Updated: Jan 7
The last month has seen a wave of new listings come to market, but more surprising is that the demand has outweighed the rise in new listings. A very positive stabilising force within the market amid the economic uncertainty surrounding COVID-19. Corelogic came out this week and presented their findings that although the Australian property market saw its first month-to-month decline since June 2019 that there has been a very strong absorption rate for new listings across the past 28-day period.
The CoreLogic data consider a listing as ‘new’ if it has not been on the market for the past 72-days, whereas total listings consider all stock advertised on the market. These numbers are presented on a 28-day rolling period.
The 28-days to the 31st March were reported to see new listings rise 22.4% on the previous period, yet total listings still fell -2.9%. These figures show us that although a wave of new stock coming onto the market, buyers demand outweighed the influx of additional stock. Shown by the graphs provided by CoreLogic below.
So why is this important? With the loss of jobs and reduced incomes of many families, many property owners may be put into situations where their properties become distressed, seeing lenders list a larger volume of these properties to market to recoup their equity in them as the owners can longer service their debt. This has the potential to put downward pressure on property prices, especially if the buyer demand isn’t there to match the likely rise in new listings.
This is a part of the reason why banks have made repayment holidays on mortgages available. With much of the banks' profits derived from making loans to the housing market, if property values decline, so will their profits.
So where is the demand coming from? It’s important to note that the 20.4% jump in sales volume in the month of May is from a low base, to begin with. With Aprils sales volumes the lowest recorded since 1991. More importantly, though is the consumer confidence within the market. The ANZ Roy Morgan weekly consumer confidence index has gone up for 9 consecutive weeks, up 50.5% since the bottom of late March, and just 9% lower than before Australias first confirmed COVID-19 case in January. It’s clear the easing of restrictions has given consumers more confidence about our economic outlook, their personal situations and potential property purchases.
The CoreLogic report also pointed out that the job losses which have been experienced are mainly in industries that are less likely to have mortgages, and will more likely have an affect peoples ability to pay rent. With 27.1% of payroll jobs lost across the accommodation and food services, and 19% within arts and recreation sectors. ABS data shows that people in these industries are more often renters than homeowners.
In all these new figures paint a much nicer picture then was expected just a few months ago in regards to the Australian property market, showing a relatively stable housing market for homeowners, but a more difficult situation for lower-income earners.
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