SQM: Stock on market unchanged for third month

By Leith van Onselen

SQM Research has released its stock on market figures for the month of October, which registered virtually no change over the month nationally, but a -2.7% decrease in the number of homes for sale over the year:

Here’s the national chart, which shows that stock levels have been steady for the past three months but remain elevated overall (blue denotes houses for sale and purple denotes units for sale):

However, it remains a two-tiered market, with stock levels highly elevated in Melbourne, Adelaide, Hobart and Canberra:

Whereas stock levels have tightened in Sydney, Brisbane, Perth and Darwin:

According to SQM’s Managing Director, Louis Christopher:

“The October data is a surprised result. We were expecting listings to rise in October following the steady result in September and to be fair some capital cities have recorded a rise, but overall it is becoming clear to us that this is an abnormal result for this time of year and suggests to us that stock is being absorbed by buyers and/or vendors have been withdrawing their listings. We are starting to believe that it is the former rather than the latter.”

Twitter: Leith van Onselen. Leith is the Chief Economist of Macro Investor, Australia’s independent investment newsletter covering trades, stocks, property and yield. Click for a free 21 day trial.

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Comments

  1. “stock is being absorbed by buyers…”

    Any why wouldn’t they. After all, interest rates are low & after a few years of Real negative growth… The RBA’s not concerned.

    Classic bubble echo.

    • People either agree with you Peter, or no one is taking the bait today 😀 Canberra, Hobart and Melbourne are steadily oversupplied but but the trend seems to be mostly steady now.

      • russellsmith55 – no I’m not taking your bait today because I agree with you – Canberra, Hobart and Melbourne do seem oversupplied and Brisbane about right or maybe a tad oversupplied.

        The oversupply on the Gold Coast weighs on Brisbane because it is so close.

    • Time for some more inconvenient facts. This is from the AFR in July 2012:

      “The chairman of the federal government’s National Housing Supply Council says recent estimates that Australia has an undersupply of 228,000 homes could be incorrect.

      The comments by NHSC chairman Owen Donald come after ABS Census figures released last month showed vast differences between the population numbers used by the council to draw its conclusions and census conclusions. The census found there were 1.1 million fewer households than in estimates used by the NHSC, and 595,000 fewer private dwellings.

      Adjusted by Morgan Stanley researchers to allow for a potential census under count, the 228,000-home undersupply becomes a 341,000-home oversupply.”

      http://www.afr.com/p/business/property/housing_undersupply_you_shouldn_FFAUmmahkHLANiAOxaOY2N

      There is not shortage of houses. Just a shortage of affordable houses. Period.

      “The Price Is Wrong, biatchz”

    • From your MB reporter here in Darwin.

      This place has had minuscule land releases for the last ten years.

      Most recent land release here had people queuing for three days and they all sold out. Prices started from $270k for 450-750sqm of land.

      A hovel here is $550k

      • Clearly a shortage – if the idea is to provide housing in similar fashion to the past.
        But if the idea is to drive up the price of housing and cause many to miss-out, then there is no shortage – there is the perfect amount!

  2. TheRedEconomistMEMBER

    Under supplied because Vendors know they will not get the price they want.

    Better to hold and wait.. in the hope that buyers will meet there price.

    But the punters … are smarter… they are not prepared to be part of the pass the parcel that is property in Sydney.

    Most motivated vendors in Sydney town got out of the market in September when first home buyers could get the first home buyer grant.

    With this stimilus gone… the market should return a true marktet.

    Rents are flat lining, the building of new property is looking more attractive with targeted Government grants. Supposed Supply issue is losing it lustre.

    With Unemployment creeping up due to financial and housing sector redundancies in the Syndey town, do not be surprised if we see a rush of listing after Christmas.

    • Wasted OpportunitiesMEMBER

      We are moving into a lovely 3br renovated federation brick semi in Sydney, close to everything. Rent is 650p/w. Similar properties are on the market from about $800k.

      This renter is still perfectly happy to be subsidized to live in the owners house, growing savings and watching from the sidelines, undersupply be damned.

      • TheRedEconomistMEMBER

        Agreed…

        I am paying $480 per week for a 3 bed house… in the Hills.

        Whilst similar properties go for $650K.

        But you still see investors at open homes. I just cannot work it out.

        The obsession that you own a few IP’s is ridiculous.

        These parasite buying 2 or 3 existing properties is just crowding out families whom just want a house they can call there Home.

  3. Many US sites re housing look at it in terms of months supply at current or recent rates of sales.

    EG 3 month average stock divided by 3 months average sales = months of supply on market.

    They then look at changes in the months of supply on the market. Increasing months of supply tends to downward pressure on prices, reducing months of supply tends to upward pressure on prices.

    Probably some seasonality adjustment required for month on month figures.

  4. “Stock on market

    Stock on market is defined as the total number of residential properties (including land) advertised online during the month concerned. It will include those properties that have been advertised and then withdrawn for the month

    All listings are taken from online monitoring of major listings sites. Only those properties with unique addresses or with a unique listing id are used. Those advertisements with no addresses are excluded from the series. Any addresses repeated between sites are de-duped.

    As SQM Research relies upon online listings only for its stock on market index, some outer regional areas which solely rely on hard-copy advertisments for their listings may be under-represented. ”

    A question re methodology.

    Above is the(SOM)definition from the SQM website.
    Does this data include new homes?
    If so, does SQM provide a breakdown of the SOM data to newhomes v existing homes v land ?

      • Hi.

        Yes it includes new house and land packeges where we can identify an actual address. We leave out vacant residential land. Some have criticised the inclusion of house and land packages in the past as they believe we would then likely to be double counting listings and that these properties dotn really exist. We argue back that we can minimise such duplicates by the fact that we can pick up the address and will not count the same address twice.

        No we dont have the splits freely available (as we like clients to pay for that data!). But will have a think about what we could release on this front going forward.

        Cheers

  5. ““The October data is a surprised result. We were expecting listings to rise in October following the steady result in September and to be fair some capital cities have recorded a rise, but overall it is becoming clear to us that this is an abnormal result for this time of year and suggests to us that stock is being absorbed by buyers and/or vendors have been withdrawing their listings. We are starting to believe that it is the former rather than the latter.”

    Historically low interest rates are surely having some effect. It’s not dramatic but it’s there.

    • Yes but I wonder about the “Stock is being absorbed by buyers” comment

      Its either selling or its not.

      I find it difficult to believe these experts that cant tell whether the property has been sold or withdrawn.

  6. Quality hard data on sales won’t be available for a good three months, so the opinion of an experienced market watcher is as good as you will get for the moment. Finance numbers will tell us something, but that hasn’t been released yet.

    Louis was just being honest and telling you that there is more than one possibility for the numbers.