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.<\/p>\n
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. <\/p>\n
\u201cIn terms of listing numbers coming into the market, they are picking up,\u201d the data firm\u2019s head of research, Tim Lawless, told news.com.au. <\/p>\n
\u201cSo 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.\u201d<\/p>\n
As a general rule, housing stock is inversely correlated with prices \u2014 the more stock for sale, the lower the price. <\/p>\n
Mr Lawless said Sydney\u2019s flow of listings exceeded the average by 12 per cent, and Melbourne\u2019s by 4.5 per cent; and these were the two cities showing negative growth in prices.<\/p>\n
\u201cIt\u2019s really clear that stock levels are on an upswing here \u2014 not really because vendors are just dumping stock on the market, it\u2019s more a case of buyer demand has slowed,\u201d the analyst said. <\/p>\n
\u201cAnd we\u2019re seeing this gradual accumulation of stock in the market simply because the rate of sales has slowed down.\u201d<\/p>\n
Softening buyer demand is evident in a steep decline in auction clearance rates, as higher borrowing costs and proposed tax changes weigh on sentiment.<\/p>\n
Measures in this month\u2019s federal budget included restricting negative gearing and replacing the capital gains tax (CGT) discount with an indexation model for established residential property. <\/p>\n
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.<\/p>\n
Independent analyst Tarric Brooker said Sydney\u2019s 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. <\/p>\n
It was a \u201cnew all-time low\u201d since his records began in 2018, excluding public holidays and the Christmas season.<\/p>\n
Mr Brooker also pointed to a \u201cridiculous 48.4 per cent of results unreported, which might be an all-time high outside of holiday-impacted periods\u201d.<\/p>\n
Auctions unreported represent the percentage of scheduled auctions where the real estate agent didn\u2019t tell the data agencies what happened by the weekend reporting deadline.<\/p>\n
News.com.au understands that when a property passes in with zero bids, agents often delay reporting the failure.<\/p>\n
Melbourne, on the other hand, was \u201cmounting something of a fight back\u201d in its sold-to-listed result, up 3 percentage points to 39.4 per cent from its recent lows, but \u201cstill 10 percentage points down from where it was at the end of February\u201d.<\/p>\n
\u201cThis 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,\u201d Mr Brooker wrote in his weekly update.<\/p>\n
\u201cOverall, both markets remain profoundly weak and highly vulnerable to a further reduction in demand stemming from the changes to the federal budget.\u201d<\/p>\n
Mr Lawless was tipping a surge in auction volumes during the King\u2019s 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. <\/p>\n
\u201cIf you\u2019re looking to sell, I think the timing is probably becoming increasingly urgent as the market moves into a weaker phase,\u201d he said.<\/p>\n
Mr Lawless\u2019 comments came as SQM Research became the latest firm to forecast a house price decline. <\/p>\n
The firm said its modelling showed prices in Sydney and Melbourne were likely to fall up to 9 per cent this year. <\/p>\n
\u201cThe live reality on the ground is the housing market is tanking in Sydney and Melbourne,\u201d SQM\u2019s Louis Christopher told The Australian Financial Review.<\/p>\n
Growth in national home values is clinging to positive territory for now, but a growing number of experts are tipping a correction.<\/p>\n