With demand heavily outweighing supply, Australia’s home sellers hold the upper hand in the current market, new research shows.
Corelogic Head of Residential Research Eliza Owen wrote this week that dwelling sales continue to surge across Australia in spite of low listings levels.
In the three months to July, CoreLogic estimates there were around 171,100 sales. This is 53.4% higher than what has typically been seen this time of year for the previous five years.
In the same period, there were just 121,200 newly-advertised properties for sale.
This has taken the ‘sales to new listings ratio’ to recent highs nationally, at 1.4 over the three months to July, Owens says.
“The sales to new listings ratio is calculated by dividing the number of sales that have taken place over a given period by the number of new listings added to the market over the same time”, she explains.
“For the past decade, the ratio has averaged 0.9, suggesting for each listing added to market, there was just under one transaction that took place.”
When the ratio is 1, buyer demand and advertised supply is balanced. A ratio of 1.4 suggests strong selling conditions, as there are more sales than new units of supply in the same period.
Owens says that the sales to new listings ratio has been, on average, above 1 since June 2020, which she attributes the swing to various factors, such as:
– low mortgage rates making it easier for buyers to borrow;
– a lift in household savings as consumption fell and financial support kicked in;
– increased financial incentives for first home buyers.
On the supply side, she suggests that the drop is likely to be due to increased numbers of first home buyers, as buyers who already have a home would most likely put it on the market when they are looking for a new home, thus keeping the supply-demand in balance.
Added to that, a combination of lockdowns deterring would-be vendors and hardship assistance keeping market conditions stable has kept new listings low.
She does however, suggest that spring could well bring out its usual uplift, bringing the balance closer to ‘normal’ again.
