Panic selling engulfs Australia’s housing market

According to CoreLogic’s daily index, quarterly dwelling value growth across both Sydney (-0.4%) and Melbourne (-0.1%) has turned negative, as illustrated in the next chart:

Australian dwelling value growth

Sydney and Melbourne dwelling values are falling.

This has prompted a sharp increase in vendors attempting to sell their homes before prices fall further.

As shown in the next chart from CoreLogic, the total number of homes for sale across Sydney and Melbourne rose by 10% and 5% respectively in the year to March 2022 at the same time as total listings nationally fell by 11.0%:

National for sale listings.

Listings have risen across Sydney and Melbourne.

Auction volumes across both markets have also surged. In the weekend before Easter, both Sydney (1,490) and Melbourne (1,795) hosted their busiest auction activity of the year with both markets’ final clearance rates also falling to their lowest levels of the year:

Final auction clearance rates

High volumes, low clearance rates.

The Easter long weekend was also the busiest on record, led by Sydney where 483 homes went under the hammer.

SQM Research Managing Director, Louis Christopher, summed up the situation nicely:

“Vendors are racing to sell to make the most of the current strong prices and before the market softened further”.

“Sellers now understand that this is probably as good as it gets when it comes to selling, with the federal election and rate hikes looming, buyers are likely to stay on the sidelines.”

Domain’s chief of research and economics Nicola Powell agrees:

“People are cashing in now while conditions are still good, but we are going to see weakening in Sydney and Melbourne.

“We’re likely to see prices fall 5 per cent or even 10 per cent by the end of the year, but that depends on how hard interest rates are hiked by the Reserve Bank.”

As does CBA’s head of Australian economics, Gareth Aird:

“Sellers would be aware we’re on the cusp of a rate hike cycle. I would imagine people would like to sell their properties before rates start going up because there will be buyers out there who expect prices to be lower, and they would like to be ahead of that before it happens”.

Given Sydney and Melbourne are the most expensive capital cities in the nation, they will be more sensitive to interest rate hikes and are facing the sharpest price falls.

Therefore, vendors are wise to sell while the going is still good, and before ‘panic selling’ potentially engulfs the market.

Unconventional Economist
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Comments

  1. I wish people would stop lumping sydney and melb together. My house in the leafy east is worth a whopping 10pct more than 5 years ago. Melb is 400k median less than sydney, and only 150k more than brissy. Sydney is due a much bigger fall.

    • ErmingtonPlumbingMEMBER

      Yeah nah we are like the London, Paris, New York, Mumbai and Shanghai of the South Pacific all rolled into one awesome Emerald City.
      As long as we continue to get our fair share of 300,000 immigrants per annum Our house prices will continue to double every 7 years.

        • ErmingtonPlumbingMEMBER

          Got most of it packed away.
          The Ute is still half a mess after clearing it out looking for the one key that works in the ignition.
          Spent over 4 hours looking for it!
          I think I might have lost it in a neighbours wall where I was running a new water point for a fridge.
          The walls closed up now.
          It cost me $330 for a mobile locksmith and I missed out on a 3 to 4 hundred dollar jetting job!
          And I moved the fridge point for free!

      • New Strong Borders policy, Ermo, all migrants should have to show the consulate a confirmed home-buy in Sydney or Melbourne, before we even load them onto the plane. Rising House Prices 4Eva!

  2. When property values have doubled in some regional areas a correction of 10% would hardy cause a dent in the absurd devaluation of the buying power of Aussies savings. The RBA’s inflation indicators that don’t include house prices and the future follow on effect of rents, are so far from reality it cannot perform its mandated functions and now we are in another mess like in the 80’s that will take 2 decades for us to recover from. Panic selling? it was more like panic buying and with good reason. Sadly MB has consistently got house price forecasts wrong.

    • TRADINGtheAPOCALYPSE

      I don’t know why folks are predicting it will stop at 10pc.

      Unless they know the exact date the government will fire the housing stimulus cannons and the RBA will ease like they’ve never eased before..

      • All depends on who wins the election. If Labor win, then the MSM will hammer Labor into a premature grave if house prices go a tad too far south. Yet if Scomo prevails, house prices can slide a lot more as the MSM will run cover for him as he continues to rape the nation every which way and twice on Sundays.

      • happy valleyMEMBER

        ” … and the RBA will ease like they’ve never eased before.”

        Yes. Captain Phil’s RBA guv current term ends Sep 2023 when he will likely ride off in to the sunset with his enormous defined benefit pension from 40+ years at the sheltered workshop and his $10m(?) Randwick residence. Have created in the past 2.5 years the greatest-ever housing price bubble and social divisiveness this country has seen (with his predecessor Captain Glenn coming second best), he’s unlikely to let the market implode before he gets out the door.

    • Those were the best two decades we’ve had in this country. Boy did the speculators retreat after the late 80s. People actually worked and were rewarded for it.

        • Absolute BeachMEMBER

          Same Mr Surfbeach. But what rational person would have predicted ZIRP, Q.E., etc. Or that prices would rise during a pandemic?

  3. SupperannuationMEMBER

    My wife and I were looking at 3 places in outer Eastern Melbourne. All townhouses. All sold over last 2 weeks at over 10% of the upper end of the reserve.

    • My sister in Middle Park, Melbourne listed her apartment just before Christmas for $1.6m, based on the sale of an identical unit in Sept, just weeks before, for $1.67m. At her auction in early March? No bids at all. No bids since, except one (that’s all you need!) at $1.4m.
      She goes unconditional in a week’s time at $1.425m.
      She’s ‘out’ and happy.

      • That is just surreal for us normal people not in Sydney or Melbourne.
        Imagine being the buyer who forked out $1.67 and might just be realising they’ve just smoked $250k.
        $250k would be ruin for us normal folk. Surreal.

    • boomengineeringMEMBER

      Good luck superman, just remember the adage wealth goes from the impatient to the patient ( Oracle from Omaha)
      Hang in there, won’t have long to wait anymore.

  4. reusachtigeMEMBER

    LOLOLOL. A bit of normal cyclical action and some expected slight negative sideways movement and youse idiots still think it’s all over. What is wrong with youse?

  5. Hill Billy 55MEMBER

    Greed turns to Fear at a rapid rate. Don’t stand in the way. That coupled with the anxiety of Southerners who moved to QLD and having second thoughts. All music to the ears.