A flood of properties hit the market – Louis Christopher

Figures released by SQM Research reveal national residential listings jumped 7.9% in November with stock on market rising in all cities. When compared to a year ago it represents a rise of 8.1%.  That is a lot of properties up for sale – over 360,000 to be exact.   We ask Louis Christopher if we are over-stocked.
Kevin:   Louis Christopher from SQM Research tells us that national residential listings jumped 7.9% in November over 360,000, but the real surprise package was Melbourne that jumped 11.6%, or over 30% from one year ago.
Kevin:   Louis, were you a bit surprised about the Melbourne figures?
Louie:   Yeah, the Melbourne numbers were quite high, Kevin. Yes, we’ve now got over 43,000 listings. I think this is an indicator of the fact that Melbourne’s housing downturn is gathering pace somewhat.
Kevin:   Yeah.
Louie:   The reality is is when you see more listings on the market, it generally means that sellers are having a harder time to move their properties and they just stay on the market. And during good times, we generally see listings fall. There’s a shortage of listings as there are more buyers than sellers.
Kevin:   Yeah. No doubt that’s reflected in the days on market figures, too, which we might get a chance to talk about. Louis, I’m just interested to get your take, and I want to go in a little bit deeper into some of the figures, but before we do, I’m just wondering, with a fall off in auction numbers, and we’re seeing that again this coming weekend, I’m just questioning, I mean obviously a lot of people are very wary about the market. It’s not stopping them putting their properties on the market, but it’s certainly showing some hesitation to take their properties to auction.
Louie:   Yes, that’s right. We normally see this during housing downturns.
Kevin:   Okay.
Louie:   That what happens is that vendors become a little bit more reluctant to sell via auction. They generally start selling by private treaty. So, yes, auction listings are down compared to last year across the country. Private treaty listings well and truly up.
Louie:   When your average vendor is hearing very low auction clearance rates, particularly in Sydney and Melbourne, you can understand reluctance to want to sell by auction.
Louie:   There is another factor in this. which is making it even more difficult to sell by auction, and that is the time it is now taking for banks to process loan applications. This is a critical point, Kevin, because that time has blown out to being above or beyond four weeks, and most auction campaigns run at four weeks. Right?
Kevin:   Yes.
Louie:   So you’ve got this situation here where come auction day, there are many would be buyers for their properties still haven’t got their money together, and so we … I’m hearing reports of, okay, on the day, property passes in, but generally it will sell after the day because, among other things-
Kevin:   The finance, yeah.
Louie:   … the buyer finally has their money together from the bank.
Kevin:   Yeah, yeah.
Louie:   So yeah, it’s a bit of an issue right now on the auction front.
Kevin:   Certainly is.
Louie:   There’s no question about that.
Kevin:   Yeah, and not only lowering numbers, but also lowering clearance rates as well, which is really reflected in what you said. Can I take you now to some of the figures in your report?
Louie:   Yes.
Kevin:   We’ve already highlighted the growth in Sydney and Melbourne with listing numbers.
Louie:   Yes.
Kevin:   Also in Canberra. I see Canberra’s up month on month about 12%, and year on year, 22%.
Louie:   Yes, that’s right. Yeah, that’s been a bit of a blowout with listings in Canberra. Up until recently, the Canberra market was doing quite well. It was bucking the trend that was occurring in Sydney and Melbourne, and I must say, on the rental front, rental listings are super tight right now. It’s definitely a landlord’s market in Canberra.
Louie:   But I have noticed that, yes, listings have been increasing, and it does suggest to me that perhaps the Canberra housing market is now slowing down.
Kevin:   I can probably understand in Hobart, where we saw month on month 17% growth in listings, that would no doubt be on the back of the fact that we have seen a lot of growth there, Louis.
Louie:   That is correct, Kevin. So Hobart has been the number one outperformer when it comes to price rises over the course of the last three years, actually. It’s been a booming housing market. We’re being a little bit careful at the moment in terms of not reading too much into this result. It was a big rise in listings for Hobart. Let’s just keep in mind, of course, that the year on year change is still showing a one percent decline.
Kevin:   That’s true, yeah.
Louie:   With all this information, Kevin, as you would be well aware, we are in the selling season right now for many major capital cities, so we normally get a rise in listings in November, hence the reason why we like to look at the year on year numbers and see what’s going on there.
Kevin:   Yeah, good point. Another key indicator, too, and it comes out in your report, is the capital city average asking prices for houses fell to 932. How much did they fall by, Louis?
Louie:   Okay, so as a capital city average, houses for the month fell by 0.7%, units were flat, and on the year on year change, houses are down by three percent, units are up by 0.4%. The declines for houses have predominately been driven by Sydney, where asking prices for houses on our numbers are down by 5.2%. Units are down by 1.5%.
Kevin:   5.2%, that’s a fairly hefty drop in Sydney, compared to the national average of three percent. Given the fact that Sydney’s such a huge part of the market, I’d imagine that’s even more dramatic, Louis, because if you take out the Sydney figures-
Louie:    Yes.
Kevin:   The rest of Australia, probably not travelling too bad at all.
Louie:   Well, that’s right. If you take out Sydney, and to a lesser extent take out Melbourne, the national result would be a lot higher. It’s clear that Sydney, and to a lesser extent Melbourne, are dragging down the overall national result. That’s why it pays to understand what’s going on from city to city, Kevin, because it still overall is a mixed housing market. We’re not recording price falls in every capital city. That’s for sure.
Kevin:   Louis, always great talking to you, and a tremendous insight into what the … The thing I love about your figures, Louis, is that it sort of really indicates where the market’s headed, not necessarily where it’s been. So thank you very much for that.
Louie:   Thank you, Kevin. Cheers.
Kevin:   Louis Christopher there from SQM Research.

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