Yesterday, the CEO of property listings portal, REA Group, claimed the crash in property sales is “about as bad as it can get [and] it’s the worst market we’ve ever seen”.
Today, the boss of rival Domain Group has warned of an “extraordinary” shortage of properties for sale in Sydney and Melbourne:
Mr Pellegrino likened the current market to the 1990s, a time when an economic downturn hit the banks and Westpac posted a $1.6 billion loss. Australia was in a formal recession until the September quarter of 1991.
“It’s an extraordinary period,” Mr Pellegrino told The Sydney Morning Herald and The Age after Domain’s annual general meeting on Monday morning, adding real estate agents were also facing the same pressures of fewer listings…
Domain’s digital revenue was down 8 per cent for the year so far, compared to an 11 per cent decline in the fourth quarter in 2019. Total revenue was down 12 per cent over the period.
As I noted yesterday, property sales as a share of Australia’s dwelling stock has indeed fallen to the lowest level in at least 25 years:
And given both REA and Domain are turnover-based businesses, they are getting hammered.
This is a nice little analogy for state government stamp duties, which will likewise keep suffering despite any price rebound. And for federal government capital gains tax receipts.
Now that all of Australia’s institutions are working hand-in-hand to “manufacture” an upswing in the housing market, all fortunes should improve but for how long and how far remains an open question.
The bull trap scenario still lies in wait as monetary and fiscal stimulus is exhausted and the next external shock looms.