Stock on market dipped in December

By Leith van Onselen

SQM Research has released its Stock on Market figures for the month of December, which revealed a -6.0% decline in the number of homes listed for sale nationally over the month and a -5.1% decrease in listings over the year:

As you can see from the above table, all capitals recorded declines in the number of listings over the month and year. Sydney listings fell by a massive -21.7% over December, whereas Darwin lead the way over the year, with listings falling by -22.9%.

While some of the fall in the number of homes for sale is seasonal – listings typically decline in the run-up to Christmas – the -5.1% decline over the year is significant and possibly signals that the number of listings nationally has peaked.

According to SQM Research’s managing director, Louis Christopher:

β€œWhile the drop in listings is normal for this time of year it doesn’t normally fall to this extent. Clearly the large national result has been influenced to a great extent by the very sharp drop for Sydney listings which fell by -21.7% for the month. Overall the spring selling season recorded a fall in listings in 2012. This is abnormal and could indicate increased buyer activity for the last months of the year.”

Comments

  1. Plenty of buyers out there, iron ore back to 160
    Obviously this is a terrible prospect for housing. Nice price increase on the book for 2013.

  2. Several possible explanations. Louis may be correct that sales in Oct/Nov/Dec have been higher than we are aware of, or it could also be that the lower rates have taken the distress out of the equation for many homeowners. Less distress more homeowners who choose to not sell.

    Probably a combination of both. Those falls in Sydney and Darwin are gigantic, and must affect the market going forward.

    • I believe you’re right Peter. No need to sell with buyers offering less then scrap campaign. And probably asserts the average auction rates if you read through the REA bluster on reporting.

      I doubt buyers are going to up their offer though with continued economic uncertainty. We still have the US fiscal cliff, the UK now rattling the EU chattels again and Europe continuing to drag and our own unemployment if you add official and unofficial (consultants) plus a looming election.

      The only losers I see this year are hungry REA’s and those hanging on to their shirt tails. I doubt many will shed a tear for them.

      • Yep KG I think that our election will certainly drag on the market. I’m not sure that the UK and Europe will make any negative impression with the steps being taken to create a true EU Banking System.

        The fiscal cliff – well that might impact, but with the Republicans on the backfoot due to the platinum coin issue. They have at least technically lost their strong bargaining position.

      • The platinum coin issue is a total non-issue. There’s no way that Obama is going to try that one on.

      • You are probably correct Nathan, but it has taken the wind out of the tea party crowds sails.

        BTW Melbourne was still trending down YOY although I concede highly elevated.

    • I have just run the numbers based on the capital cities only – the fall in stock levels is a massive 8.92%. The significance of that is Capital cities is where the demand and shortages of stock are. Who cares what oversupply exists out in the sticks, it’s the Capital cities that are the market.

      Maybe it will correct next month, but that’s a lot of catch up needed in January.

      • Can you tell me about Melbourne, your statement implies that all capital cities are in the same boat, but isn’t Melbourne’s city in oversupply and set to get worse with the large number’s of property in the pipeline yet to come ?

      • Substitute the word *large* for *HUGE*.

        I wasnt lying yesterday when I said that I see new builds going on EVERYWHERE down here.

        And the knock-downs of existing residences arguments does not fly with me as the vast majority of builds are dual-occ’s and apartments.

        Stock on market to the MOON!!!

      • bskerr2 – well this is personal opinion only. I’ve been negative on Melbourne for a while. Melbourne only had a fall of 4.2% YOY and from very elevated stock numbers. It’s a less populated city than Sydney with significantly more stock, so that’s a story in itself. I think that Louis provides the numbers for some years so you should go back several years and compare stock numbers and what the market was like at that time. The data is free, so use it, and I know that LVO provides analysis on Melbourne on this site – so “Buy the ticket – take the ride” as Hunter S Thompson would say.

        Each city is different, but as Melbourne is your focus, then I wouldn’t expect any rises soon.

        Whether this makes buying in Melbourne now when there are distressed properties for sale, or whether larger falls are on the way, is entirely your decision.

      • Melbourne seems most likely to be a falling knife for at least 6 to 12 months.

        I don’t trust the Sydney figures. The one month fall is just too large. Even if correct, I wouldn’t be surprised if it’s downsizers who had got sick of Open houses and wanted some peace in the lead up to Christmas and would rather defer than sell at the prices they were being offered. I’d watch the 3 or 6 month averages with more enthusiasm than the one mnth figure.

      • thomickersMEMBER

        lots of vendors with unsold homes will do 3 months on 3 months off marketing campaigns. Christmas/summer break is a time to “campaign off”

        oldlistings.com.au to the rescue

      • Exactly, if the property wasnt selling in the peak periods why would it over Summer when everyone is away on holidays.

        Off the market and relist afresh when everyone is back in the swing of things…… Only for it to remain on the market unsold yet again πŸ˜€

      • I’ve noticed a lot of properties for sale around here (Adelaide beachside) disappear then reappear a month or so later as ‘new’, as if buyers are that naive. Others get rented out instead. There seemed to be a surge of properties ‘under contract’ just before Christmas, but the prices achieved for a few of these that were published this week were well below asking price. There is also a recognition among sellers that they are not going to get the massive over-inflated price that they dreamed of, so they are staying-put (waiting for prices to rise again no doubt)..

      • What the quantitative data does not describe is the qualititaive side, i.e. why were properties taken off market? Sold? Probably not, and would be in the interests of RE industry if properties have been pulled, and can then spruik shortages as less stock on market……

    • Its possible that sales were higher, although I have serious doubts that, that many more houses sold than the original estimates/statistics would of suggested.

      However I think your second theory is 100% correct, with the interest rate cuts many people now find themselves actually being able to afford their mortgage repayments. This has no doubt lead to many deciding to keep their homes instead of selling.

      Whether this is positive or negative piece of news remains to be seen, it could potentially be seen as a precursor to a crash if we do see a massive rise in UE in 2013, or it could be seen as possibly propping up the housing market in 2013.

      The real question is how much does stock on the market actually effect prices?

      Also how much stock vs demand is actually out there on the market compared with previous years is an important question.

      • Not unexpected really given the media bombardment the average Joe gets in terms of “Rates dropping can only be a positive for property”.

        Many would withdraw their properties off the market and hope that verbal diarrhea being spouted by the REA comes true.

        When really they should still be looking to offload to the ‘GREATER FOOL’ sooner rather than later…. Maybe ‘dam’ could assist in that regard.

    • Of course if one were living in Darwin, where unemployment was low, with good prospects for the next couple of years at least, would you sell your house to go interstate?

      The NT unemployment figures will probably tell whether this is the case or not.

  3. A colleague told me the other day that a friend of his at one of the BIG 4 banks said that they are purposely backing off people who’s mortgage servicing ability was under stress (i.e. 90+ days).

    And the figure is increasing from what I was told…..

    • GunnamattaMEMBER

      Well if 1/3 of mortgages are being serviced on an interest only basis (according to the credit suisse report before christmas) one assumes they will probably not back off for long.

      • So your happy to agree that mortgage stress continues to increase and the banks are hiding it?

        Can this go on indefinitely?

        Let me know when they start allowing 50+ year arrears as the new threshold, I may be tempted to buy then.

      • No what I meant was that banks have always moved on homeowners who are 3 monthly payments behind. Many people have this idea that a significant number of home owners with mortgages are stressed to the point of a tidal surge of mortgagee in possessions sales are imminent, and I’ve been hearing it for 5 years.

        In any economy there are always people who fail to meet mortgage payments, that isn’t new. Look at the delinquency rates and trends for an answer on that. The banks usually declared their bad and doubtful debts positions in their financial reports, the ABS has stats on this – it’s easy information to get, so look at it and make evaluations for yourself.

      • “””The banks **usually** declared their bad and doubtful debts positions in their financial reports”””
        .
        .
        .
        .
        The key word there being ‘usually’.

        Funny too that I have been hearing far more stories of people in financial / mortgage stress than I was 5 years ago.

        So that fact that you have been hearing it for 5 years does it make it any less of a concern or even that things may being getting far worse.

        Your a master of pulling comments out of your arse Peter… Your standard rhetoric reads….. “I just dont see it, so therefore it isnt happening or nothing worth worrying about”.

        Head in the Sand because your livelihood depends on it.

      • Actually Christiaan they “always” declare their bad and doubtful debts.

        My mistake.

        If I put my head in the sand – I would see you….

      • Just like they declare all the arrears stats that they are hiding!

        Transparency is not a word that comes to mind when I think of the BIG 4, or any bank for that matter.

  4. Hope. You can feed a family with it. You can hold it in your hand. Matter of fact, vendors have got some now.

    Louis says: “This is abnormal and could indicate increased buyer activity for the last months of the year.”

    That is exactly what isn’t happening. Reported sales volumes and credit contradict this and remain very weak.

    No point holding an unsalable property on the market. A proportion of vendors have taken down the sale board, to live in or let their unwanted houses.

    Have they had a catharsis and decided to reengage in the dream of stellar future capital gains? No. So the explanation lies elsewhere. Encouraged by those interest rate cuts, vendors are hoping for a momentary ‘bull trap’ to unload into.

    While the rent/buy equation remains profoundly unattractive, numerate buyers will sit and save. If prices never fall, this group’s winnings will continue.

    Don’t Buy Now!

    • David, I’ve recently had experience with commercial/industrial property in Melbourne’s inner west and I know of 3 fellow vendor’s who’ve pulled their properties off the market because the offers they’re getting aren’t meeting their expectations.

      They can, so they do. Down the boards come.

      Doesn’t indicate sales, it indicates frustration.

      Slowly enough, frustration turns into capitulation.

      • The land market is the biggest and deepest market in Australia. It towers over the sharemarket. It has many players and is largely gamed in the favor of the very wealthy.

        Aggregates like ‘Stock on Market’ contain many positions and attitudes. So we ask, what has changed to explain the listing decline? I think my explanation is closer to the truth than Louis’.

        Economics is a social science, a study of human behavior. Yes, we need good statistics to read this behavior, but it remains a human study.

        Your ouija board crack is pathetic.

      • pf. the information is easy information to get, so look at it and make evaluations for yourself.

        stock is being pulled from market in droves in western melbourne, i see it every day of my life.

        what do you see in SE queensland?

      • dd – I’ve seen 1 bed units on the Gold Coast change hands for as low as $30,000 post GFC but those deals have dried up – I know they have because I want one. There were also issues that made those units so cheap.
        The Gold Coast is still a very tough market, but improving.

        I don’t see any increase in bouyancy in the Brisbane market, but by co-incidence an REA did mention that they haven’t had any new listings for a while and they are running shorter than normal.

        What do you see?

      • Is that the same ouija board you are using for predicting Melboure will turn around in two years time?

    • You could be right David, while Louis’s theory may hold some water the other data/measures don’t support his conclusion.

      My question is what happen’s now, many sellers have obviously abandoned selling their properties for one reason or another, what these sellers do in the long run could potentially be what makes or breaks the market.

      If they are owner occupier’s deciding to pay down their debt due to much lower interest rates then thats obviously going to affect future stock on the market. However if a large portion of them are investors not happy with the current prices and waiting for “The Kouk’s” 10% rise in prices this year, then that may signal a stampede in the next 12-18 months if prices do drop again and this time more substantially.

    • I agree, from what I have seen in my area the are lots of places that have been on the market for ages and are not selling and have just been pulled from the market and put up for rent or the vendors are just waiting for better times. Postcode 2096

  5. I wonder how the numbers look alongside sales volumes.

    Perhaps rate cuts, coupled with recent price falls (and ego anchoring investors to a preconceived figure as to what their home is “worth”) has simply been a catalyst for de-listing property for sale, and moving it to the rental market?

    Hell, with all the positive spin out there from the real estate propaganda crew, I too would be happy to rent it out for bugger all and await the 10%+ growth expected for CY2013. …and like hell I’m going to sell when the price won’t even cover that Interest Only loan I took out 5 years ago!

    Then again, maybe demand has absorbed all those extra homes? …Suddenly, in the face of some economic weakness, the average Aussie investor realised that they “need” to have two or three investment properties (geared to the eyeballs)…. maybe?

  6. The data reveals a telling feature of our bizarre res property market that there is more housing stock on market in Brisbane than in Sydney

  7. From SQM Sydney Stock on market graph:
    http://www.sqmresearch.com.au/graph_stock_on_market.php?region=nsw%3A%3ASydney&type=c&t=1
    it appears that in 2011 the stock was kept on the market in December and came off in January which was an aberration compared to 09, 10 and 12.

    If you look at the general trend in the graph in the link you would say that Sydney stock fell dramatically over Oct 08 to Jan 10, increased from Jan 10 to Oct 11 and looks to be trending down since then, but the comparison of Jan 13 to Jan 12 and Jan 11 and Jan 10 might make more sense when Jan 13 is available.

    But it does look like Sydney is tightening at least a little.