Rising house prices are encouraging more sellers to put their properties on the market, but the number of new listings is still lagging behind demand, particularly in regional areas.
After economic uncertainty caused listing volumes to plunge in 2020, the number of new properties listed for sale on realestate.com.au has been trending higher this year, although it’s still not enough to match buyer demand, a new report has found.
The new REA Insights Listings Report showed new listings nationally had reached their highest volume since October 2019 in March 2021, before pulling back marginally in April.
Author of the report and REA Group director of economic research, Cameron Kusher said new listings in April were almost double that of the same time last year when national lockdowns were in place.
“While new national listings fell 6.9% over the month of April compared to March, it was still the second-highest number of monthly new listings since October 2019,” Mr Kusher said.
But the number of active listings – which is the total supply of properties for sale in the month – remains low, indicating properties are selling quickly amid strong buyer demand.
“With demand at heightened levels, residual stock for sale continues to be sold, reducing the active supply,” Mr Kusher said.
“As the year progresses I expect to see a further shift toward equilibrium, however I also expect demand will continue to outweigh supply, pushing prices higher.”
Record low interest rates, government incentives and the fear of missing out has fuelled buyer demand, with property prices forecast to rise by around 20% over this year and next, according to economists at Australia’s big four banks.
Supply in regional markets at ‘historic low’
Flexible working arrangements have resulted in a regional property boom, as buyers seek lifestyle changes and more bang for their buck.
The listings report found regional market active listings are now the lowest they’ve been since 2016.
“The historic low levels of supply in regional areas reflects the ongoing strong demand for properties in non-capital city areas,” Mr Kusher said.
A separate survey conducted in April by ME Bank found most buyers think supply is lacking, particularly in regional areas.
60% of respondents believed there wasn’t enough choice in the current market, up from 43% in January.
In regional areas the figure was higher, with 65% noting limited supply.
The listings report showed almost two thirds of new listings in April were in capital cities, compared to a third in regional areas.
Stock to rise in CBD markets
The report found active listings in April 2021 were 13.8% lower than they were a year ago, driven by a 25.9% decline in regional listings, compared to a 1.3% lift in capital city listings.
Mr Kusher said although capital city stock levels were higher over the year, it was really driven by the two largest property markets, Sydney and Melbourne.
In Sydney, active listings rose 5.8% year-on-year, while Melbourne had 15.9% more stock available than the same time last year.
Perth was the only other capital city to record an annual increase in listing volumes, up 3.8% compared to April 2020.
It comes amid oversupply concerns in CBD markets reliant on international visitors.
A survey conducted in April by Digital Finance Analytics found thousands of Sydney and Melbourne apartments could be listed within months, following expectations international borders will largely remain closed until mid-next year.
Director of Digital Finance Analytics, Martin North said the survey of 52,000 households showed investors with apartments are the most likely to list.
“The number of households planning to list their property for sale is rising – up 5% compared with January 2021, and 10% a year ago,” Mr North said.
“Property investors with units in high-rise buildings are the most likely to list, as net rentals are often negative, meaning they lose money in cash flow terms, and they are hoping to get a buyer given the slight rise in some unit prices, though across many suburbs they are still falling,” he said.
Victoria’s economy was the hardest hit by the coronavirus pandemic and Melbourne’s CBD bore the brunt of several stages of restrictions.
Last week’s state budget included several measures specifically aimed at reviving the CBD.
In an attempt to boost apartment sales, new properties in the Melbourne local government area that have been unable to sell for more than a year could have stamp duty waived if the value is less than $1 million. Stamp duty concessions will also be expanded for off-the-plan purchases to include properties worth up to $1 million.
But the state’s seven-day circuit breaker lockdown is another blow to confidence.
Victorians entered into a snap lockdown from midnight Thursday as the state grapples with a growing COVID-19 outbreak.
Property Council Victorian executive director Danni Hunter supported the lockdown, but said it will “jolt Victorians’ confidence” and set back the recovery of businesses still reeling from previous lockdowns.
“It will be vital on the other side that we boost all efforts even further to reactivate Melbourne’s CBD and ensure this is merely a small blip in Victoria’s sustained economic recovery,” Ms Hunter said.
She said budget measures to increase land tax, which will largely impact commercial properties, as well as an increase to the premium stamp duty rate must be scrapped to minimise any economic damage caused by the latest lockdown.
“The Andrews government must recognise that our sustained economic recovery is still very fragile and uncertain,” she said.
“Within this context, major structural tax changes proposed by the Andrews Government, including increases to land tax and stamp duty, and a new tax on investment, must be completely thrown out.”
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