A massive increase in property listings has led to increased speculation that the Sydney market is slowing, although one buyer’s agent has warned that the figures aren't telling the full story.
New data from SQM Research shows that real estate listings in Sydney increased by 7.6 per cent during the month of September – with an 11.1 per cent increase in listings year on year.
The news follows confirmation of a dramatic plummet in Sydney’s auction clearance rate over September – down to 69.6 per cent on the last weekend of September, compared to 76.9 per cent the year prior (APM PriceFinder).
According to SQM Research managing director Louis Christopher, the data may be indicative of a turning point in the Sydney market’s momentum.
“The Sydney surge in listings is another indicator now suggesting that the Sydney housing market is now slowing. Buyers should now find there is a little more choice out there compared to earlier this year,” Mr Christopher said.
Deborah West, principal of buyer’s agency SydneySlice, believes that the dramatic surge in listings can be attributed to the market reaching a “plateau” – with many less-desirable properties listed for sale in order to capitalise on the last of Sydney’s price boom.
“I think that’s partly to do with the cycle being spring. I think some vendors are listing their properties now in reaction to media hype that the market is going to go down, to try and cash in on the current strong market conditions.
“In this sort of market, houses that are on busy roads, houses that have compromised locations, or issues that would normally be difficult to sell – I think you’re seeing a lot of those properties coming on the market, where vendors have tried to capitalise on the market,” she said.
Supply levels of high-quality properties have been isolated from this increase in stock, according to Ms West.
“For it to really flow through to the market we need to see an increase in quality stock. As buyer’s agents we’re still seeing a lack of quality stock – while the numbers might be increasing, good quality stock is not increasing as much as we’d like to see. A lot of stock is being regurgitated that hasn’t sold in the past.”
According to SQM Research, it doesn't appear that seller expectations have readjusted to suit the increase in dwelling listings.
“Yet, I note that asking prices are still higher. I suspect vendors are not quite registering that conditions have changed somewhat since the white-hot market of autumn,” Mr Christopher said.
Sydney asking prices continued to climb over September, with a total monthly rise of 1.6 per cent for houses and 0.9 per cent for units. The median asking price for a unit reached $636,100, while the median house asking price in Sydney sits at $1,143,300.
Ms West said that vendor expectations are starting to fall out of line with the market, creating a discrepancy between different housing stock.
“You’re seeing that the market is maybe getting a little bit patchy. Some properties are getting very high pricing and it’s not following through that that means every property in that suburb is going to be getting crazy high pricing. I think clearance rates are reflecting that vendors are still trying to hold onto – they've got very high expectations or unrealistic price expectations,” she said.
Demand for high-quality properties should, however, remain constant – meaning investors are unlikely to lose out by prolonging the sale of these properties, according to Ms West.
“I don’t envisage any great dip in the market, and the stock is still well behind buyer numbers, so that buyers are still significantly outweighing stock numbers […] there needs to be a much greater increase in stock levels to even out to the number of buyers that are in the current market,” Ms West said.
“In terms of the lower, sub-$1 million level of the market, it is still very strong, because you have such a large number of investors in the market. So that sub-$1 million standard two-bedroom, good-location apartment with parking is a very competitive market at the moment. And I think it will be for some time – because the stock is just not keeping up with the number of buyers, in particular the homeowners trying to upgrade or get into the market, or the investors trying to get into the market.”
According to SQM Research, sales listings in Australia’s second largest city, Melbourne, fell by 16.9 per cent in the same 12-month period.
“The Melbourne result is also interesting in that there was barely any movement at all in listings in September and that stock for sale is well down on this time last year. This is suggestive of a strong housing market that is not slowing down at all," Mr Christopher said.