hit in terms of revenue and profitability. For example, this article talks about how a drying up of multi-unit residential developments means there's been less work for building tradespeople across the country.
NSW building reforms consultation process has closed
The strong and voluminous public responses to proposed reforms, which include adopting recommendations from the 2017 Shergold-Weir report commissioned by the Building Minister's Forum, are now being assessed by the NSW government. Today's Fin dips into some of those responses today.
One of the key criticisms is that the reforms aren't getting to the heart of the issue - namely, accountability. They say insufficient warranty periods and patchy insurance issues have not been addressed by the reforms, which would mean homeowners are still left with little recourse when things go wrong.
Meanwhile, Australia's news organisations continue to hunt for other examples of people made homeless by building defects. This example from Brisbane appeared on ABC News online this morning.
The Owners Corporation Network has called on NSW to make long-term low or interest-free loans available to fund building defects. But with all parties involved showing all care and little responsibility, that'll be a tough one to get up.