After a lacklustre listings season through spring and early summer in 2022, early indicators have suggested the flow of new listings this year are starting relatively softly, according to CoreLogic.
Vendors appear to remain reluctant to test the housing market at the start of the new year, with the flow of new listings over the past four weeks down 25.9% compared to the previous five-year average, and 20.3% lower than the same period a year ago.
Through the final quarter of 2022, the total number of properties listed for sale was tracking well below average levels, then started the year with a 31.5% dip from the previous five-year average and was 2.9% lower than at the same time last year.
The shortage of new listings comes at a time of below-average demand.
“Through the December quarter last year, the number of home sales was estimated to be 27.3% lower than at the same time in 2021 and 6.6% below the previous five-year average,” said Tim Lawless, executive, CoreLogic research director, Asia-Pacific. “If a normal, or above-average number of properties were being added to the market amid a slower rate of absorption, we would have seen total advertised stock levels rising, which could amplify price falls.”
Through the December quarter, months of supply – or how long it would take to absorb all advertised stock based on the current run rate of sale – continued to hold well below average at 1.8 months. That figure is substantially lower than recent housing downturns where months of supply was as high as 3.7.
Over the coming weeks, new listings are expected to continue their relatively mild flow to the market, early indicators show.
Normally at this time of the year, from late January to late March, new listings move through a dramatic seasonal upswing, with a second wind in the weeks leading up to Easter. Based on the pre-COVID decade average, “week eleven,” roughly mid-March, has typically represented the seasonal peak in the flow of new listings activity nationally.
“While it’s too early in the year to assess the likelihood of a pre-Easter bump in listings, ‘week 11’ will be an important test for the market,” Lawless said. “Arguably there will be some pent-up supply that has built up through the second half of 2022 from prospective vendors who have been holding off selling until market conditions improve.
“A ramp up in new listings at a time when buyer activity is likely to remain below average could see total advertised supply levels rise, providing more choice for those buyers who are active, and potentially creating some additional downwards pressure on housing prices.”
Despite low advertised stock levels, market conditions have clearly “turned” to favour buyers over sellers. Through the December quarter, homes sold by private treaty were on the market longer, averaging 31 days across capital cities and 41 days in regional Australia. Also, vendors had to offer larger discounts to their initial asking prices in order to sell their property.
Auction markets have also weakened. The combined capital cities clearance rate finished the year at 51.9% - that’s well below the decade average of 65.1%.
“Buyers are no longer facing a sense of urgency to make a purchase decision and they can negotiate on price more aggressively,” Lawless said. “If they don’t secure a price, they think reflects good value, they can simply move on to the next property amid persistently declining prices.
“Vendors, on the other hand, need to be realistic when setting their price expectations, be prepared to negotiate and ensure they have a high-quality marketing campaign behind the property.”
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