Mass buyer exodus pummels Aussie housing market

SQM Research has released its Stock on Market report for July, which shows that national residential property listings rose in July by 7.1%, amid softer buyer demand:

Total property listings

New listings (Less than 30 days) rose 1.8% over July, whereas listings over 180 days rose by 0.6%. Most notably, however, listings between 31 days and 180 days rose by 14.1%, “indicating a surge in unsuccessful sales campaigns for the month and year to date”:

New vs old property listings

Commenting on the results, SQM’s Louis Christopher noted that “lower buyer interest” is behind the rising listings, which means the spring selling season will be difficult for vendors:

“Vendors were largely unsuccessful in their selling efforts over July. There is now a clear trend across all cities of rising listings which is being driven by lower buyer interest and is ultimately symptomatic of the national housing downturn”.

“I think the spring selling season is going to be a very tough one for property sellers and their respective agents. While asking prices have been adjusting downwards since February, there will need to be further compromise if property vendors do want to sell this spring”.

Separate reporting from Domain explains that buyers are dropping out of the market due to a combination of “rapidly rising interest rates, reduced borrowing power and a fear of overpaying”:

“The most common feedback is that their finance conditions have changed,” [Sydney auctioneer Jesse Davidson] said. “The banks are calling clients and saying that the approval we gave you is no longer valid, and they have to redo the process again.

“The second thing is the fear of overpaying that has entered the market.”

More buyers were getting cold feet as property prices declined, Davidson said, and some had put their plans on hold, in the hope of securing a better price later this year…

Thus, “fear of overpaying” or FOOP has taken over from “fear of missing out” [FOMO]. This makes sense given dwelling values are plummeting across Sydney and Melbourne, and prospective buyers have already experienced a 23% reduction in their borrowing capacity.

The situation will obviously get worse so long as the Reserve Bank continues to hike interest rates.

FOOP will intensify, buyers will stay on the sidelines, and house prices will continue to fall.

Unconventional Economist

Comments

  1. I don’t know what has changed, but a lot of houses for sale around us are being marked as “under offer” rather than “sold”, often for extended periods. I wonder if people are not getting financing or a bunch of people are managing to buy conditional on sale of their own property? Or maybe agents have enough time to update the status now.

    • kiwikarynMEMBER

      Its usually that its not gone unconditional, and the condition usually holding it up for long periods is the one dependent on them selling their current house. In a slow market, this may take months to satisfy. This results in long property chains which further freezes up the market.

      • Thanks, it makes sense, in a hot market no one would accept the conditional on sale, now they will so we end up with lots of these, I imagine these chains often fall over if just one property sale falls through, thrn they all end up back on the market…

        • Hill Billy 55MEMBER

          And that makes the CoreLogic indexes even more out of date. The other thing I have thought of is that Brisbane’s history of fewer auctions per total sales means our registration of sales takes, on average, longer than Sydney or Melbourne. So that explains at least a small part in why our movements lag that of the southern capitals as we are probably more than 2 weeks later to register, on average.

    • “Under offer” just means a contract has been accepted and signed – both the buyer and seller have agreed to conditions, which may include pest/building inspections, settlement period, finances clauses etc.

      • I realise that, but the last two months houses are sitting Under Offer for many weeks at least, that hasn’t happened in the last two years. I was just wondering if that meant financing issues or people were getting “conditional on sale” clauses, I have noticed it a ls a pretty dramatic change.

  2. pfh007.comMEMBER

    There is a very easy way to lower that surge in listings.

    Meet the market!

    Do that and that fat supply of listings will shrivel away like a beer belly during a brewery strike.

    Mr Market – always keen to help with those unsightly unsold housing stock levels.

  3. Big jump in Brisbane listings for the month, though still low stock on market vs history.

    Noticed a lot more property for sale in the various areas I follow but at first glance, a lot of it appears to be poor quality stock or resi subdivision sites (i.e good luck with your splitting block project in this environment). No idea why those types of vendors didn’t have these on the market 6 months ago, clearly misread the market on that occasion.

  4. Thus, “fear of overpaying” or FOOP has taken over from “fear of missing out” [FOMO].
    Not what I’m seeing nor what I’m hearing
    Buyers are willing to pay whatever the banks will lend, that’s hardly the cold hard rational response of a buyer that fears over paying. Nope I’d say FOMO is alive and well living deep in the hearts of our Aussie young. . .Within the younger generation there’s a deeply held belief that they can’t begin to really live until they get their housing situation “sorted out”. So it’s not Fear of missing out on housing that’s on their mind rather it’s fear of missing out on life.

  5. TailorTrashMEMBER

    The situation will obviously get better so long as the Reserve Bank continues to hike interest rates.
    This unhealthy obsession with the property market needs to be undone …..despite that some will feel the pain
    Long run it may be better for the nation ….

  6. Listings have only started to rise too. There is a looong way to go to get to the levels of even 2018 when the banking royal commission was on. This has only just started. Give it a year.

  7. Still lower listings over the past 12 months and lots less 180+ day listings. I’m hopeful of a correction, but don’t know if these stats are showing it yet.

  8. Not many people around. Lots of people taking 3-4 weeks off to go see relatives overseas (especially to europe in the summer ) after many years of boarder closures and built up holidays. Others have been hit with covid, RSV and flu. Come Spring and summer there will be many more buyers

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