More homeowners are taking advantage of strong selling conditions but property listings still cannot keep up with the homebuying frenzy, particularly in regional areas.
The number of new properties listed for sale on realestate.com.au has been trending higher in 2021, despite the inaugural REA Insights Listings Report released on Thursday showing a moderate dip in April.
But the total supply of properties listed for sale remains low, indicating properties are selling quickly amid strong buyer demand.
Realestate.com.au director of economic research Cameron Kusher said buyer demand remains close to record high levels and continues to outstrip supply, pushing prices higher.
“Active listing volumes continue to drift lower, highlighting strong demand,” Mr Kusher said.
“With demand at heightened levels, residual stock for sale continues to be sold, reducing the active supply.
“This demonstrates that despite rising prices and some steam coming out of the market, we are still seeing strong buyer activity.”
The number of properties newly listed for sale on realestate.com.au reached their highest level in 17 months in March, before pulling back in April.
Mr Kusher said while new national listings fell by 6.9% in April compared to March, it was still the second-highest number of monthly new listings since October 2019.
Mr Kusher said there were already signs the market is starting to move to a better balance between demand and supply, although demand was still far outstripping supply.
“As the year progresses I expect to see a further shift toward equilibrium, however, I also expect demand will continue to outweigh supply, pushing prices higher.”
“I expect property prices will continue to rise, however, with a better balance between demand and supply, it’s reasonable to anticipate that the rate of price growth will slow over coming months,” Mr Kusher said.
Property prices are tipped to surge by 20% over 2021 and 2022, with economists at the big four banks forecasting gains of at least 10% and as much as 17% this year. The pace of growth of early 2021 is expected to slow down, particularly next year.
Record low interest rates and incentives for home building and first-home buyers, plus restrictions on international travel and the ability to work remotely during COVID, have driven the strong rise in buyer demand.
A fear of missing out is also fuelling demand and pushing up prices.
More new listings but homes being snapped up
Mr Kusher said new listings volumes have been trending higher in 2021, despite the April dip.
“Vendors definitely seem more confident and there is pretty strong evidence for them at this point that demand for residential property is strong,” he said.
“I believe the other factor through 2021 to date has been that a lot of vendors probably just wrote off selling their homes in 2020 and said they’ll revisit it this year, and that is why new listing volumes have been stronger.”
Mr Kusher said selling conditions and demand had eased a little from their pre-Easter levels.
“But in the context of recent years, demand remains very strong and sales volumes are elevated,” he added.
Mr Kusher said some would-be sellers may also still be holding off listing their homes, either hoping to take advantage of further price hikes or out of fear they will struggle to buy their next home in the same hot market.
“I am sure there are still some reluctant sellers, perhaps those waiting for further price increases before selling and potentially those awaiting a little less demand so there is some reduced competition to purchase.”
While the report showed a drop in new national listings in April, the number remained higher than in February.
Combined capital city new listing volumes were 3.8% lower in April, while regional markets experienced a bigger decline in new stock coming to the market of 12.2%.
New listings fell in most capital cities and in all regional areas in April compared to March.
But the number of new listings in Sydney rose by 1% to reach the largest volume since October 2018, while Darwin recorded a 9.3% rise.
Mr Kusher said Easter and school holidays had an impact on the April figures.
The monthly new listing numbers were higher in April than a year earlier across all capital city and regional areas, due to the COVID lockdowns in 2020. Nationally, new listings were up 98.1% compared to April 2020.
The total supply of properties listed for sale on realestate.com.au, including new listings, continued to moderate in April 2021.
Active listings overall fell by 3.2% over the month, dropping by 1.4% in the capital cities and by 5.1% in regional markets.
Perth (up 2.5%) and Darwin (up 0.8%) were the only capital cities to record an increase in total listings.
Active listings in Hobart fell 11.8% to an historic low in April.
Total listings were also at record lows in all regional markets except for regional Northern Territory.
Mr Kusher said regional market active listings are now the lowest they have been at any time since 2016, amid a COVID-inspired record shift into the regions from capital cities.
“The historic low levels of supply in regional areas reflects the ongoing strong demand for properties in non-capital city areas,” he said.
Properties listed for sale are selling quickly. The typical property that sold on realestate.com.au during April had been on the site for 38 days.
At its May meeting, the Reserve Bank of Australia board noted housing turnover had increased to around its highest level in a number of years and many properties were staying on the market for short periods of time.
“Strong demand was encouraging an increase in new listings, although the total stock of listings was below the average of recent years because new listings were being sold quickly,” the meeting minutes released on Tuesday stated.
More homes to be listed in spring
Mr Kusher said a lot more stock typically comes to market throughout spring, although this year it may not be as strong as usual with signs demand and sales may be peaking.
“I sense we have seen the volume of demand peak with a lot of interest in property unleashed initially due to very low borrowing costs, restrictions on how people can spend and Australia’s COVID management,” he said.
“We’ve also seen extremely strong weekly sales volumes and an increase in new listings, which suggests a share of the demand has now found a property to purchase and, of course, prices have increased.
“It would be foolish not to expect that listings will increase in spring, but I am of the belief that spring will not be as strong or active as it has been in the past given the strength in the market over the past six to nine months and indicators of a moderate softening of demand and sales of late.”
Frustrated buyers face tough competition
Victorian buyer’s agent and Real Estate Buyers Agents Association of Australia president Cate Bakos said the increase in new listings this year was not alleviating the buying frenzy.
“There’s a lot of new listing activity but there’s still a lot of buyers per property and really competitive conditions,” Ms Bakos said.
“The data says there’s more stock but everyone’s screaming at me saying ‘how come there’s not enough stock?’.”
She said buyers hoped more properties would come on the market in spring and over the remainder of the year.
“The problem is vendors have to go somewhere. Unless they’re trading into a market that’s softer, they’re reluctant to put their houses on the market until they’re confident they can buy something.”
Mr Bakos said the market remained very hot and there were many buyers frustrated at missing out on properties.
“Buyers are propelling sales results above where anyone can anticipate, particularly for anything with three bedrooms or more.”
Ms Bakos said there has been a vast increase in borrowing capacity.
“That’s a challenge for every buyer because with what you think you’re comfortable to spend, you’re up against other buyers who are reinstating higher borrowing capacity limits.”
Ms Bakos said buyers faced a dilemma in deciding whether to buy now out of FOMO or wait in case the market cooled.
“The challenge for people is deciding whether they want to buy something now – with the fear of the market continuing to increase they don’t want to get priced out – or whether they should put some faith in conditions moving into their favour a little bit in spring.
“If that happens, then great. But if they’ve made the wrong judgment call and they miss the boat, they could miss buying in that market altogether.
“We saw that happen through COVID when the media were suggesting that prices would drop 30%. I’ve spoken to people who held out for that and they’ve now missed out on buying into the suburb they could have afforded.”