The Australian property market has demonstrated exceptional resilience, predominantly owing to a pronounced imbalance in supply and demand. In May, new listings added to the market fell by 20% compared to the monthly average of the past decade across the nation. Moreover, the “months of supply” ratio, an indicator measuring the time needed to deplete the existing housing inventory based on the current pace of property sales, reduced to a lean 1.8 months in May. These figures underscore a considerable shortage of available properties and their swift sales rate.
Contrary to the supply and demand shortfall, the behaviour of investors in the Australian property market deviates from the overarching listings trend. While investor listings in May were marginally below the nationwide average of the preceding decade, they were higher in urban hubs such as Sydney, Melbourne, and Perth. A noticeable upswing in investor listings was seen in inner-city locales. This sustained activity from investors in selling their properties corresponds with a decline in decisions made by owner-occupiers. A set of challenges is presented for owner-occupiers mulling over the acquisition of former investment properties. Despite elevated investor listings, they still fall short of the record peak witnessed in mid-2021. Most capital cities, with Hobart being an exception, present a higher proportion of investment listings compared to the historical average.
The precise reasons behind investors’ decision to sell their properties in the Australian market are uncertain, considering the wide range of individual circumstances. However, increased interest costs and potential capital growth are two plausible factors that could be influencing these sales. Higher mortgage expenses amidst an inflationary environment may be nudging investors towards offloading their investments. Furthermore, cities like Perth, with stable or ascending property values, might be encouraging investors to sell and profit from their capital gains. In Perth, both the proportion and volume of investor listings have exceeded the average of the past decade, signifying a robust investor presence in the market.
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