SQM Research has released its Stock on Market report for October, which recorded a surprise fall in property listings.
Total listings fell 2.5% nationally in September, driven by the sharply falling ‘big three’ of Sydney (-4.6%), Melbourne (-3.9%) and Brisbane (-3.6%):
Commenting on the result, SQM Research managing director, Louis Christopher, noted that the fall in monthly listings was abnormal for Spring:
“There was a modest rise in new listings activity over October. This is abnormal given October is a month where the annual spring selling season reaches a peak in activity. Older listings fell for the month driven by higher absorption rates in regional Australia. However, it should be noted there were rises recorded in older stock for most of the capital cities, indicating city vendors struggled to move their property over the month. And we note the new rise in distressed sales activity, which may indicate the rising interest rate environment is starting to bite.
Overall, it was a disappointing month for sellers and their respective agents in the capital cities. Sellers would be wise to meet the market in this environment if they want to sell. I note our asking prices index was actually up a little, which is only going to hurt sellers in this current downturn.”
Interestingly, the number of distressed property listings has risen sharply since the Reserve Bank of Australia (RBA) commenced its interest rate tightening cycle in May, with Sydney most impacted:
As explained by Louis Christopher:
“I think the seven straight rises are now starting to bite”.
“The market can handle a 25 basis point rise and even a 50 basis point rise, but it’s been happening each month for the past seven months so sooner or later it’s going to catch up with some property owners”.
“As we get more rate rises, the number of distressed properties will rise as more households struggle to keep up with their mortgage repayments.”
The unusual fall in Spring property listings makes sense given dwelling values are falling from coast-to-coast. It also makes sense that Sydney, Melbourne and Brisbane are leading the decline given they are experiencing the sharpest price falls:
Why sell into a falling market if you don’t have to?
