The number of homes listed for sale is soaring across Australia, putting downward pressure on prices as vendors rush to sell before the market declines further.
In the four weeks ending May 3, new listings were up 22.4 per cent compared with last year, and 4.7 per cent compared with the 5-year average, according to figures from Cotality.
“In terms of listing numbers coming into the market, they are picking up,” the data firm’s head of research, Tim Lawless, told news.com.au.
“So it does look like vendors are becoming more motivated, possibly ahead of selling conditions deteriorating down the track, or housing markets becoming softer as the year progresses.”
As a general rule, housing stock is inversely correlated with prices — the more stock for sale, the lower the price.
Mr Lawless said Sydney’s flow of listings exceeded the average by 12 per cent, and Melbourne’s by 4.5 per cent; and these were the two cities showing negative growth in prices.
“It’s really clear that stock levels are on an upswing here — not really because vendors are just dumping stock on the market, it’s more a case of buyer demand has slowed,” the analyst said.
“And we’re seeing this gradual accumulation of stock in the market simply because the rate of sales has slowed down.”
Softening buyer demand is evident in a steep decline in auction clearance rates, as higher borrowing costs and proposed tax changes weigh on sentiment.
Measures in this month’s federal budget included restricting negative gearing and replacing the capital gains tax (CGT) discount with an indexation model for established residential property.
But the housing market was already showing signs of cooling before the budget, thanks to consecutive 25-basis-point hikes by the RBA in February, March, and May, bringing the official cash rate to 4.35 per cent.
Independent analyst Tarric Brooker said Sydney’s sold-to-listed result (the percentage of properties that successfully sold compared to the total number scheduled for auction) fell to 27.5 per cent at the weekend, down from 28 per cent the weekend before.
It was a “new all-time low” since his records began in 2018, excluding public holidays and the Christmas season.
Mr Brooker also pointed to a “ridiculous 48.4 per cent of results unreported, which might be an all-time high outside of holiday-impacted periods”.
Auctions unreported represent the percentage of scheduled auctions where the real estate agent didn’t tell the data agencies what happened by the weekend reporting deadline.
News.com.au understands that when a property passes in with zero bids, agents often delay reporting the failure.
Melbourne, on the other hand, was “mounting something of a fight back” in its sold-to-listed result, up 3 percentage points to 39.4 per cent from its recent lows, but “still 10 percentage points down from where it was at the end of February”.
“This may be partially due to Melbourne being theoretically less exposed to negatively geared investor demand compared with Sydney, possessing the highest rental yields of the mainland state capitals,” Mr Brooker wrote in his weekly update.
“Overall, both markets remain profoundly weak and highly vulnerable to a further reduction in demand stemming from the changes to the federal budget.”
Mr Lawless was tipping a surge in auction volumes during the King’s Birthday long weekend on June 8, partly due to seasonal factors but also because of the added impetus for vendors to sell before conditions got worse.
“If you’re looking to sell, I think the timing is probably becoming increasingly urgent as the market moves into a weaker phase,” he said.
Mr Lawless’ comments came as SQM Research became the latest firm to forecast a house price decline.
The firm said its modelling showed prices in Sydney and Melbourne were likely to fall up to 9 per cent this year.
“The live reality on the ground is the housing market is tanking in Sydney and Melbourne,” SQM’s Louis Christopher told The Australian Financial Review.
Growth in national home values is clinging to positive territory for now, but a growing number of experts are tipping a correction.
Analysts from investment bank Morgan Stanley have predicted that house prices could fall between five and 10 per cent, a move they described as “one of the largest price corrections over the past 40 years”.
HSBC Chief Economist Paul Bloxham, meanwhile, predicted home values would remain flat in 2026, followed by a national decline of 3 to 6 per cent next year.