Home listings pick up as residential market turns positive

Sydney and Melbourne are leading a late spring charge of property listings as vendor expectations lift.

Auctioneer Damien Cooley in action in Sydney’s Epping. Picture: James Gourley

The resilience of the housing market has been demonstrated, with listings coming back in the last two months as prices hold in most major capital cities.

The lift in listings, reported by research house SQM Research, is being driven by the gateway markets of Sydney and Melbourne, as the latter comes out of lockdown.

The surge sets the scene for a late spring selling season that could flow over into December and spur the housing market early next year, says SQM.

“It seems like we are moving back to the usual spring selling season with all capital city listings rising in October,” said SQM managing director Louis Christopher.

“Melbourne in particular, has bounced back in a big way after the relaxing of stage four restrictions. In fact, we are expecting another big rise in listings during the month of November for Melbourne.”

National residential property listings increased in October by 6.5 per cent, up from 289,566 listings in September to 308,413.

That is still down 3.3 per cent on a year ago, but trends are positive in the two largest markets.

Melbourne recorded an increase of 22 per cent and Sydney a 13.6 per cent rise on 12 months ago, while other capital cities recorded declines on last year.

The easing of pandemic-related restrictions appears to be partially driving the market.

All capital cities recorded increases in property listings over the month with Melbourne posting the highest increase of 26.7 per cent.

Both Sydney and Canberra also posted large increases of 8.4 per cent each and Hobart posted 8.2 per cent increase.

Brisbane recorded a 4.6 per cent increase, Adelaide 4.5 per cent and Perth 4.2 per cent. Darwin recorded the smallest increase of 0.6 per cent.

Vendors are also responding to stronger markets. Capital city average asking prices increased 1.8 per cent for houses and 0.1 per cent for units over the month to November 4. Average asking prices are now $563,900 for units and $989,100 for houses.

Compared to a year ago, capital city asking prices lifted by 5.2 per cent for houses but fell by 1 per cent for units.

UBS economist George Tharenou said September residential approvals had also rebounded much more strongly than expected and he has boosted his forecasts for dwelling commencements.

He noted CoreLogic dwelling prices rose 0.2 per cent in October, the first increase since April. Across the prior five months, the peak-to-trough decline in this COVID cycle had been small.

“While this is better than our initial expectations when COVID struck of a 5 per cent to 10 per cent decline, for several months we have already cited upside risk,” Mr Tharenou said.

He now expects positive price growth. The key drivers are Reserve Bank rate cuts having a stronger than expected impact and COVID cases falling towards zero, boosting sentiment, and seeing Melbourne finally exit lockdown.

However, he said some downside risk remains, with the chance of another wave of COVID forcing a return to lockdowns; the expiry of mortgage deferrals next year forcing distressed sales that cause a double-dip of prices; and no migration causing a drop in underlying demand, especially as incentives for new housing and first home buyers expire next year.

First homebuyer loans “skyrocketed” again, to a cycle high share of total loans at 25.2 per cent, amid the very significant policy stimulus.

“If sustained, this suggests housing credit growth will continue to tick-up. Overall, despite the strength of housing, the RBA will still likely cut rates (on Tuesday), given their material shift towards focusing on the labour market as a policy driver,” Mr Tharenou said, ahead of the central bank decision.