Buyers pull pin on tanking Aussie housing market

After 18 months of FOMO, Aussie home buyer sentiment has well and truly shifted to Fear of Overpaying (FOOP).

New data from Domain shows that the number of property searches fell significantly in April compared to the same time last year in every state except the Northern Territory:

Australian property search volumes

Australian property search volumes have fallen sharply.

Searches fell most heavily in NSW and Victoria, which are now leading the nation’s property downturn.

Meanwhile, the reduced buyer interest has driven property listings up across almost every market:

Australian property listings

Property listings are rising across Australia.

Commenting on the results, Domain chief of research and economics Dr Nicola Powell said that “homes are coming onto the market quicker than they are purchased”, and “they’re taking longer to sell”.

This above Domain data does not fully capture the Reserve Bank of Australia’s latest rate hikes, which have only just begun.

Expect to see more buyers remain on the sidelines as they wait for house prices to bottom. And given the extreme interest rate forecasts, the bottom could be a long way down.

Unconventional Economist

Comments

    • Only until rates are back to 0.1% or less, then the party starts again. If 2 or 3 % rates cause damage they are predicting and we roll into recession, the next ’emergency’ rates will have a – in front of it

      • I’m not sure how old you are Carlos but we are going to see mortgage rates above 1980s levels again
        We got to 17% in 89
        We will be higher this time
        We will see a cash rate in the 20s next 4 or 5 years
        Any downturn & recession/depression ahead they’ll just keep printing money
        They are imbeciles & are going to create hyper inflation over the years to come
        It’s going to be a real mess
        Cash will become worthless
        Gold & silver but I like BTC here very long term. Maybe a little more volatility but think we will see all time highs again in Eth BTC
        Similar to 70s we are going to see very high building costs
        For a year I said we’d see home loan interest rates up here
        How does the maths work, will be double the cost to build & you’ll be able to borrow less than 50%
        I can’t see how the sums work

        So a house that was $500k to build will be $1M (now $700k)
        You could borrow $800k but will be able to borrow $500k or less

        The banks are just going to collapse, the whole east coast economy will be dead because property development building is dead & AUD will be above PARITY. The AUD is going much higher macrobusiness is wrong, many commodities much higher, iron ore price will be in the $300s & higher

        AUD will break 2011/12 high of 1,12, so no building & tourism

        We will be back to the Dutch disease again with WA resources booming

        Most builders will just go bust

        In 5 years time settlements on purchase of property will also be done in physical gold & silver

        Land will be worthless, all the value will be in the building

        The banks are history, they won’t survive, they are going under

          • No idea
            Guess it’s just all the move towards heading away from the USD as reserve currency maybe late 2020s
            Guess in the mean time countries will try & find away to avoid the dollar but that’s years off

            USD isn’t going anywhere

        • NoodlesRomanovMEMBER

          Bcnich – glad to see you in the comments again. I don’t necessarily agree with you on a few things but I enjoy the discussion you stir up!

    • Cue TFF V2 in 3, 2, 1.

      To think the indebted can afford 7-9% loans is laughable. Banks know there customers cannot sustain it and if they go there, they will have mass defaults and bank collapse.

      Go Australia.

    • Nyleta I said we’d see 5% on 5 year fixed, think we will see 6% soon but Aust fixed rate home loan 4 & 5 year fixed rates heading from 6% back under 4%
      RBA will hike 75 & 75 July Aug but will be forced to cut rates again in Oct/Nov
      Variable rate has 2% higher to go over the next 3 months we will see close to 5% variable rates but fixed rates are coming down from up here

      It’s going to be the recession & property crash that brings them down, lower rates won’t help this time. Lending standards are going to get very tight
      Banks are in panic over the building collapses
      Banks are going to be left holding these part built properties
      In Ireland they just bulldozed them

  1. Dave666MEMBER

    I don’t think that after more than 20 years of “booming” house prices, people are going to panic sell, regardless of what interest rates do. If people don’t panic sell, and stock on market dosn’t rise substantially, then prices will only come down very slowly, and a lot less than most here are expecting (once again)

    Property investors will be expecting either (1) the prices to correct to new record highs over time, or if things do get bad (2) Governments / central banks will bail them out eventually with repayment holidays, and other forms of assistance, as they have done many times in the past.

    I am not saying that property investors will be right, I am just saying that there is a very very deep belief in this country that over the medium to long term property investment will make you rich. This deep belief has been engrained from previous action by Central Banks and Government, and its not going away in a hurry.

    All this talk of house prices crashing is just way too early from my perspective. I will take notice when stock on market is at 20 year highs, almost nothing is selling, and inflation and interest rates are still very high. Right now almost no one is considering the prospect that in 12 months we are in a global recession and inflation / interest rates are falling quickly.

    • Holiday In ScomodiaMEMBER

      Yep, besides the possibility of all kinds of dumb government intervention yet to be announced, I also don’t see panic selling, at least for a while yet- if you a speculator you have insane rents and history of ‘anything to help the housing market’ on your side, may as well white knuckle as long as you can- either you get bailed out/losses reduced or you sell later at a loss anyway- why not take the bet…

      • Dave666MEMBER

        Yes, rents are insanely high.
        Property speculators might hold off on the aggressive buying for now, but panic selling is not even a consideration at the moment.
        I will give the property speculators one credit, they don’t get caught up in short term media hysteria, unlike Macro Business and most of its subscribers (that includes me by the way).

    • Retiring and moving out of the city, downsizing to a smaller property, going into a retirement home, divorce, moving for work…there are plenty of reasons people sell that will bring stock on the market anyway, its buyer behaviour that sets the price in that case.

      • Dave666MEMBER

        90% of the transactions you mentioned don’t generally add to stock on the market. If you really want stock to rise, property investors have to change their deep belief that that they will make money from property over the medium to long term.

        • They add stock to the market when someone lists a property, if they are motivated sellers then they have to match buyer’s expectations whatever they are and then when the properties transact they set the new market price which means even if investors don’t sell, values of all properties will adjust to what buyers are willing and able to pay today.

    • Ronin8317MEMBER

      There are definitely panicking at the state governments. The NSW “spend like a drunken sailor” budget is heading toward a 20 billion dollar deficit when the stamp duty “river of gold” stops flowing, and the state losing it’s credit rating. There is nothing left to sell, but plenty of massive infrastructure projects that are locked in with cost blown out. With the land tax rising to 4%, there won’t be any Chinese buyer to save the day.

      • Yes it’s a dumb take.

        Prices are set by the marginal buyer and seller, that’s all. That’s how you get a trillion$ increase in the total ‘value’ of housing stock based on a few billion$ of transactions, of course it works both ways. You can have plenty of sellers refuse to sell and hold an asset all the way to zero if you want (e.g. UST/Luna bagholders), doesn’t stop the marginal buyer and seller setting the price – this type of market behaviour is amplified to to the maximum level when significant illiquidity is discovered (such as the housing market). In the real world, a significant volume of transactions are caused not by panic but by necessity, as you’ve listed some examples, sellers simply need to sell to the highest bidder in this cases and the marginal price is reset.

        Real carnage sets in when it’s the banks causing the forced selling into a falling market (i.e. sorry you need to give us more money to protect the LVR of the mortgage or you can go refinance with someone else (which you can’t) or you sell and pay us back our money).

        • All those “equity mate” redraws also catch up.
          The other thing few are aware of is just the act applying to refinance can bring the world crashing down for a borrower. My partner is one of the few people around who have lived through an actual banking crash as an arrears officer in Geelong with “Which Bank” in the early 1990’s. She handed many a file to legal to foreclose.

          From the inside it is brutal. Applying for refinancing anything to do with your home loan begins a credit assessment on your file, everything is reviewed, income, assets, revaluation of the property. All of a sudden you are outside your 80% LVR and you are in deep shit.

          Her advice is never have your file reviewed during these periods. Pay your mortgage, make no new applications for ANY credit and life will be sweet. Anything else, you are having the ruler run over your affairs. In normal times with rising prices, most aren’t even aware of how this process works in the backend. Many are going to discover the issue only after the net has already been thrown over them, once they hit submit on the credit application it is too late to stop the train.

          It is these bank backend processes that have the potential to create a series of unexpected forced sales.

    • chuckmuscleMEMBER

      spot on. psychology hasnt shifted yet. still think there is a bull trap ahead of us as govs reach for a long list of stupid policies available to support prices and activity, before the big final leg down in real prices

    • Dave you are right.The stock on market is nowhere near 2011-13.Even with such a high stock on market. it did not fall at that time.The interest rate was much higher then.The rental market is holding up well now.So I am skeptical if we will see corrections more than 10-15% over a 3 or 4 year period

    • You’re probably right.

      As I and others on this website have been saying for years: Aussies will keep paying basically whatever for property until they don’t have a job anymore.

      So, it comes down to unemployment.

    • Dave, I’ll just throw in a curve ball that MB doesn’t really talk about or anyone really. In the next few years a couple of million baby boomers will die, then the other half of them within 10 years of the first wave. That’s 5.6 million baby boomers dead in the next 10 years ish. That is also true worldwide, hundreds of millions. So going to be interesting.

      • That is an interesting point you make. I would love to see the hard data on this (ie expected volume based on hard data), because the beneficiaries of these property are more likely to sell if prices are falling.

      • Baby boomers will be forced to sell their 2nd properties before they die, more likely next year 2023 & 2024
        Their super is going to be wiped out they’ll need to raise cash to live
        Then later their families will be selling their principal homes into 10/20% home loan rates
        NO BUYERS

        • I’ll give you the one no one will see
          Financial planners will move the last of retirees super to fixed income & as interest rates rise above 10% their so called safe investment will go down 50+%
          Financial planners haven’t seen a bond bear market

    • Agreed. Need something that will truly “gum up the works” and get banks to stop lending for literally years, but the powers that be will do anything to prevent it. Things like TFF, upcoming bailouts/bailins will protect the status quo even before we need to lower teh rates to fix thing.

    • A property crash is caused lack of credit availability. Most likely that will be due the Fed breaking the financial system as it fights inflation. Then procyclical forces take over and financial cancer speads through the system. Our canary is Genworthless! Once that fails the the banks are gone. Its effectively the point of no return.

  2. Everyone is saying that sharemarkets need to go down into a recession but opposite tends to happen
    Sharemarkets rise because central banks will be forced to pivot most probably
    Market might be getting a whiff of a pivot
    Sharemarkets look out several months
    They trade in anticipation of a future event

    The market will tell you what’s ahead, most forecasters wait for the event but when they see it, the move has already happened

    This is why the majority is most bearish at the lows & most bullish at the highs

    Macrobusiness does this a lot, because you need to know that it’s the movement in the market that actually causes the problem that comes in the future

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