New property listings have fallen nationally as COVID lockdowns hit vendor confidence, while a leading housing economist says buyer demand remains strong.
The latest REA Insights Listings Report showed a 10.4% fall in new listings nationally in July due to sharp declines in locked-down cities and drops in most areas free of COVID restrictions, although Canberra bucked the trend.
The new wave of COVID-19 lockdowns is impacting seller confidence across Australia and some vendors may continue to hold off listing their properties as a result, realestate.com.au director of economic research Cameron Kusher said.
“The more lockdowns occur, and they are occurring pretty regularly at the moment, it could feed into more trepidation by vendors,” Mr Kusher said.
Lockdowns are expected to temporarily slow the strong momentum in parts of Australia’s booming housing market, although national dwelling prices are still tipped to surge by as much as 20% in 2021 amid massive buyer demand.
“In markets where lockdowns aren’t occurring I would expect a lift in new listings in spring, although I am now thinking it will probably be a little less busy than it usually is,” Mr Kusher said.
While noting winter was a seasonally slower period and conditions in the housing market remained strong, Mr Kusher said the lockdowns were affecting vendor confidence nationally.
“It’s clearly impacting confidence right across the country because a lot of other cities that weren’t in lockdown have also seen falls in new listings over the month, although the falls have not been as great as those in those lockdown areas,” 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.”
But realestate.com.au economists and other industry experts expect affected property markets will quickly make up for lost time once lockdowns end, as occurred after previous lockdowns over the past 18 months.
“Demand for properties remains near record-high levels, underpinned by low interest rates and healthy bank liquidity, and continues to dramatically outstrip the supply of stock available for sale,” Mr Kusher said.
“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.”
Raine & Horne executive chairman Angus Raine also predicted markets subject to lockdowns would rebound once the restrictions ended, pushing the spring selling season into summer.
Mr Raine said the property group’s appraisal figures were up on this time last year, and some sellers in affected areas were “waiting and seeing”.
“A lot of mum and dad Australians are putting their toe in the water – COVID or no COVID, restrictions or no restrictions – to sound out agents, see how much their property has been appraised for and then maybe make a decision in spring, and that spring will most definitely hop into summer,” he said.
Mr Raine said transactions were still occurring in locked-down markets and the delayed spring selling season would be “a blip”.
“Once that COVID pandemic genie is back in its bottle, it will be back to a booming market again.”
Sellers delay listing in locked-down markets
July’s 10.4% fall in national new listings of properties for sale on realestate.com.au was the largest monthly fall this year.
New listings in capital cities dropped by 14.9% while regional listings fell 3%, according to the report released on Thursday.
Mr Kusher said the falls in new listings were much larger in the areas subject to lockdowns, with restrictions in the biggest property markets in Sydney and Melbourne adversely affecting the national results.
New listings fell by 27.3% in Sydney, 26.9% in Adelaide and 14.2% in Melbourne during July.
Mr Kusher said the fact that one-on-one real estate inspections could still occur in NSW meant the 27.3% fall in new listings in Sydney during July was not as severe as the 75% decline that occurred in Melbourne in August 2020, when inspections were not possible.
“The Sydney market is still moving, albeit at a slower pace,” he said.
Even Darwin recorded a 20.5% fall in new listings last month, despite a snap lockdown for the Greater Darwin area ending on 2 July. Another snap lockdown in Greater Darwin ended on Thursday.
New listings fell 6.6% in Brisbane and 3.5% in Perth.
But new listings in Canberra, which was not in lockdown last month, jumped by 23.3%.
Mr Raine noted there were traditionally fewer properties transacted during winter and said two-thirds of the Australian property market was not affected by lockdowns.
He said markets like Tasmania were experiencing their strongest conditions ever. New listings rose by 0.3% in Hobart in July.
“If they’re not affected by COVID then the market is probably the best market in some areas they’ve ever seen,” Mr Raine said.
At its August meeting, the Reserve Bank of Australia board noted conditions in established housing markets remained strong, in contrast to the experience during the extended lockdowns in 2020.
Minutes of the meeting released on Tuesday showed the board noted the number of newly-listed properties for sale had declined recently but sales activity had held up well compared to the experience during the 2020 lockdowns.
“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.”
While many homeowners have opted to hold off listing their properties, the report suggested there were opportunities for those thinking of selling.
The report said sellers in Sydney’s Ryde region faced reduced competition as it had the fewest new listings and largest annual decline, while vendors could also take advantage of a quieter market in Melbourne’s north east and the Moreton Bay region in the Greater Brisbane area.
More than half of Australia’s population is currently in lockdown, with shutdowns in Melbourne and the ACT extended until 2 September and indications the NSW lockdown could continue into October, at least for Greater Sydney.
Total listings decline amid strong demand
The report showed total listings volumes nationally fell to a new record low following a further 3.5% decline during July, indicating properties were selling quickly amid strong buyer demand.
Total listings were at a record low in regional markets after a 2.5% fall, while capital city listings dropped by 4.3% in July.
“The ongoing decline in total listings really points to the fact that demand for properties remains strong and that the supply of new stock coming to the market is insufficient to meet demand,” Mr Kusher said.
Total listings were down 23.7% nationally compared to a year ago, the largest year-on-year fall on record.
Regional Australia’s 32.6% annual decline was also a record fall, while capital city listings dropped 13.6% year-on-year.
Most regional markets and smaller capital cities recorded their biggest year-on-year declines in total listings, which Mr Kusher said reflected the COVID trends of more people moving to those areas and fewer people heading to the larger capitals.
Mr Kusher said the COVID-induced lift in demand for housing in regional Australia has led to an ongoing decline in the volume of stock available for sale.
“Fewer owners in many of these areas want to sell while we are seeing many more people wanting to purchase, which is fuelling the ongoing decline in stock for sale.”
Total listings were at record lows in all regional areas of states and territories except for the Northern Territory.
Buyer FOMO increases during lockdowns
The decline in listings during lockdowns has intensified a fear of missing out as property prices surge and buyers rush to take advantage of record low interest rates.
Mr Kusher said demand for properties had pulled back from a record peak reached before Easter, but the fall had been moderate, indicating demand was still well and truly outstripping supply.
“The biggest issue for buyers remains the lack of new stock becoming available for sale and the ongoing decline in total listings as older-listed stock gets purchased.”
Sydney-based buyer’s agent Veronica Morgan said FOMO had reached frenzied levels.
“FOMO is ridiculous,” Ms Morgan, the founder and principal of Good Deeds Property Buyers, said.
Buyers who would be “super picky” in a flat market were scrambling to buy whatever they could as prices jumped, said Ms Morgan, who also co-founded the Home Buyer Academy.
“FOMO is leading to a lot of really rushed decisions,” Ms Morgan said.
“People get caught up in the frenzy and they take their focus off what’s the right property for them, and they focus on ‘I don’t want to miss out’.”
Mr Kusher said buyers had less stock to choose from and were increasingly settling for stock that was not previously selling.
“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.”
Ms Morgan, whose agency focuses on properties within 10km of the Sydney CBD, said while there was a shortage of properties, many vendors were pushing ahead with selling to take advantage of the strength in the market.
“So buyers still have things to buy and there’s plenty to get FOMO about.”
The listings report showed there were areas in each of the capitals where buyers had more choice. The report noted that while supply remained tight, buyers circling Sydney’s eastern suburbs had more options with new listings falling by the least compared to last year.
The inner east was the only Melbourne region where new listings rose over the past year, giving buyers more choice. The Brisbane-West region was that city’s only region where new listings were up year-on-year, although supply remains constrained in that tightly-held market, the report said.
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