Buyer demand is predicted to increase after the Reserve Bank of Australia kept interest rates on hold for the third consecutive month. Rhett Wyman
The Reserve Bank of Australia’s decision to keep interest rates on hold for the third consecutive month at 4.1 per cent could spur stronger buying activity over spring, fuelling sharper price increases, SQM Research says.
“I think buyer demand will increase, given another pause in interest rates,” said SQM Research managing director Louis Christopher.
“The fear of missing out is about to explode as buyers who have been waiting on the sidelines for prices to fall realise that the market has bolted, and are now responding by buying in.
“I think this will continue now that interest rates are most likely to remain on hold for some time, so it’s very likely that we will see ongoing price rises through to at least to the end of the year and probabilities are increasing that we’ll see a strong start to the calendar year 2024 in terms of price increases.”
Vendors have started to respond to the rising house prices and stabilising interest rates as evidenced by the surge in new listings across the country’s biggest housing markets.
Fresh stock across Sydney jumped by 10.5 per cent to 13,780 homes last month, which is the largest amount of new stock to hit the market for any month of August since records started, SQM Research data show.
Melbourne also posted a strong start to the spring selling season. New listings climbed by 12.6 per cent to 15,075, the highest count since 2016. Canberra, which had a 22.2 per cent lift in fresh stock, recorded the largest increase for any capital city.
“It’s clear vendors are feeling more confident this year than this time last year, which, I think, is due to a combination of better than expected buyer activity over the course of 2023 and the increasing likelihood that the RBA has reached its terminal rate,” said Mr Christopher.
“I believe demand is rising because of strong population growth and buyers’ fear of missing out, which has fuelled a lift in asking prices, so vendors are responding to the stronger market conditions and are now more willing to list their property.”
Most capital cities recorded a rise in fresh stock over the month, except Brisbane and Darwin, which posted a drop of 0.6 per cent and 14.2 per cent respectively. Nationally, new listings rose by 6.9 per cent.
So far, the sharp increase in new stock has been mostly absorbed by the buyers, as indicated by the falling number of total listings and old stock, Mr Christopher said.
Total listings have dropped by 1.9 per cent nationwide compared to a year ago. Sydney and Melbourne fell by 6.5 per cent and 4.9 per cent respectively.
The number of properties that have been sitting on the market for more than six months also fell across the capital cities during the month, except in Hobart, where it rose by 3.7 per cent.
“We’re not seeing a build up in stock at the moment because total listings are still below long-term averages,” Mr Christopher said. “We’ve recorded 224,530 dwellings for sale nationwide in August, which is lower than the long-term average of around 240,000 homes.”
Rich Harvey, chief executive of buyer’s agency Propertybuyer, said it was likely that demand was being boosted by vendors who were selling to upgrade or downsize as well as expatriates who were returning to the country.
“We’re definitely seeing pent-up demand from home buyers who haven’t been able to find anything during winter due to low stock levels,” he said.
Sydney real estate agent, BresicWhitney chief executive Thomas McGlynn said there had been a spike in the number of buyers looking for properties in the past month.
“We’re seeing an increase in the number of buyers proactively looking at properties both through open homes or online,” he said.
“We saw our biggest month ever of online traffic to our website, so it does feel that the demand is keeping pace with the extra stock at the moment, which to me is surprising considering the sharp rise in interest rates and cost of living.”
Distressed listings also fell further last month, dropping by 1.8 per cent as fear of mass defaults due to fixed mortgage reset receded. The number of properties selling under distressed conditions is now down by 18.9 per cent compared to a year ago.
“The fear surrounding fixed mortgage reset is not playing out in the market because people are still hanging on to their jobs,” Mr Christopher said.
“There’s been no material spike in unemployment, as yet, and that still may well happen, but at the moment, the majority of the working population are keeping their jobs, so there’s been no need to sell the house.”
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