Slim pickings for buyers, as housing market stuck in Catch 22

If you go looking for a home to purchase this spring, the choices will be pretty much thin on the ground.

In Sydney, house values are rising while the available stock is falling. Picture: Toby Zerna

If you go looking for a home this spring, the choices will be thin.

There is an element of “property fatigue”, say some market experts, after three years of rapid-fire sales that saw housing prices in Sydney soar by 61 per cent, and by 42 per cent in Melbourne.

“People will sell, but they won’t sell until they see something to buy,” said Melbourne buyers agent David Morrell, noting that this mindset had created a “Catch-22’’ in the market.

“If you look in the top six suburbs, there has been 50-60 per cent less transactions from a year ago,” Mr Morrell said.

He said some home owners in popular parts of Sydney and Melbourne were taking advantage of the lack of stock, and were bringing the sale of their properties forward. “It could be a gamble though, and you will probably end up renting.”

The number of homes advert­ised for sale have fallen in most capital cities as hefty stamp duty costs on the steeply higher housing values, uncertainty around superannuation and a flight to the relative safety of bricks and mortar keeps vendors from hanging out the For Sale sign.

In Sydney, the number of newly listed homes fell by 27 per cent over the past year, while in Melbourne advertised numbers fell 16 per cent, said researcher CoreLogic. Brisbane listings fell by 5 per cent; Adelaide was down 11 per cent; Darwin down 26 per cent; and Canberra homes advertised were down 2 per cent. List­ings rose by 12 per cent in Hobart, and by 5 per cent in Perth.

Spring is always a good test of the market, said CoreLogic head of research Tim Lawless. “The question is: is there a fall in buyer demand or are the lower sales and listing numbers simply due to less stock?”

He said there was usually a 20 per cent lift in sales and listings in September and October.

In Sydney, values were still rising — housing prices rose 9 per cent in the year to July 31 — when transaction numbers were falling, suggesting there was a shortfall in supply, Mr Lawless said. Tighter bank lending conditions were also slowing the market, he said.

Some of the wealth created off the back of the Sydney/Melbourne boom was being diverted into buying a holiday home rather than trading the principal family home, Mr Lawless said.

Brian White, the chairman of agent Ray White, said the expect­ation that interest rates would stay low gave buyers confidence, while any further rate cuts would help at the margins.

Earlier this month, the Res­erve Bank cut the cash rate to a record low of 1.5 per cent, with some economists tipping that rates could go as low as 1 per cent.

While listing numbers were down compared with last year, Mr White said inspections and appraisals had been rising, which pointed to more activity in spring.