- New listings and auctions are expected to rise in the coming weeks
- Long-term occupiers more likely to sell
- Vendors need to be more realistic with prices, says Eliza Owen of CoreLogic
While traditionally spring is a time of strong activity for Australia property market, this spring is set to be different.
Amid higher interest rates and weak sentiment among consumers, it is not clear how this spring selling season will fare.
Using their data and insights, CoreLogic has evaluated key trends for this spring selling season.
- New listings and auctions will increase in the coming weeks
- Seasonal uplift in new listings will vary between the regions
- It won’t be a “bumper” spring selling season, such as last year
- Long-term owner occupiers likely to sell
- Sellers to be more flexible, especially with price
What is going to happen to the Australian housing market this spring?
- New listings and auctions will increase in the coming weeks
Although the season as it not expected to be as intense as last year, CoreLogic’s RP Data platform has shown that during the last seven days of August comparative market analysis volumes rose 8.2%, which indicates a seasonal lift in new listings.
This lift in listings is expected to flow through the auction market. The below chart typically shows what happens throughout the year in terms of auction listings.
Rolling four -week count of auctions
- Seasonal uplift in new listings will vary between the regions
During the five years prior to the pandemic, new listings campaigns on a national basis have increased by 19.6% on average between winter and spring.
This seasonal bump, however, does vary between the cities. Cooler cities such as Canberra (42.4%) and Hobart (31.6%) typically witness a larger seasonal effect than the more temperate markets.
Average volume change in new listings – winter to spring (2015 – 2019)
The below breaks down this seasonal trend across by the local government areas that witness the greatest seasonal bump.
LGA’s by largest seasonal bump
“Between 2015 and 2019, the volume of new listings added to the market has on average doubled across Adelaide Hills in this period,” noted Eliza Owen, CoreLogic Head of Residential Research Australia.
“In addition, many regional, lifestyle areas like the Mornington Peninsula, Yass Valley, Surf Coast and Huon Valley see a notable uplift in new listings through spring.”
“Given home values across Adelaide have only just passed a peak in value, many sellers across the city may show interest in ‘cashing in’ this spring selling season. Despite a -0.1% fall in the CoreLogic Home Value Index for Adelaide, values are still almost 45% higher since the onset of COVID in March 2020.”
- It won’t be a “bumper” spring selling season, such as 2021
While 2021’s spring selling season was seen as “bumper”, this is unlikely to be replicated this year.
CoreLogic data showed that there were 154,294 new listings during spring 2021, higher than the decade average of 144,985. Late 2021 also saw auction volumes that were record breaking, such as 4,981 during the week ending December 12th.
However, listings were concentrated at the end of 2021, given Covid-related disruptions throughout the year.
So, arguably, vendors were playing ‘catch-up’ due to the pent-up demand after lockdowns ended. Many vendors were also cashing-in from the 21.3% price rise recorded across the capital cities.
Spring 2022, however, is very different. Buyer appetite has crashed thanks to higher interest rates, with properties taking longer to sell and vendors offering greater price discounts.
- Long-term owner-occupiers more likely to sell
CoreLogic data has shown an interesting trend of a decline in average hold period of sold priorities rise.
National property value changes and median hold period
This is likely due to buyers more likely to make a nominal loss if they sell during a downturn. On the other hand, those who have held their property for longer are likely to make nominal gains, even if the market is going through a short-term, cyclical downswing.
After all, home values have increased 380% in the past 30 years. By contrasts, they have increased by 4.7% during the past 12 months.
- Sellers to be more flexible, especially with price
It is clearly not a sellers market anymore. Median days on the market is now up to 33 days in the three months to August. By contrast, this was 20 days in November 2021. Vendor discounting – the discount between initial listing prices and contract sale price – has increased recently.
Median vendor discount of sales – rolling 3 months – national
Serious vendors need to be more realistic about their price expectations, coupled with a stronger marketing campaign, concluded Ms Owen.
“This reduction in price is largely a function of rising mortgage rates, where buyers may not be able to afford as much debt as they could a few months ago,” she said.
“The average owner-occupier home loan size has fallen nationally, from a recent high of $617,608 in January of 2022, to $609,043 in July. As the cash rate is expected to rise further in the coming months, borrowers may become more constrained.”
