The Australian housing market is bucking seasonal trends with an unusual uptick in new property listings since mid-June.
Ordinarily, this is a period when new listings tend to dip due to the cold weather. However, this winter has seen a 13.2% growth in new listings, predominantly fueled by a 17.9% spike in the capital cities as opposed to a modest 4.6% rise in regional areas.
For the four weeks that concluded on August 13, new listings exceeded the past five-year average by 3.3%. This is the first time such an event has occurred since September of the prior year. Factors like appreciating property values since March and historically low inventories seem to be bolstering vendor confidence.
Additionally, anecdotal data points to several factors motivating homeowners to sell, including looming “fixed rate cliffs,” higher interest rates, and the escalating cost of living. Although mortgage arrears are still relatively low, there’s potential for increased mortgage stress as the year progresses.
Most Australian regions are experiencing this rise in new listings, especially in the capital cities. Year-over-year, new listings have climbed by 1.5% in the capitals but have dropped by 11.7% in combined regional areas. Notably, only Sydney, Melbourne, and the ACT have reported more new listings compared to the previous year.
The regional markets haven’t seen the same degree of growth in new listings. Although there has been a 4.6% increase since winter commenced, this figure is still 11.7% less than last year. Regional Victoria stands as the outlier, showing a slight 0.9% increase in new listings.
Despite the surge in new listings, the overall supply in the market remains constrained, dropping by 3.5% since winter began. However, recent data shows a marginal increase of 0.3% in total listings, spearheaded by a 2.2% rise in the capitals and countered by a 2.2% drop in regional areas.
Areas with increasing supply like Sydney and Melbourne are observing a deceleration in property value growth. On the other hand, cities with limited supply such as Perth, Brisbane, and Adelaide are experiencing accelerated property value growth.
As the supply begins to grow in some cities, the market could turn more competitive for sellers, potentially leading to longer sales periods and lower auction clearance rates. Given the low consumer sentiment, it is difficult to predict any substantial increase in buying activity in the near term.
In summary, this winter has seen an unexpected increase in new listings in the Australian housing market, largely due to soaring property values and record-low supply. However, rising supply levels could lead to heightened competition among sellers, possibly putting the brakes on the rate of capital gains.
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