New home listings tick up but is what’s selling what you want?
There's so much chatter around the property market right now, it's hard to get a good take on it.
Prices are too high, they say. But seriously, haven't they always been? Borrowers are to blame for taking on too much debt, we're told - but is that fair? Lenders are copping it for lending out too much, but how does that stack up given such high prices? Then the government has to answer to the media for not offering more help. I'm just not sure what else they can do.
This creates reams of news headlines, which clearly benefit some. Every single time the RBA or APRA mentions housing, the media goes into Armageddon mode. What's new?
The truth is there are many ways to dissect the property market, from the amounts we're being asked to pay for a home, to the rates we pay on home loans and on to the limited home offerings available to us.
But too much of the wrong info, like so much else in our lives right now, only serves to confuse the matter. This is why it's important to do your homework and not get spooked by a lot of the 'fake news' out there.
Home loan research 101 - what's for sale?
A good place to start is to know not only what's selling in your area but how much of it is on offer. This is why researchers track what’s listed on the market. A limited supply of homes typically leads to price spikes because the numbers of buyers in a hyped up marketplace outpace the homes they have to choose from. That's the simple part. But how can we make sense of all the stats?
Listings of properties for sale have been down quite a bit in 2021, though 'new listings' have ticked up of late, almost 12% up for the month of September, says SQM Research. (New listings have been on the market less than a month). This should be good news because it widens the pool of what's available and presumably spreads out all those eager fear-of-missing-out buyers.
The problem is the numbers are still down historically speaking. In fact, CoreLogic's data shows that listings are still below five-year averages in every capital except Adelaide, Perth and Darwin.
Sydney’s new listings are 4% below the five-year average for this time of the year, while Hobart and Brisbane listings remain 9.6% and 3.8% below the five-year averages.
More property but is now the time to jump in?
Yes, it's perhaps a positive that there are more for sale signs going up. It suggests a rise in consumer confidence and that more sellers are willing to test the waters.
However, it's important to note that "old" listings or those that have been on the market for more than 180 days have dropped by 4% in September and were down by 54% over the year, according to SQM.
In fact, old listings are down significantly around the major capitals and this matters. It reiterates to us that nothing much sits on the market for very long in 2021, which means buyers are probably rushing, home loan finances are being fast-tracked and those with less buying clout and still scrambling their initial deposits together are most probably missing out.
A quick example can help better explain the current rush. Let's take the popular north shore area of Sydney where prices have been climbing for years. This is a high demand area, close to popular schools and with plenty of parks and family friendly facilities. It's a massive stretch of homes and so as you’d imagine, some suburbs have led others on price growth over others. The lower end of the north shore is closer to the CBD, so it stands to reason that homes in this section always sell.
In this hot market though, the whole area has been under the buyer pump because of a distinct lack of other options across the city. The shortage of available homes in the north has two parts: it's partly to do with not many new homes coming onto the market, sure, but also because the turnover of older homes has seriously stagnated.
As property firm Herron Todd White reports, while a hot property market "has been welcome news for property owners in these (north shore) areas, it does have the consequential effect of raising the transactional costs of a possible move for owners wanting to remain in the area. The old adage of buying and selling in the same market rings true at the current time, with constantly reported record sales prices flooding your letterbox from local selling agents."
In short, nobody wants to move! And the pandemic seems to have only exacerbated this issue because sellers don't know what's next for Sydney's economy overall. Moving out means finding somewhere new to go, and with few housing options, let alone pricing options, you can hardly blame those sitting pat.
How well do you know your preferred suburb?
So, all this is to say be sure to analyse whichever area you're keen on. How many properties are listed there? How long have they been on the market? Of the type of home you're after - be it a unit, a townhouse or a four bedroom terrace - how many are for sale in your area of interest? Are there a lot of buyers focused on hat type of property right now?
Continuing with our northern Sydney example, Crows Nest is a popular spot and by SQM's figures, 176 homes were on sale there in September, 100 of which were on the market for less than 30 days. And old listings in Crows Nest? Just 20. In other words, it's incredibly competitive and maybe worth waiting until more homes come on, or at least a few more buyers drop out. It's also an area where units have been springing up in nearby St Leonards. So a buyer who's willing to compromise on their preferred spot, can sometimes go for a smaller home just one suburb over and maybe, just maybe, sneak in on a less heralded property.
Our Mozo experts have selected the cheapest home loans of 2021 to help on your property journey.
But if you're ready to hit the buying scene, we also have some tips about how to beat the competition. Good luck!