Homes are sitting on the market longer as vendors refuse to budge, even with more price drops on the horizon
Homes are taking longer to sell as vendors refuse to meet the market, even as more price falls are forecast, according to a new report from SQM Research.
Houses are sitting on the market longer, with national residential property listings up 7.4% in February, according to the report.
The rise in property listings came as investment bank Morgan Stanley said that home prices were still on a downward trajectory despite a respite in February, The Australian reported.
The tough market conditions were also apparent in the slowdown in residential construction. In January, building approvals hit their lowest level in more than a decade, with detached house approvals falling 13.5% and multi-unit approvals tumbling by 43.7%, according to the Australian Bureau of Statistics.
“Distinct lack of intent”
Louis Christopher, managing director at SQM Research, told The Australian that sellers were yet to clearly commit, as the direction of prices was still uncertain.
“Despite the housing downturn, there remains a distinct lack of intent by many sellers to come to the market and meet the market,” he said. “This clearly reveals itself by the lower-than-average counts of new stock entering the market for February, and what sellers are there continue to hold the line on their asking price.”
Christopher said sellers needed to understand that the market was unlikely to meet their asking price right now.
“Only a minority of sellers recognise this, [which is] why there has been a rather large rise in older listings,” he said. “However, the lack of distressed selling activity also suggests little panic by sellers.”
National property listings reached 231,039 properties in February, up from 215,144 in January. The rise was spurred by a 67.35 surge in new listings over last month to 70,948, The Australian reported.
While this kind of rise is expected as the market kicks into gear after the holidays, it was below the average of new listings for February since 2017, which sits at 75,460.
Sydney posted a 16.2% rise in listings, while Canberra recorded a rise of 21% and Melbourne saw a 12.6% rise, The Australian reported.
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The SQM report found that older listings continued to rise. Property listings more than 180 days old rose by 5.2% in February and by 30.3% over the year.
Hobart, Sydney and Melbourne posted jumps of 217.9%, 71.1% and 39.7%, respectively.
More declines to come
While national home prices crept up 0.18% in February, Morgan Stanley predicted further price declines over 2023 as interest rates continue to rise and credit tightens.
The bank said that turnover in February was much weaker than a year ago and expected the autumn selling season to remain subdued, according to The Australian.
“We expect the housing outlook will remain challenging throughout 2023,” Morgan Stanley said. “Credit conditions look set to tighten further – we forecast the RBA to raise rates in March, April and May to a 4.1% cash rate, with the rolling over of fixed rate mortgages having a further impact.
“This will keep credit conditions constrained and therefore prices under pressure,” the bank said. “Our view remains for a 20% peak-to-trough price decline and, as such, we believe we are around halfway through this current price correction.”
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