CoreLogic’s Eliza Owen says the typical surge of new homes hitting the market in Spring has been lacklustre in a sign that vendors may be holding off from selling amid the current housing downturn.
“What we’ve observed is that as market conditions have weakened, the usual spring surge that you’d expect to see across the market, it hasn’t really eventuated in our listings counts,” said Owen, the Head of Australian Research at CoreLogic (pictured centre).
“If you take Sydney as an example, we’ve seen the volume of new listings trend lower to about 5,300 new listings added to the Sydney market over the past four weeks.
“But if you compare that with the previous decade average, you’d be looking more at more than 7,000 new listings and to be honest, I haven’t seen a spring selling season like it.
“Usually, those volumes would’ve been trending up weeks ago, but that hasn’t happened.”
Australia has experienced one of the most significant housing market downturns in its history, largely due to the series of interest rate hikes this year.
However, the country’s housing downturn slowed in September, with national home values falling -1.4% last month, easing from -1.6% in August.
Owen said the unique spring selling season could be linked to last month’s softening in the monthly pace of decline in home values.
“I think it’s the power of vendors to just not sell as prices are falling and that comes back to some of the strengths in serviceability like people being well ahead on their mortgage repayments, offset accounts being higher, and income growth being quite strong,” said Owen.
“It’s an extraordinary set of circumstances that we haven’t really observed in the data before. It’s starting to shift a little bit now, but it is quite a powerful position for sellers to be in and I think that’s contributed to a lacklustre start to the spring selling season.”
Eleanor Creagh (pictured left), Senior Economist at REA Group, said she had also seen that the spring selling season had been off to a bit of a slow start.
“We usually see that uptake in spring selling activity and we haven’t seen that,” Creagh said.
“We’ve actually seen that throughout September, sales actually declined month-on-month from August from those winter levels, which is quite unusual. We don’t usually see that – we usually see an uptick in activity.”
Creagh said home buyers and sellers had adjusted to the rising interest rates.
“I feel like it’s not the same kind of feeling on the ground as it was six months ago,” Creagh said.
“Now with the RBA easing back to that more measured pace of tightening, it could potentially give people that are out there at the moment a little bit of an incentive or a confidence boost to move forward with their long-term purchasing decisions.
“We know that the rental market is historically tight. We also know that even though the strength in new listings has been relatively weak in September – throughout the balance of this year the strength in new listings has been historically very strong.
The total number of properties that were available on market had greatly improved for buyers, certainly relative to spring last year, Creagh said.
“So the big change is not just borrowing costs for buyers at the moment, but it’s also the amount of choice that’s out there,” Creagh said.
“For people that are ready to move on with their purchasing decisions, that could create some favourable conditions or opportunities for some. We know that vendors have adjusted or adapted to market conditions now.
“We’ve seen several months of price falls, and I think that’s also one of the reasons why we’ve seen the auction clearance rates have really stabilised and, and they’re sitting well above levels that we saw throughout, say the second quarter, when interest rates first started to rise.”
Owen and Creagh spoke at Proptech Association Australia’s 2022 Proptech Forum held in Sydney.
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