Over the first five months of 2023, national property prices increased by 1.5%. Aside from Darwin, all capital cities saw prices rise in May, with Adelaide and Perth sitting at peaks.
By comparison, national home prices were 2.4% lower over the 2022 calendar year. Brisbane, Adelaide, Perth and Darwin recorded growth but falls occurred in all other capital cities.
Not only have prices begun to rise this year but sales volumes have also increased significantly.
Preliminary sales, which are a count of agent advised sales, were below 2020 and 2021 volumes throughout the second half of last year. They ended 2022 well below the volumes recorded in 2020 and 2021, and were similar to 2019 levels.
So far this year, there has been a significant rebound in preliminary sales with sales in May 2023 just 0.6% lower than last year and higher than both 2019 and 2020. Albeit they remain lower than 2021 volumes.
Although prices and sales are increasing, we are yet to see a rebound in the supply of properties coming to market.
New stock coming to market is much lower than last year
The number of new properties listed for sale in May 2023 was 16.8% lower than May last year, while the total stock listed for sale was 3.3% higher than a year ago. Although total listings were higher over the year, historically, they were still very low, sitting 30.5% below their decade average.
When you consider how people search for property, total stock on market is initially important. When they begin their buying journey, potential buyers look at all available properties and if those listed are not suitable, or the vendors have unrealistic price expectations, they will disregard them.
From that point onwards, potential buyers are waiting for new stock to become available. Currently, buyers are faced with very few purchasing opportunities due to the lack of new listings on the market.
Ideal selling conditions are when prices are increasing, demand is either strengthening or strong and there is little competition for sale, which is the market we’re currently seeing.
At the beginning of 2023, we had forecast that national property prices would fall between 7% and 10% and many others were forecasting similar if not larger falls.
The reason these falls haven’t come to fruition is due to the rebound in sales through the first five months of this year and the very low volume of stock available for sale.
More buyer choice in spring could lead to price falls
If there was a significant uplift in the volume of stock listed for sale, buyers would have more choice and may be able to negotiate greater price discounts than they currently can. This could lead to price declines resuming.
During this time of year – the winter season – is when many vendors stop listing properties for sale, choosing to wait until the spring selling season.
If vendors hold off until spring, there is a possibility there will be significantly more stock available. Historically, the number of new listings added to the market climbs throughout this period.
Over the decade to 2022, there was 19.7% more new listings on average in spring than there was in winter. Last year was the only exception, and if we look over the decade to 2021, the average increase was 21.4%.
More stock for sale in spring leads to more negotiating power for buyers and could see the recent rebound in prices abate. In fact, auction clearance rates typically fall throughout spring as auction volumes increase.
What we know for sure is that property prices are rising now, sales volumes have increased significantly compared to late 2022 and there is very little stock available for purchase. Some vendors are likely to recognise these conditions and consider bringing their selling intentions forward. Waiting may mean facing increased competition and the uncertainty that selling in spring could offer.
Source: REA Group
