Seller's market endures

A surge in new listings hasn't done much to dampen property sales

Seller's market endures

Even though new listings surged by 41% in Sydney and 82% in Melbourne last month, Australia’s two largest capitals are still sellers’ markets, according to buyer’s agent Lloyd Edge (pictured). He told MPA that while the new listings provided a bit more “breathing space” for buyers, activity was still strong in most markets.

“It’s given buyers a little more scope of what is available,” he said, adding there had been signs the market was beginning to slow.

Despite this, the ball was still in the seller’s court and competition among buyers remained heated.

“It depends how we see listings come along over the next month or so along with any effect from APRA changing its lending requirements,” he said. “That could potentially slow things down as well, but at this stage it’s definitely still a seller’s market.”

He pointed out the increase in listings didn’t apply across all suburbs, making it difficult to judge the impact of greater stock. Since listings were so low to begin with, the size and scale of this latest increase paled in comparison to previous years, said Edge. In terms of market activity, sales were still running hot and activity was even stronger than in October 2020, when the market really started to pick up.

“I’ve been in property for 20 years and it is the most action I’ve seen over the last couple of months,” he said.

According to REIA president Adrian Kelly, demand in the Sydney and Melbourne markets has been so high that for every property sold there have been about 10 other buyers who would have happily snapped it up. He said that the increase in listings still wasn’t nearly enough to meet this level of demand.

Read more: How will the return of international travel impact the Australian property market?

Lloyd said he expected to see more impressive results in the lead up to Christmas as buyers rushed in to finalise a purchase before the festive season began. Next year, however, could be a different story, he said.

“I expect it to maybe slow down a little bit next year,” he said. “Coming into February or March it might start to plateau.”

But this didn’t necessarily mean prices would drop as a result of more stock on the market. Edge said much would depend on whether APRA brought out additional lending curbs.

Read more: Further lending curbs could lead to downturn

“It might take more than just those listings to take a real effect on the market,” he said. “I think it comes down to whether people are finding it hard to borrow as well.

“I think it really comes down to those changes APRA make, because that’s what really slowed the market back in 2018 when they last did it.

“We haven’t really seen an impact at this stage, but I think there will be a flow on effect into next year when that does happen.”

The last time APRA brought in lending restrictions, the median houses price in Sydney dropped 11.4% from a mid-2017 peak in just 18 months. This was the sharpest contraction in more than a decade according to a Domain report.

A rising cash rate was likely to put pressure on demand and slow activity, he said. But whether or not the RBA increased the rate as soon as many economists had predicted remained to be seen. While the RBA kept the cash rate on hold last Tuesday, it hinted that it could move sooner than its forward guidance of 2024.

“If the cash rate does go up, it’s probably still 12 months away,” he said. “That will definitely have some impact in terms of slowing the market and that’s probably the only reason the RBA would increase the cash rate, just to slow the market if it has still got some heat. But if the market starts to slow down before then they may not look to increase the cash rate then.

“At this stage they are looking to 2023-24 before they increase it. I think they’ll only bring that forward if the market is still heated. In 12 months’ time, I can only assume it’s not going to be as heated.”

Even if the RBA maintains the current cash rate for another three years, banks have been hiking fixed interest rates in preparation. Many have also lowered their variable rates in a move that a Reuters report claimed would lure borrowers to the variable rate ahead of a cash rate rise. This indicates that no matter which option borrowers choose, they are going to be subject to higher repayments at some stage over the next 12-24 months.