The recent increase in listings has so far been largely absorbed according to CoreLogic. Joe Armao
Buyers, lured by the pause in interest rates rises, are keeping pace with the supply of homes offered for sale, even as the trend in new listings rises, analysis from CoreLogic shows.
The Reserve Bank of Australia’s decision to keep rates on hold for the second month could fuel even faster absorption rates as buyer sentiment improves, experts say.
The months of supply, which measures the number of listings against the estimated number of sales, fell to 1.7 months nationwide, down from 2.1 months in February and lower than the decade average of 2.4 months.
“This measure of supply versus demand remains well below the long run average, highlighting that advertised supply remains low relative to demonstrated demand,” said Tim Lawless, CoreLogic research director.
“Although the trend in new listings has been rising, the total listing trend has held reasonably firm across most cities. At the moment it seems like the extra supply coming on the market is being absorbed.”
A significant imbalance between supply and demand fuelled the surprise rebound in prices in February, although the recent increase in fresh stock led to a slowdown in the pace of price growth in July.
The national dwelling values increased by 0.7 per cent, which is markedly lower than the 1.1 per cent gain in the previous month. Sydney posted 0.9 per cent increase, the smallest gain since prices started rising in February.
Sydney fell to 1.6 months of supply, Melbourne was down to 2.1 months, Brisbane and Perth to 1.4 months and Adelaide 1 month. Hobart fell to 2.2 months, ACT to 1.8 months and ACT to 1.3 months.
During their recent highs, Sydney has 1.86 months of supply, Melbourne 2.4 months, Brisbane 1.9 months, Adelaide 1.6 months and Perth 2 months.
Pat Bustamante, St George senior economist, said the stable interest rate environment could entice more buyers into the market.
“Affordability has been reduced by the 12 rate rises, but we’re still getting higher wages and a strong job market, which could boost buyer’s borrowing capacity,” he said.
“So now that buyers have some certainty about the interest rate, they could return in bigger numbers this spring.
“At the same time, the stable interest rate may also give homeowners confidence that they could manage their mortgage repayments and decide to hold on to their property, which would result in lower stock in spring, than people are expecting.”
The number of fresh stock climbed by 10.6 per cent to 22,560 in the capital cities over the four weeks ending June 25 to 22,560 over the four weeks ending July 30 according to CoreLogic.
Over the same period, the total number of properties for sale was only down by 0.2 per cent.
On the demand side, the estimated volume of capital city home sales over the past three months roughly matched the volume of sales a year ago and 5.2 per cent higher than the previous five-year average.
A separate data from SQM research also showed faster absorption rates with the total listings falling by a larger than average 4.4 per cent nationwide, led by the sharp decline in older listings.
The number of listings over six months fell by 6.9 per cent nationwide in July, with the bigger capitals posting around 10 per cent decline.
“The decline in older listings could be as a result of higher absorption rates and we note that the calendar year to date has actually recorded higher than expected levels of total residential property sales turnover,” said Louis Christopher, SQM Research managing director.
Independent economist Stephen Koukoulas said while the demand and supply imbalance has lost some potency, it would continue to support prices.
“Demand from that really super strong population when the borders reopen is starting to show a little bit of fatigue, so we’re now seeing house prices rising at a slower pace,” he said.
“But I don’t think we’re going to see large scale distressed selling that would drag prices significantly lower. If unemployment stays low, people keep their jobs, and they can continue to hold on to their homes.
Distressed listings fell by 1.1 per cent to 5335 nationwide last month, with NSW recording the sharpest decline of 3.6 per cent according to SQM Research.
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