Strong clearance rates have not attracted new sellers, with property listings over the past 28 days falling to its lowest October level since the global financial crisis, new research has found.
Numbers from CoreLogic have indicated 22,939 fresh real estate listings were added across the last month in capital cities which is 13 per cent lower than this time last year and 15 per cent lower than the 13-year average.
Head of research for CoreLogic Tim Lawless said despite record-low listings for spring, overall numbers have increased by 44 per cent from July until October.
“New stock levels are down across every capital city, with the largest fall in Darwin where newly advertised listings are 36 per cent lower than a year ago and 63 per cent below the highs recorded in 2007,” he said.
Darwin housing conditions have been weak since the middle of 2014, so it’s understandable that home owners would be reluctant to list their property under such challenging selling conditions, he also flagged.
CoreLogic said the same explanation can’t be used for the stronger markets though, with properties in Hobart averaging just 28 days to sell, while homes are taking less than 50 days to sell across Melbourne, Sydney and Canberra.
Despite clearance times, the analysis did consider that vendors seem to be lacking confidence to put their home on the market with new listings down in those cities also.
Why are the numbers so low?
CoreLogic’s head of research said low numbers can be partially explained by low levels of consumer confidence, having flagged Westpac research that noted sentiment is at a four-year low.
Another explanation offered is the recent improvement in housing conditions. Capital dwellings have been falling just three months ago, with home owners taking time to get their affairs in order pre-selling.
Finally, Mr Lawless attributed a low number of options to high transaction costs, especially where home owners are wanting to either downsize or upsize but capital gains or stamp duty are keeping buyers away.
Effect on the market
A shallow pool of choice and lower entry levels due to changing regulations and cost of credit are coinciding with a rise in auction clearance rates.
“With increased competition, vendors are regaining some of the leverage they lost through the housing downturn and buyers could be feeling the first pangs of FOMO as they see properties selling faster and prices rising,” Mr Lawless said.
Historically, the seasonal peak for new listings numbers occurs around the second week of November, so there is still some time for spring/early summer listings to ramp up, Mr Lawless indicated.
“If the market recovery continues at the same pace as the last few months, it’s almost certain that home owners based in the markets showing strength will take advantage of renewed level of buyers’ demand,” he concluded.