Vendors are holding off listing their properties for sale as the latest wave of COVID lockdowns hit confidence, but a leading economist says the limited competition is presenting opportunities for sellers.
The latest REA Insights Listings Report showed new listings fell 10.4% nationally in July, driven by sharp declines in Sydney, Melbourne and Adelaide, which all faced lockdowns during the month.
In contrast, listing volumes across the then-restriction free ACT jumped by 23.3%.
REA Group director of economic research, and author of the report, Cameron Kusher said the lockdowns had had an immediate impact on the property market.
“Lockdowns have clearly impacted vendor confidence and so while much of Australia remains locked down, it is likely there will continue to be some hesitancy from sellers,” Mr Kusher said.
“The good news is both listings and confidence tend to rebound well once lockdowns are over, but with the prospect of future lockdowns we could see a lot of volatility in listings and confidence if and when they occur.”
Unlike Melbourne’s lockdown restrictions, Sydney residents are still able to inspect properties by private appointment – a measure Mr Kusher said has cushioned the blow.
“The fact that one-on-one real estate inspections can still occur in New South Wales seems to be making a meaningful difference to market confidence,” he said.
New listings in Sydney fell by 27.3% in July 2021 as lockdowns began, which was less severe than the 75% decline that occurred in Melbourne in August 2020, when inspections weren’t allowed during the extended lockdown.
New listings fell 6.6% in Brisbane and 3.5% in Perth.
But while vendors are sitting on the sidelines, a fear of missing out is fuelling buyer demand. National search activity and buyer enquiry on realestate.com.au was at near-historic levels in July, and remained strong heading into August.
“This lopsided market dynamic is creating an opportunity for vendors who choose to sell to be able to do so quickly and at top-end prices,” Mr Kusher said.
“While this is good news for sellers, unfortunately for buyers there is limited choice and fierce competition.”
Mr Kusher said as a result, buyers were settling for older listings that had been sitting on the market for a while.
“Properties for sale that were sitting on the market for an extended period of time are now being bought as new supply fails to meet market demand and buyers start to reconsider properties they perhaps once passed over,” he said.
“This trend is especially true in regional markets where there are now fewer properties for sale than in capital cities and supply is at historic-low levels.”
Mr Kusher said the market should make up for lost time once lockdowns end.
“Based on the market behaviour following previous lockdowns, we would expect once current lockdowns end, there should be a fairly rapid rebound in the volume of new listings coming to market, seeking to cater to this strong demand.”
The suburbs where sellers face the least competition
While winter is a seasonally slower period for new listings, Mr Kusher said the declines were much larger in the areas that entered lockdown.
“The falls have really been exacerbated in places like Sydney, Melbourne, Adelaide and even Darwin that have gone into lockdown during the month,” he said
“This time of year is always a bit quieter but we have seen a big pullback in the number of new listings coming onto the market over the last month and in previous months when there have been lockdowns.”
July’s 10.4% fall in national new listings of properties for sale on realestate.com.au was the largest monthly fall this year.
The report showed new listings in capital cities fell by 14.9% during the month, while regional listings fell 3%.
However, the report pointed to pockets where there were opportunities for both buyers and sellers.
In Sydney’s Ryde, sellers currently face less competition from other vendors, as the region recorded the fewest new listings during July, and the largest year-on-year decline.
“This indicates that buyers in the area have limited choice,” Mr Kusher said.
Vendors could also take advantage of a quieter market in Melbourne’s north east and Brisbane’s Moreton Bay, where new listings fell 20.5% and 15.3% respectively over the year.
In South Australia, new listings across southern Adelaide fell 32.6% year-on-year, while Perth’s south west recorded the largest decline, down 8.9%.
South Australian real estate agent Karen Dorman, who services Adelaide’s Glenelg region, said buyers were paying a premium due to the limited supply of new properties in the area.
“It’s the classic supply and demand situation,” Ms Dorman, from Harris Real Estate, said.
“People are nervous about selling because they’re worried about buying and purchasing in the same market. But a lot of buyers are paying up to 15% more than the advertised price.”
She said increasingly desperate buyers were putting in offers before properties were going to the first open house.
“There’s a lot of frustration from buyers, especially first-time buyers. They’re getting very disheartened because there’s not enough stock for them to purchase and so we’re getting great prices,” she said.
“I think at the end of the day, anybody that sells is getting a good price, and you’re seeing lots of competition.”
Where buyers have more choice
The listings report also highlighted areas where buyers had more properties to choose from, with Canberra recording the largest monthly rise in new listings of any capital city.
Total listings in the nation’s capital rose by 3.4% over the month, but were still lower than volumes in May.
In welcome news for buyers circling Sydney’s popular eastern suburbs, new listings have fallen the least compared to last year, although total listings remain low as demand outstrips supply.
Melbourne’s inner east was the city’s only region where new listings rose over the past year. Similarly, Brisbane’s west was the only pocket in the capital to see more new listings.
New listings fell across Adelaide, with northern suburbs recording the smallest decline.
But buyers were spoilt for choice in Perth’s north-west region, with the area recording the largest increase in new listings compared to a year ago, and accounting for the largest share of new listings (26.5%) of any Perth region in July.
Regional listings at record lows
Total listings nationally in July were 23.7% weaker than a year earlier, driven by a 32.6% annual fall across regional Australia.
“This really talks to the trends we’ve seen since the onset of COVID, less movement into the large capital cities and more movement to regional centres and smaller capital cities,” Mr Kusher said.
After years of weak housing market conditions in many regional areas, Mr Kusher said the COVID-induced property boom has pushed down listing volumes as new supply fails to keep up with demand.
“COVID has seen demand for regional properties surge. Keep in mind, it hasn’t just been people buying for owner-occupation, we’ve also seen demand from investors shift from the cities to regional markets,” he said.
“The amount of new stock coming on the market is not large enough to offset how many sales we’re getting each month and the supply of stock just continues to fall.”
Total listings were at record lows in all regional areas of states and territories in July, except for the Northern Territory.
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