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Backlog of property listings will put pressure on price growth, experts say

Over 350,000 homes will be on the market during the second half of the year as properties take longer to sell due to unrealistic expectations, industry experts say. The comments come after official housing finance data revealed by the Australian Bureau of Statistics yesterday shows finance approvals increased for the first time in eight months. […]
Patrick Stafford
Patrick Stafford

Over 350,000 homes will be on the market during the second half of the year as properties take longer to sell due to unrealistic expectations, industry experts say.

The comments come after official housing finance data revealed by the Australian Bureau of Statistics yesterday shows finance approvals increased for the first time in eight months.

Louis Christopher, founder of SQM Research, says the number of properties on the market will grow as sellers pitch their properties at unrealistic prices, and buyers wait them out for a better deal.

It comes as SQM has just launched a new index that allows users to track the number of units and houses being sold in a particular suburb.

“We’re seeing a boost in listings in the last few months. Seasonally you tend to see less listings right about now, so what this trend is suggesting is that the market is slowing down and buyers cannot be found for these properties.”

“Listings are going to continue to build up, specifically when we enter Spring, and then you’ll get a rise in listings, so we’re looking at a substantial increase for the second half of the year.”

Christopher says that in September and October, the market could record in excess of 305,000 property listings nation-wide – close to the levels recorded during 2008, when property listings peaked at 425,000 in December.

He points to falling clearance rates as evidence of the slowing market – in Melbourne, rates were in the 80s for nearly half a year, but have now dropped back to the high 60s. In Sydney, the largest property market, clearance rates are regularly dropping below 60%.

Christopher says from this point on, price growth will continue to be flat and could even fall in some segments of the market.

“I think the market is now effectively trading flat for Melbourne and Sydney, in some areas, and I believe it could be slightly falling in some places in Brisbane. But I think we’d have to see a lot more listings on the market before we see something plummet.”
“The finance data from yesterday was better than expected, but finance approvals are still at relatively low levels. We’re obviously heading into a property downturn, and time will tell if we see further falls.”

David Airey, president of the Real Estate Institute of Australia, says the market is slowing to the extent that listings are accumulating, and “buyers have lost their desire”.

“There’s some very good buys out there, people are now starting to set their prices at below 2007-levels. Listings are beginning to build up, and buyers are just waiting out for those lower prices.”

However, Airey says that there has never been a major price collapse in Australian residential property history, and even though the market may cool he is confident the market will sustain at least a flat growth rate through the rest of the year.

“We are just going through an adjustment period, no different to what the stock market is experiencing. The ASX peaked, and has come back, and the same thing is happening in the property market. You run out of buyers, but they’ll be back.”