Sellers come to terms with a changing market – Louis Christopher

Sellers come to terms with a changing market – Louis Christopher

Louis Christopher from SQM Research tells us that listings around Australia have increased.  So what is behind that? Why are they increasing?  It certainly has nothing to do with increased consumer confidence.

Transcripts:

Kevin:  Louis Christopher from SQM Research tells us that listings around Australia have increased, but what’s behind that? Why are they increasing? Louis, hello and welcome to the show.

Louis:  Good day, Kevin.

Kevin:  What’s behind it, Louis? Is this a sign of confidence or is it that’s stocks not selling?

Louis:  It is more the case that, okay, the month of March is usually really the first proper month where the housing market is fully open. And you generally do see an increase in listings compared to the month of February, where the month of February, vendors are just starting to come to the market for the new year. So we normally get an increase in March. What’s important here to understand how the numbers have changed year on year. Through looking at those numbers, there are some very interesting findings. Melbourne, for example, listings actually rose year on year by 24.9%, which is a huge increase. But there’s now 42,000 listings in Melbourne, and compared to this time last year, there was 33,000 listings. So I ..

Kevin:  Have you got to breakdown on that whether it’s houses and/or units?

Louis:  It’s an increase on both, I think, probably. We’re seeing it across the board. This is a classic sign of a deepening housing downturn occurring in Melbourne. When we see a rise in listings, basically it means that supply is increasing and stock is not moving. Our measurement is based on total listings available to buyers, not just new listings.

Kevin:  Yeah, yeah. Of course, that’s the report we’re getting from agents as well, is that listings are abundant, but sales just aren’t happening.

Louis:  That’s right. Many agents will complain at the moment there’s not enough new listings, but the thing is, they’ve got plenty of listings on their book, they just cannot move them. I think it’s just an ongoing tussle to get their existing vendors to understand that the market, particularly in Sydney and Melbourne, it’s still falling, and if these vendors want to sell in this market, they need to meet the market quickly.

Kevin:  Well, of course, then that translates into asking prices, which I know is something else that you monitor as well. What’s happening there?

Louis:  Yes, that’s right. We monitor what vendors are doing with their asking prices. For the month, it was mixed. Just once again talking about Melbourne, the asking prices for Melbourne fell by another 1.2% just for the month. Sydney for houses was actually flat. It’s the first time we’ve recorded a flat rating in a while, but units fell by about 1.7%. Brisbane recorded some minor falls in asking prices and houses were down by 0.3%, units down 0.1%. The area which recorded a rise was Canberra, where houses went up by 0.3% and units up by 0.2%. But overall, asking prices did fall nationwide for the month.

Kevin:  Yeah, and when you look at that graph that you supplied us, if you look at the weekly asking prices year on year, a lot of red ink in there, and the two that you’ve highlighted, both Hobart and Canberra, the only two markets that had growth year on year in both houses and units.

Louis:  Yes, that’s right. Just to those particular cities, that year-on-year growth is definitely slowing. I wouldn’t be surprised later in the year if we were to record some type of year-on-year falls for those cities. They are slowing down, both Canberra and Hobart, and I think those markets are being affected by the same thing that’s been affecting the other cities, which is ongoing restrictions on lending and very little buying confidence out there, particularly among investors.

Kevin:  National, all house price variations come back year on year by that 1%, but if you look at the capital city average, it’s as high as 7.3%, which indicates to me that the price disparity is not as strong in the regions as it is in the cap cities. Am I reading that correct?

Louis:  No, that’s true, Kevin, and that’s been a story that really hasn’t been told that much out there, that the regions are actually doing far better than the capital cities right now. If I was to take a closer look at the regions, it’s actually a lot of the mining towns now which are recording fairly strong recoveries, particularly in Western Australia and South Australia. We’re recording some rather large increases in some of those towns, particularly for example Karratha, where the market’s picked up by about 12% since the bottom, and we’re expecting further increases. Keeping in mind, of course, that the mining downturn that we had that ran from 2012 through to about 2017 was an absolute shocker for investors.

Kevin:  That’s right. It was a shocker. Yeah.

Louis:  yeah. But now we’ve got a recovery going, so investors that have been buying there or been holding there through the downturn have finally got some good news.

Kevin:  Yeah. Great stuff. Always a good report and a good man to talk to is Louis Christopher from SQM Research. Louis, thanks again for your time and your wonderful insight.

Louis:  Oh, thank you, Kevin.

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Kevin Turner
kevin@realestatetalk.com.au
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