A sharp fall in listings is starving home buyers of choice and helping to support property values.
SQM Research’s stock on market report for April showed that total listings fell 9.0% over the month to be down 0.8% year-on-year, with the heaviest declines occurring across Sydney and Melbourne where net overseas migration is booming:
The overall decline in listings was driven by a 20.2% fall in new listings as well as a 3.6% fall in old listings.
Nationally, new listings (Less than 30 days) fell 20.2% in April, with 60,457 new property listings added to the market.
Sydney, Hobart and Melbourne recorded significant falls of 23.8, 23.5% and 21.4% respectively:
Older listings (properties that have been on the market over 180 days) fell by 3.6% in April, although they were up 28.1% year-on-year:
Commenting on the results, SQM Research managing director, Louis Christopher, noted that the fall in listings “appear to be greater than normal for this time of year”.
“The corresponding large falls in new listings combined with an uncharacteristic fall in older listings suggests some vendor caution selling at this point in time”.
CoreLogic’s April housing report likewise showed that new listings were tracking 22.9% below same time last year and 14.3% below 5 year average:
Likewise, total listings were tracking 9.7% below same time last year and 21.8% below 5 year average:
CoreLogic’s research director Tim Lawless noted that the unexpected rebound in house prices had been driven by “the larger than expected rise in net overseas migration which has created additional housing demand at a time of extremely tight rental conditions and well below average levels of advertised supply”.
Meanwhile, Nicola Powell from property listings group Domain believes the RBA’s latest rate hike is unlikely to be severe enough to derail the housing market recovery.
“Ultimately, with fewer listings, and heightened demand prices will likely continue to stabilise or even rise modestly”, Powell said.
This view is shared by Sydney-based buyer’s agent Jack Henderson, who notes signs ‘fear of missing out’ [FOMO] are emerging among prospective home buyers amid the low levels of new listings.
“There was a lot of uncertainty last year, but after seeing 10 rate rises having less impact on house prices than people expected, people are becoming more confident”, Henderson said.
“I think there are some early signs of FOMO probably coming back into people’s mind. And the dialogue that everyone’s using now is a lot more positive, which has impact on the way people think and act”.
Meanwhile, Home Loan Experts chief executive Otto Dargan says that mortgage per-approvals are booming.
“We’ve seen a surge in new loan applications with a rise of 44% between January and February and then another 26% increase between February and March. April looks like it’s similarly strong”, Dargan said.
“Many home buyers are getting pre-approved and ready to buy as they are seeing that the market is changing”.
Logically, there is still the risk of a significant lift in distressed sales given more than 600,000 cheap fixed rate mortgages are set to expire between April and December:
That said, SQM Research has recorded a fall in distressed sales as house prices have rebounded:
So far at least, the housing market is taking the fixed rate mortgage reset in its stride.
