Residz Team 3 min read
Right now, home sellers prepping to list in spring are busy painting their walls and talking to real estate agents. Spring is historically the peak season for real estate listings, with October the busiest month of all. But tough conditions this year mean fresh spring sellers may be up against very motivated autumn/winter sellers who are yet to sell their property.
Cooler months, cooling market
A goodly number of home sellers fall into this category. They listed their property in the colder months just as interest rate rises began to cool the interest of buyers. In the three months to July the Reserve Bank of Australia lifted the cash rate from 0.1% to 1.35% and flagged further rate increases in the months ahead, saying it would ‘do what’s necessary’ to bring inflation down. .
Property research company CoreLogic estimates that through the June quarter the number of home sales was around 15.9% lower than a year ago, reflecting less buyer demand.
Median days on market in Sydney increased to 33 days through the June quarter (from 23 days a year ago) and Melbourne median days on market increased from 27 days a year ago to 30 days through the June quarter.
A flooded lawn can’t take more rain
So the total number of listings is staying steady despite fewer homes being offered up for sale, especially in Sydney and Melbourne where house prices have fallen the most.
Like a flooded lawn that won’t soak up any more water, the real estate market in some cities is struggling to absorb even modest numbers of additional homes being put up for sale, as CoreLogic research director Tim Lawless explains:
“The slower rate of absorption is likely to worsen as rapidly rising interest rates and low confidence dampens buyer activity further, suggesting even as new listings trend lower through winter, total advertised supply is likely to rise through the second half of the year.” - Tim Lawless, CoreLogic’s research director.
However, so far, there is no ‘panicked selling’, he says.
“The flow of new listings is generally in line with last year and showing little divergence from the pre-COVID average at the macro level.”
Welcome to the buyer’s market
Nevertheless the ‘soaked lawn’ factor of higher inventory levels and drawn-out sales will be a dampener on house prices, explains CoreLogic. Vendors will be very motivated to discount their price expectations (unless they’re in Adelaide and Perth where stock levels remain well below average). Especially in the top end of town, house prices and unit prices are already showing signs of weakening.
This will be even more apparent in spring. Natural seasonal variations in listings usually leads to a drop in winter listings and a jump up in spring. Tim says the number of new listings nationally has typically fallen by 9.2% between autumn and winter (based on the pre-COVID average) before surging 18.9% between winter and spring.
In colder parts of Australia the difference is more noticeable, he says, with the number of listings of homes for sale in the ACT lifting an average 40% as the weather warms up. Hobart, Adelaide, Melbourne and Sydney also see more than a 20% difference between the winter and spring seasons. By contrast, Darwin’s peak listing time is autumn.
This house is ‘so last season’
More than ever, Australia’s real estate market is going to call for a large swathe of sellers to be realistic in their price expectations and prepared to do some compromising. There are buyers out there and there will be more in spring, but they’ll likely be choosing from both this season’s and last season’s offerings.
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