The spring selling season has arrived, and there’s good news for buyers who have faced limited options for much of this year.
Choice has improved significantly in the major capitals, with buyers benefiting from the rush of properties hitting the market.
Given the spring selling season has kicked off busily, and national home prices have grown for the eighth consecutive month — the longest stretch of growth since the pandemic period — many are now wondering how the selling season will shape up.
One driver of the recovery in home prices this year has been the subdued listings environment. The limited flow of new listings coming to market in the first half of 2023 meant buyers were competing over fewer properties, contributing to the lift in home prices so far in 2023.
Home prices have also been underpinned by record levels of net overseas migration, the challenged rental market and a shortage of homes.
In the face of such a substantial reduction in borrowing capacities and deterioration in affordability, the fast turnaround in home prices has been an unusual occurrence, and a testament to the strong demand from buyers.
However, the listings environment is now shifting, with the spring selling season blooming and activity on the rise.
New listings volumes in August rebounded significantly in Sydney (+18.4% year-on-year) and Melbourne (+20.8% year-on-year), and both capitals recorded their busiest end to winter in more than a decade.
In other capitals there was a strong pick up in new listings compared to July as activity ramped up for the spring selling season. However, unlike Sydney and Melbourne, most still lagged the pace set in August last year.
Improved seller sentiment has been a key driver of the increase in listings, with confidence springing as interest rates remain on hold amid positive market conditions.
It’s become more and more likely that the peak in interest rates is here, and August was the third consecutive month the Reserve Bank has left interest rates on hold – welcome news for buyers and sellers alike.
Auction volumes increased 15% in August compared to the same period last year at a national level, but were up 25% year-on-year in in Sydney and 28% in Melbourne.
Whilst auction volumes have increased, clearance rates have eased in recent weeks, but remain above levels seen this time last year when interest rates were first rising.
Sales volumes have also picked up, especially in Sydney where sales volumes increased 24% year-on-year in August 2023, with both buyer and seller confidence on the rise.
With this spring shaping up to be busier than last, supply and demand dynamics are likely to continue rebalancing in the coming months.
The uptick in the number of properties coming to market will challenge the extent of buyer demand as the selling season continues to unfold.
There is a possibility that home buying demand is able to absorb the uplift in new stock coming to market, given interest rates have peaked, the labour market remains tight, and population growth remains strong.
Source: Will the big spring selling surge rebalance the property market?, Eleanor Creagh for realestate.com.au