New data shows the property market is being inundated with new listings even as auction clearance rates continue to fall, indicating market growth will continue to flatten and more discounts will appear even during the traditionally strong Spring selling season.
SQM Research revealed today listings grew by 5.1% in July to 309,000, in a third consecutive month of rises. That figure is also 28% higher than in July 2009, when there were 241,783 listings.
Founder Louis Christopher says this trend, combined with low auction clearance rates and demand, means supply will remain unusually high during the remainder of the year.
“There is going to be quite a lot of choice for home buyers this Spring, and into early Summer. Quite a lot choice. And what that means is that this will increasingly become a buyer’s market. There will be discounts occurring, and they’re even occurring now.”
“We don’t think there’ll be anything like a market collapse, but we do think there will be opportunities for buyers.”
The new SQM figures show 27,617 listings were added in Sydney, indicating a 5.49% change, although Melbourne recorded the most, with 31,433 listings added during July, an increase of 6.97%.
The largest percentage gain was in Darwin, which recorded a listings increase of 1,414 or 9.02%.
Christopher says this environment will last until one of two things happen – either a major economic upswing, “which is dependent on what happens overseas”, or government intervention in the form of stimulus.
“There will also be movement once there is an interest rate cut, and we believe that will happen eventually into next year.”
For the rest of the year, however, the focus will be on buyers. Doing your research means you could end up with a good deal.
“The challenge is doing the research, because a bargain today could be an even better bargain tomorrow. It’s a buyer’s market, it’s been going that way since April, and there is no sign that’s going to dramatically change.”
“We’ve also seen a stabilisation in auction clearance rates, and I believe that when we enter Spring we’re going to see those rates fall again. Melbourne could possibly enter the high 50s, Sydney into the high 40s. Growth-wise, there will be a negligible amount during the next six months – it’s a flat market.”
The new figures come as auction clearance rates reveal buyers are still backing away. According to the Real Estate Institute of Victoria, Melbourne recorded a clearance rate of just 67%.
Chief executive Enzo Raimondo said in a statement the figures actually confirm the market will continue to be wary, even when the Spring selling season arrives.
“This weekend has seen clearance rates remain in line with the performance of the market throughout July, suggesting that little will change until after the Federal Election when stock levels will increase. Unless buyer activity increases buyers will be presented with conditions that are more favourable than they have been over the past few months.”
Just 496 properties were put up for auction, with a total of 331 homes sold and 165 passed in. At this time last year, there were 424 auctions put on the market with 85% sold.
Sydney recorded a clearance rate of just 66% out of 183 properties on the market, with 128 selling and 10 withdrawn. Total sales came to $89.5 million.
Brisbane recorded just three sales out of seven on the market, with total sales reaching just $535,000, while Adelaide recorded 15 sales out of 29 properties with a total of $4.7 million.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
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