House price growth has never been as fast as it was over the past two years. Clearly the increase experienced could not have kept going – if it did, Australia’s median house price would be well over $1 million by 2024 while Sydney’s would hit $2.15 million by the same date. And with this, we would have seen continued growth in household debt and concerns about affordability.
Another auction measure is the gap between the highest prior offer and final sale price which we have been tracking since the start of 2020. On average, Ray White auctions yield a 12.5 per cent gap above the highest prior offer. Not surprisingly, the very high number of active bidders led to a much higher gap, hitting a high of 14.8 per cent in August 2021. In April, the gap dipped slightly below average to 11.9 per cent.
Right now, our auction data, particularly average active bidding, suggests that demand conditions are looking better than they were prior to the pandemic but not as good as they were last year.
And although we don’t have as long a time series for the gap between highest prior offer and auction sale price, the data is showing that demand is cooling from last year but is still a lot better than what it was just prior to the pandemic and within the first nine months following the first lockdown.
For now it looks like we are certainly in a different, much more stable market, but certainly not a plummeting market that is cause for concern.