Buyers outpaced listings in the past three months, despite further interest rate rises according to CoreLogic. Justin McManus
Houses were sold at a faster rate than they were being listed in the three months to May as vendors continued to hold off and as buyers remain undeterred by further interest rate increases, new data shows.
A total of 78,700 homes were sold nationwide over the past three months to May, while only 68,250 were listed, resulting in a sales to listings ratio of 1.15 according to CoreLogic.
“This shows housing demand outweighs the number of new listings added to the market,” said Tim Lawless, CoreLogic research director.
“Despite the previously weak housing market conditions through the second half of last year, the sales to new listings ratio has held relatively high compared with pre-COVID levels.
“Even through the worst of the recent housing market downturn, the sales to new listing ratio across the combined capital cities hardly dipped below 1.”
A ratio above 1 implies vendors should have the upper hand as stock levels tighten, buyers are more competitive and vendors do not have to discount their asking prices as much, according to Mr Lawless.
A separate analysis by Kent Lardner, founder of Suburbtrends, also found that demand exceeded supply across 219 areas out of the 328 analysed, despite the prospect of further interest rate rises.
“As is the case for most markets, listings volumes remain very low as a result of many potential sellers being unsure as to what they can move into,” Mr Lardner said.
“This catch-22 is impacting real estate agents adversely with low listings volumes and also helping keep prices from falling. In many Sydney markets especially, it appears we have seen the end of the downturn and market conditions are getting stronger month on month.”
Sydney’s inner suburbs including the inner south, inner west, eastern suburbs and Sutherland posted the highest absorption rates, while houses in Melbourne’s inner east, inner south and outer east were also selling fast.
More than 77 per cent of the average monthly listings were sold within 30 days across the Marrickville-Sydenham-Petersham district, which encompasses suburbs such as Camperdown, Dulwich Hill, Enmore, Erskineville, Marrickville, Petersham, Enfield and Strathfield.
Of the 90 houses listed for sale on average each month, 68 were sold within 30 days across the Sutherland district. Meanwhile, around 64 per cent of the average monthly listings were sold across Hornsby, eastern suburbs and Chatswood.
“A high absorption rate, typically above 20 per cent, is considered favourable for sellers, indicating that homes are selling quickly due to high demand,” said Mr Lardner.
Buyer demand
“Conversely, a low absorption rate, below 15-20 per cent, can be advantageous for buyers, suggesting a slower market with more choices and potentially lower prices.”
Thomas McGlynn, chief executive of BresicWhitney, said buyer demand remained strong despite the threat of interest rate increases next month and in August.
“We’re seeing the number of active bidders at auctions rising to six on average, which means five would miss out in every auction,” Mr McGlynn said.
“So there’s definitely enough buyers for what we can see. I don’t think buyer demand is going to instantly evaporate come August.
“Saturday’s auctions were still very strong, where we achieved 80 per cent clearance rate, although the ferocity in which people were bidding could slow if interest rates rise again.”
Glen Eira in Melbourne’s inner south, which encompasses suburbs such as Caulfield, Caulfield North, Caulfield South, Glen Huntly and Murrumbeena, notched the country’s highest absorption rate of 80 per cent, which means 90 houses were sold out of 112 listed each month on average.
Darenbin, Brunswick, Whitehorse and Banyule districts were also in high demand, with up to 64 per cent of the houses listed for sale selling within a month.
Melbourne-based buyer’s agent Cate Bakos of Cate Bakos Property said the high absorption rate was largely fuelled by low stock.
“A stock shortage is aiding price growth and buyers who are actively in the market are feeling the competition,” Ms Bakos said.
“Many buyers who saw the price growth of 2020 and 2021 are all too aware of the cost of ‘waiting’ when prices are climbing. Despite mortgages being more expensive with each rate increase, buyers are fearful of the market outpacing them.
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