Where are all the For Sale Signs?
Why are Sellers Holding off?
It’s the million dollar question every real estate agent & buyer is asking, where are all the listings? Venture out on a Saturday & you’ll see a force of buyers drifting between the same open inspections, & it’s not uncommon for our agents to be selling property in suburbs that have just 2 or 3 listings available. My wife & I happen to be actively looking to buy, & we too can feel the frustration.
The real estate atmosphere is strong due to the high demand from buyers, thanks to record low interest rates & strong economic fundamentals such as low unemployment rate.
Auction clearance rates continue to perform admirably in capital cities. However, the number of properties going under the hammer is considerably fewer than last year.
In Adelaide we are seeing consistent clearance rates as a percentage in the 70s where as in previous years, anything over 50% was considered a strong week.
New listings are down across the country too; Sydney, Melbourne, Darwin, Tasmania & Canberra are all experiencing a shortage of new listings, while Adelaide & Perth have seen modest rises in new stock with a 0.9% and 6% growth respectively. Queensland is the strongest market regarding new listings with an 11% upswing.
There are 3 main reasons why sellers are holding off putting their property on the market;
The buy before you sell conundrum
For many years, vendors were encouraged to sell their home before they purchased their next property – after all, you didn’t want to be paying 2 mortgages! However, with the shift of the market, many sellers are trying to buy before they sell their property, which in turn is holding up the flow of supply in many markets across Australia.
Price growth expectations are seeing potential homeowners sitting on their hands with the anticipation that their property will accrue more capital growth.
Investors short of choice
Savvy investors are fluid in the investment choices they make. Traditionally they would sell if another asset class such as the share market, term deposit & bonds offered a higher return on investment. However these other asset classes are underperforming at present. The combined capital growth & income return for residential property in Australia & the security of bricks and mortar are currently more attractive to investors
than alternative investments.
However despite these 3 limitations in listings, homeowners are still reaping the benefits of active markets; with Sydney (11%), Melbourne (8.5%), Brisbane (3.1%), Adelaide (3.6%), Canberra
(6.1%) & Hobart (2.1%) all experiencing house price growth.
While investors may not be selling, they are still buying. Investor activity will continue to move as investors look to grow their portfolios, which will bode well for homeowners putting their property on the market this Spring selling season. First home buyers will also be drawn back into the market after August’s rate cut to take advantage of mortgage affordability.
When considering whether now is the right time to sell, do your research to understand what the level of competition is in your local area & some homeowners who have not had their property appraised in the last 12 months will be surprised to see the current worth of their home.
Original Blog Post: Sarah Lefebvre ljhooker.com.au on September 21 2016 (for Grant Harrod, CEO LJ Hooker)