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A shortage of homes for sale in Sydney has helped limit falling prices as sellers hold off listing properties until the real estate market improves.
The number of properties listed for sale in January was down by more than a third year-on-year in some regions, and by more than 10 per cent across most of the city, Domain data shows.
The limited number of homes for sale early this year has made it hard for buyers to purchase properties.Credit:Rhett Wyman
New listings in most regions were also lower than in January 2018, when the market was in the midst of the previous downturn.
These lower listing levels have led to increased competition on the properties that are for sale, despite rapidly rising interest rates. Sydney recorded a preliminary auction clearance rate of 78 per cent on Saturday, its highest in a year, on CoreLogic data.
Buyers in the Baulkham Hills and Hawkesbury region have seen the biggest drop in the number of homes to choose from, with new listings in January down 36.9 per cent year-on-year. New listings are properties marketed for 30 days or less.
It was followed by Blacktown (-33.6 per cent), Parramatta (-25.7 per cent) and the North Sydney and Hornsby region (-25.3 per cent). The outer south-west had the smallest drop, with a decline of 4.7 per cent.
The total number of homes for sale in January, which includes those still on the market from last year, was down in most regions. However, there had been a build up in stock in areas like Sutherland and the south-west, where the total number of homes for sale was up 2.1 per cent and 3.6 per cent year-on-year.
Sydney’s outer south-west had the largest increase in total listings, up 12.2 per cent on the previous year.
Domain’s chief of research and economics Dr Nicola Powell said sellers across Sydney were avoiding listing their homes during the downturn, which was helping to limit price declines.
“Sellers don’t want to sell in the downturn, they’re waiting to see the impact of interest rate rises,” Powell said. “That’s put a floor under pricing. There is a shortage in some areas. That in itself is helping hold up values.”
There are more buyers than homes on the market in some regions, which is helping slow price declines.Credit:James Brickwood
Powell said buyers may see further price falls in areas where there are more homes to choose from. Only time would tell if there would be an increase in properties for sale, putting further downward pressure on values, she added.
“The areas that are seeing the rapid build up of supply, they’re going to see a greater weigh down on prices,” she said.
ANZ senior economist Felicity Emmett said listing levels were lower than normal for this time of year, which has moderated price falls.
“The lack of stock available will be cushioning the declines in the market at the very least and could, in particular markets, be helping drive some small gains.”
Agents are expecting more listings in the months to come, which will test buyer demand.Credit:Flavio Brancaleone
However, if total supply continued to increase in some pockets, Emmett said that would weigh on prices.
“It’s a basic supply and demand equation. If there are more homes available to buy and fewer buyers, that is going to put particular pressure in those areas.”
Emmett did not expect to see an influx of homes hitting the market in the months to come, despite rising mortgage rates putting pressure on household budgets.
“We don’t think we’ll see an increase in forced sales because unemployment is very low and unemployment is the main reason why people sell their homes … or a relationship breakdown.”
Agents say tight listing levels have left some buyers shocked to be paying a premium price in the downturn.
BresicWhitney chief executive Thomas McGlynn said last weekend’s strong auction clearance rate was proof that limited listings were helping buoy the market.
“It has definitely limited the downfall in prices … we had a stronger clearance rate this week than the same week last year,” McGlynn said.
“It’s very difficult for a buyer at the moment. They’re expecting they are going to pay a fair price only to find themselves in a competitive situation, and they have to pay a premium.”
McGlynn said there had been little pressure for homeowners to sell as rates climbed, but that was starting to change, and could lead to an increase in listings that would test the market.
“There does seem to be more listings coming to market. People are starting to feel a bit more pressured than what they had last year,” he said.
Cooley Auctions’ Michael Garofolo said despite listings growth in areas like Sydney’s south-west, there was still enough buyer demand for affordable properties.
“What I’m seeing in those areas are good inquiries and good [bidder registrations], and it’s just because there is affordable buying out there. A lot of those areas you can get property under $1 million,” he said.
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