Housing affordability crisis on the horizon

The total number of houses added to the property market has fallen sharply since 2019 following a long slide over the past decade.

Rising stamp duty costs because of rising house prices are a likely deterrent for many, forcing homeowners to hold on to their properties longer.

Lockdowns may be causing listing pressure in the residential marketplace but that continues a trend of fewer and fewer properties being advertised, with experts warning affordability may further worsen as a result.

The total number of properties added to the nation’s housing market has fallen sharply lower since 2019, following a far longer overall trend over the past decade. Numbers last peaked in 2011 at the peak of the Global Financial Crisis recovery, with data from realestate.com.au showing a 34.9 per cent national decline in advertised properties.

Pandemic and lockdown uncertainty has only exacerbated the already existing problem, said Cameron Kusher, REA Group’s executive manager of economic research.

“What we see at the moment is the existing stock is actually dropping faster than the new stock being added,” Mr Kusher said.

“So, stock that previously wasn‘t selling is transacting because there’s so many people wanting to buy a property but there’s nothing coming onto the market.

While Mr Kusher believes there will be a significant bounce in new listings as Sydney, Melbourne and Canberra emerge from lockdowns, reflecting pent-up demand, he doesn’t believe it will be enough to get listings back to pre-pandemic levels.

The long-term trend is most evident in Tasmania, where the number of properties being offered on the market has fallen by 60.6 per cent over the past decade. Listings have also fallen by about a third in NSW (down 38.1 per cent), Queensland (down 37.6 per cent), South Australia (down 32.3 per cent) and Victoria (down 32 per cent). The smaller markets of Western Australia (down 24.4 per cent) the Northern Territory (down 19.4 per cent) and the ACT (down 2.3 per cent) have fared better.

The realestate.com.au data does not reflect new builds being offered.

SQM Research managing director Louis Christopher said rising stamp duty as a reflection of rising prices is likely acting as a deterrent for many and forcing homeowners to hold on to their properties longer.

“The truth is transaction costs, as a percentage of property, have also generally risen as well, mainly driven by stamp duty,” Mr Christopher said.

“When you’re getting to the point where in a number of cities now you can easily spend six figures on stamp duty, that turns people off deciding to move house, deciding to upgrade, deciding to downgrade – that’s a lot of money.

“We do believe that stamp duty may well be having an influence on the level of listings activities that we’re seeing in the marketplace – numbers have definitely been falling for a long period of time now. This is also happening through normal cyclic movements in the market.”

CoreLogic’s research executive Tim Lawless said the market would likely favour sellers for some time as low listings creates FOMO (the fear of missing out). This will ultimately result in less buyer negotiation, less discounting and buoyant auction clearance rates.

Real Estate Institute of Australia’s Adrian Kelly fears there could be a new wave of attrition from the industry, as new agents signing up to take advantage of the strong price growth realise how hard it is to gain listings.

“Pretty much what’s happening is that the same number of new people who are entering the industry is the same number of people who are leaving the industry as well,” Mr Kelly said.

“The problem is you can’t kind of cut a house in half. Unless you make two listings out of that house at some point, someone needs to go hungry.”