Plummeting listing levels present home seekers with new hurdle over 2023

They’re already grappling with rising rates, but home seekers will have to contend with a new obstacle due to some surprise market changes late last year.

Home seekers have still had to pay big sums for “quality” listings. Picture: David Swift

An impending shortage of available housing for sale could wreak havoc on home seeker plans to purchase properties this year.

Figures released from SQM Research on Wednesday revealed new property listings have dropped substantially over the past year, with home seekers competing for more than a third fewer new listings than a year ago in the worst affected cities.

It’s come as the share of “old listings” – those on the market for longer than five months without selling – climbed in every capital apart from Adelaide and Canberra.

Properties that take this long to sell have historically been less desirable stock such as homes on main roads or properties priced well above market value.

It confirms what real estate agents had been warning for much of the second half of 2022 – that “quality” or “A-grade” housing stock remains in short supply.

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And those who have wanted to purchase these homes have still faced strong competition from rival home seekers, keeping the prices elevated despite the ongoing property downturn.

SQM Research director Louis Christopher said the rise in older listings amid a drop in new listings was fairly uniform across Australia.

“This rise in older stock completely confirms the depth of this housing downturn,” he said. “As there remains more sellers than buyers, dwellings on the market that are not priced to market, don’t sell.”

Sydney and Melbourne had the biggest drop in new listings. Picture: John Grainger

Sydney and Melbourne had the biggest annual drops in new listings at 35.3 per cent. The former also had the biggest rise in old listings, with listings older than 180 days increasing by 47 per cent annually.

Australia’s two largest cities have generally been the weakest markets since interest rates began to rise midway through last year and the drop in new listings may indicate a reluctance from homeowners to list in a falling market.

Brisbane and Darwin had a nearly 27 per cent reduction in new listings, while in Canberra the fall was 30.5 per cent.

Adelaide was the only major market where new listings actually increased over the period, albeit it by a minor 0.8 per cent rise.

The South Australian capital was one of the strongest housing markets over 2022 and the few locations where house prices rose for much of the year.

Competition has remained high for well-priced homes perceived as “ticking all the boxes”. Picture: Julian Andrews

Mr Christopher said the tighter supply of new listings could put a floor under property price falls.

“Distressed listings activity, while up for the year, still remains at relatively benign levels and indeed stabilised over the December quarter,” he said.

“Until we see a major surge on distressed activity, I really doubt some of the more calamitous predictions of a housing crash in 2023 will play out.”

SQM Research recorded 6,210 dwellings selling under distressed conditions. This remained well down on pre-Covid levels of approximately 13,000 dwellings.

Mr Christopher noted that market conditions for sellers would be more challenging if the Reserve Bank increased the cash rate to over 4 per cent.

Originally published as Plummeting listing levels present home seekers with new hurdle over 2023