Stock on market jumps in November

By Leith van Onselen

SQM Research has today released Stock on Market data for the month of November, which registered a 4.9% monthly increase in overall for sale listings, but no movement in year-on-year terms:

According to SQM:

This month’s data is particularly interesting when compared to the corresponding period of the previous year (November 2011) which indicates a 0% change year-on-year and a mere difference of 10 listings. This reaffirms the notion of the seasonal effect when it comes to stock levels – as there is usually an influx of sales listings at this time of year. However, as we move towards Christmas, SQM Research believes that the level of stock will most likely stagnate or decrease slightly as the property market slows down for the end of year.

Darwin’s results are becoming increasingly alarming as it continues to show signs of severe undersupply, with stock levels down by -21.7%, year-on-year. However, during November, this capital city did experience a 3.3% increase in stock, bringing its total to 1,188.

Louis Christopher, Managing Director of SQM Research says, “It seems the spring selling season did come late for the property market, with the November result being the first spring month to record a meaningful increase in listings. In line with seasonality, I expect the December and January result to record falls.” 

The below chart shows the annual change in the number of listings by capital city. In number terms, all capitals experienced little change in the number of listings, with the exception of Sydney, where the number of homes for sale has fallen 3,148.

The below chart compares each capital’s share of listings against their population share. By this crude measure, Melbourne, Brisbane, Adelaide and Hobart appear to be oversupplied with homes for sale, whereas Sydney is significantly undersupplied.

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.

 

 

Comments

  1. Hi Explorer,

    I’ll take a guess. This website defines months of stock as follows:

    http://smallbusiness.chron.com/shadow-inventory-22006.html

    “The listed inventory of homes available for sale divided by the number of homes sold in a month produces the number of months’ housing supply represented by the current housing inventory. If there is less than a six-month supply of homes, supply is considered to be tight and home prices will probably be rising. A supply amount greater than six months’ worth of sales indicates a buyer’s market and that there is little or no upward pressure on home prices.”

    RP Data tells us in November 2012 that around 35,000 units and house sales were occurring. See here:

    http://blog.rpdata.com/2012/11/confidence-in-the-australias-housing-markets-is-gathering-pace/

    So, given SQM is quoting a total of 363,446 places for sale, this guys us an approximate “months of stock” figure of 10.38 months of supply, which by definition is an OVERSUPPLY given 6 months was considered the norm for an adequately supplied market.

  2. What we probably need an insight into is some sort of ‘market urgency’ measure.

    I mentioned on one of the other posts I had a chat with a RE Agent on the weekend. His view was indeed that there as a continued drift upwards in the number of places on the market, but he also noted there was little sense of urgency on the part of sellers, and that for the large part they would just hold on to properties if they didnt get the price they were seeking.

    He also added that where he knew of places being forced for sale they were generally being snapped up at about 5-10% less than what he would consider a decent market price, and that was happening very quickly wherever places were being realistically reduced.

  3. Thank you for the data on Darwin, it is much appreciated.

    The increase here is definitely seasonal. The arrival of nurses and teachers in January for the start of the new school year will change that.

    What I don’t understand is why a city with acute staff shortages and the flow on restrictions to business growth and GST revenue to the state government, why are land prices so high?

    No one has been able to explain that too me. No one here in the NT, no national commentators, blogs or experts.

    Its completely irrational that a 500sqm of land is $280k in this state.

    • Should add that the staff shortages in Darwin are caused by the high cost of rent or purchase of housing.

      The cost of living here is also much higher as everything has to travel at least $3500 km to get here.

      • I know a couple in the NT that had to enter a draw to see if they could secure a block of land to put their house on.

        I would go with the suggestion that who ever has the grip on land-banking up there is holding all the cards.

        It’s the NT, wide open spaces is what ya got!

  4. UE, could you please write a piece for Fairfax that debunks this slop from news.com.au?

    http://www.news.com.au/realestate/renting/ask-the-property-professor/story-fndbatbk-1226534460846

    There are so many holes in his argument that someone needs to tackle it. They’re not allowing comments so I’m just going to write the editor an email, but it’d be great to see a counter point (or at least something that’s not so biased) in a rival publication!

    – 7% house price growth for ever more!
    – Houses worth 15x income!
    – Mortgage rates at 6.5% for 10 years!
    – Rents rise at 7% per year!
    – $350pw rent for a $350,000 house!

    And this one is a doozy “Your rent will continue to increase to a stage where if you retire just after 65, your rent will be more than your retirement income!”

    • Yep, just saw this one myself about 30 minutes ago. Dunno who this dude is but, for a ‘professor’, he’s a little simplistic with his analysis. For instance, what does the $350,000 that he touts as the cost of buying a home actually get you? A 3bed? 4 bed? 2 bed? House? Unit? Where I live, $350,000 might get you a 4bed in a dodgy part of town with the bedrooms so small that a bunk bed fills them up. For that sort of value, I can rent a much bigger place, in a better part of town, closer to amenities, schools, etc, etc.

      The rest of it goes on in that sort of simplistic vein, comparing oranges to apples. He should have done a better job, with some detail comparing a similar property on a rent vs buy basis, and making some more realistic projections – not the 7% annual house price growth and 7% annual rent rise. Plus, what about renters who save money versus mortgage payments and invest that – a school kid taking basic economics/accounting would have factored that in. Apparently, the professor forgot about that. Perhaps it might have thrown his pre-determined conclusion in the bin.

    • UE has written a response and will be published tommorow.

      its a corker…

      Anyone predicting anywhere near 7% nominal growth in house prices – in aggregate – is either delusional, extremely bad at math and history or paid to say so, IMO.

      The best case scenario is half that rate. And that’s a low probability outcome.

      • “Research publications”

        Koulizos, P. (2008) “The Property Professor’s Top Australian Suburbs” – A guide to Australia’s top suburbs for property investors and homebuyers, John Wiley and Sons

        Koulizos, P. (2007) “Property Education – How Should it be taught”, South African Property Owners Association (SAPOA) Real Estate Year Book

        Koulizos, P. (2006) “Property Education – How Should it be taught”, Pacific Rim Real Estate Society Conference, Auckland NZ

        Koulizos, P. (2012) “Interest Rates, To Fix or Not to Fix, That is the Question”, http://www.realestate.com.au

        Koulizos, P. (2012) “Bargain Hunting”, Herald Sun

        Koulizos, P. (2012) “Largs North (SA)”, http://www.realestate.com.au

        Koulizos, P. (2012) “Which is the better investment – Commercial or Residential Property?” news.com.au

        Koulizos, P. (2012) “Are you better off buying an old or new apartment?” http://www.dailytelegraph.com.au

        Koulizos, P. (2012) “What are Australia’s next boom suburbs?” http://www.couriermail.com.au

        Koulizos, P. (2012) “Is it a Good Time to Sell if You Sell at a Loss?”, Money

        Koulizos, P. (2012) “Ask The Experts”, Money

        Koulizos, P. (2012) “The B and B Alternative”, Money

        Koulizos, P. (2012) “Rental Property Review Checklist”, http://www.realestate.com.au

        Koulizos, P. (2012) “Hallett Cove” (SA), http://www.realestate.com.au

        Koulizos, P. (2012) “The A to Z Selling Guide”, http://www.realestate.com.au

        Koulizos, P. (2012) “Albion (QLD)”, http://www.realestate.com.au

        FFS!

  5. I would like to know how chart showing “each capital’s share of listings against their population share” is used to show that “Melbourne, Brisbane, Adelaide and Hobart appear to be oversupplied with homes for sale, whereas Sydney is significantly undersupplied.”

    There is no even remote correlation between supply and number of listings relative to population. For example, Phoenix had very low number of active listings relative to population in 2005, that construction halted, population increased but number of active listings relative to population skyrocketed.

    http://3.bp.blogspot.com/-qQTZYc5TrzA/UHMs39Wm42I/AAAAAAAASeA/ZemUdjmmlSU/s1600/LawlerPhoenix1.jpg

    For market under/over supply you should use listings relative to monthly demand (number of properties sold) but clearly not relative to population.

    For real under/over supply measure (number of homes needed for purposes they are build excluding speculation), some other measure should be used: number or increase in properties relative to population or household increase.

  6. I have seen similar relatively large increases in both sale and rental stock from realestate.com.au in Nov and continuing (actually accelerating) into December.

    Sales seem flat.

    My 2c