Early indicators suggest the flow of new listings is starting relatively softly at this time of year, compared to the seasonal upswing.
It seems vendors are still hesitant to test the housing market at the start of 2023 after a lacklustre spring and summer listings season last year.
By the end of 2022, the total advertised supply was well below average levels, and the new year started with 31.5% fewer properties listed for sale than the previous five-year average, and 2.9% fewer than last year.
What is the likelihood of a seasonal rise in new listings?
Early January to late March is traditionally the busiest period for new listings, followed by Easter week and beyond.
It appears that the relatively mild flow of new listings will continue in the near future.
According to CoreLogic’s RP Data platform, pre-listing activity by real estate agents is down -15.3% over the first 22 days of the month compared with a year ago, suggesting vendors remain cautious when listing their properties.
Although it’s too early to assess whether a pre-Easter increase in listings is likely, the market will need to perform well in ‘week 11’.
When buyer activity remains below average, an increase in new listings could offer more choices to active buyers and potentially push housing prices lower.
A Buyers’ market or is it a transitional market
While stock levels remain low on the market, housing market conditions have changed into a transacting opportunity. This process will need to expand before we see increasing levels of stock stabilization and price stabilization. We are moving from buying first to waiting and selling first.
When prices were rapidly increasing due to the historically low interest rates and easing lending criteria in 2020 – 2022, buying first was the trend. It’s prudent to sell first when you have $370 billion in mortgages due to come off fixed rates this year. You don’t want to find yourself forced to sell or apply for bridging loans.
You should also keep an eye on the days on the market and auction clearance rates. In the December quarter, properties sold by private treaty on average in 31 days across capital cities, and vendors had to adjust their prices accordingly. It’s normal for you to experience this after a two-year market boom.
There has also been a decline in the auction market, with the combined capital city clearance rate finishing the year at 51.9%, well below the decade-average clearance rate of 65.1%.
My predictions are that the property market will vary from one area to another. The high-end market has the greatest wealth, so I anticipate there will be a shortage of stock and little price movement. There will be a mix of consequences, that will open up the transitional market, where most of the sales volume is transacting, such as forced sales, people looking to upsize, selling before buying, and developers being pressured to lower the asking price for new apartments.