A dramatic drop in for sale listings is depriving home buyers of choice and driving FOMO (‘fear of missing out’).
Housing supply in the form of properties for sale has collapsed since the beginning of the pandemic, with total listings 31.5% below the decade monthly average in April, and 33.8% below the average for April, according to CoreLogic:
As national home values bottomed out in March 2023, the volume of new listings was even lower than at the beginning of the pandemic in March 2020, and 10.0% below the previous five-year average:
CoreLogic believes that the outlook for new listings should, to a large extent, be determined by the capital growth in home values.
Historically, if national home values continue to rise at their current pace of 0.5% per month through to the end of the year, home values would end the year around 4.1% higher.
This would equate to an increase in 2023 listings that was 2% higher when compared to 2022. according to CoreLogic.
However, even a 2% uplift in new listings would still be way below the historical average.
I will add that the larger than expected rise in net overseas migration has created significant extra housing demand at a time of record tight rental conditions.
This huge uplift in demand at a time of limited supply and soaring rents is driving FOMO in the market, which is fuelling the current price rebound.
The significant rise in immigration, auction clearances, and prices suggests that home demand remains strong.
The only thing holding back prices is the sharp decline in borrowing capacity as a result of the Reserve Bank’s 3.75% of interest rate hikes.
When the Reserve Bank commences its interest rate cutting cycle, borrowing capacity will lift and home prices will inevitably take off.
