Signs the strength of the seller’s market is starting to ease as property listings across Australia rise

There are signs that some of the heat is starting to come out of the seller’s market, as an increase in the number of properties for sale gives homebuyers more choice.

While sellers still have the upper hand for now, PropTrack director of economic research Cameron Kusher said buyers are starting to enjoy better market conditions.

“We appear to be witnessing the first signs of a shift from an extreme seller’s market to one which is slowly moving towards more balanced conditions between buyers and sellers,” Mr Kusher said.

The latest PropTrack Housing Market Indicators Report showed strong buyer demand continued to drive high volumes of sales at rapid speeds in November, with all states finally out of COVID lockdowns.

But Mr Kusher said there were signs some of the strength in the market is easing, with the number of views per listing on realestate.com.au falling from record levels, and enquiries to agents easing.

“We are still seeing many active buyers, but for the first time since the pandemic began, the strong ramp-up in new listings has given them more choice,” he said.

“That sense of urgency from buyers is not as extreme because there is a bit more choice.

“Buyers continue to outweigh sellers in the current market, but the gap is narrowing, meaning the strength of the seller’s market is softening.”

Following the seasonal slowdown over the Christmas and New Year period, Mr Kusher expects the shift in market conditions to continue in 2022.

“Demand is expected to ease from its strong levels, fewer disruptions due to lockdowns should lead to a consistent supply of new listings, and price growth is expected to slow,” he said.

“Assuming lockdowns don’t return and there remains a heightened volume of new listings over early 2022, then many people will have a better opportunity to buy, and selling conditions won’t be tilted as far in favour of the sellers.”

Reserve Bank keeps rates on hold

At its final meeting for the year on Tuesday, the Reserve Bank of Australia board kept the cash rate at a record low 0.1%.

RBA governor Philip Lowe said the Australian economy is recovering from the setback caused by the Delta outbreak of COVID-19.

“The emergence of the Omicron strain is a new source of uncertainty, but it is not expected to derail the recovery. The economy is expected to return to its pre-Delta path in the first half of 2022,” Mr Lowe said in a statement.

At its meeting today, the Board decided to maintain the current policy settings – https://t.co/NQw9tCuc7b

— RBA (@RBAInfo) December 7, 2021

Mr Lowe said housing prices have risen strongly over the past year, although the rate of increase has eased over recent months.

“Housing credit increased by 6.7% over the past year, but, more recently, the value of housing loan commitments has declined from high levels.

“With interest rates at historically low levels, it is important that lending standards are maintained and that borrowers have adequate buffers.”

Mr Lowe has warned borrowers to prepare for interest rates to rise, but not before 2023 at the earliest.

On Tuesday he again said the board will not increase the cash rate until actual inflation is sustainably within its 2-3% target range, which will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently.

PropTrack economist Paul Ryan said the RBA reaffirmed its expectations that it would be some time until the economy and inflationary pressures were strong enough to warrant interest rate increases.

“The RBA doesn’t meet again until February, which is when their next forecasts will be revealed, so they will be waiting to see how the economy recovers from the COVID-19 Delta lockdowns, and what happens with the new Omicron strain before giving updated guidance,” Mr Ryan said.

Homes selling in record time but demand easing

Buyers continued to snap up properties in November with the median number of days a property was listed on realestate.com.au before selling remaining at a historic low of 30 days, compared to 44 days at the same time last year.

Mr Kusher expected demand to remain heightened after the Christmas/New Year slowdown, but said it would not be as strong as it had been over recent months.

“While the seasonal increase in days on site is coming, with demand easing from highs and the supply of stock increasing, we would expect that properties will likely start taking a little longer to sell than they are currently once the market returns in 2022,” he said.

After reaching a record level in October, the average number of views per listing on realestate.com.au fell by 9.0% in November.

The volume of email enquiry to agents dropped by 22% after the end of lockdowns, Tuesday’s PropTrack report showed.

Mr Kusher said while the increase in listings had given buyers more choice, demand for properties had also slowed.

“With a bit more freedom it seems there are other things to do now rather than just purchase property,” he said.

Weekly search volumes on realestate.com.au continued to ease from their recent highs, falling by 5.0% last week, but remained at historically-high levels.

Preliminary sales volumes dipped by 1.7% last week but remained 11.6% higher than the same week last year.

“With all states out of lockdown, we are seeing a lift in sales,” Mr Kusher said.

“However, with more stock available for sale and some signs of weakening demand, the end-of-year ramp up in sales this year is seemingly not as strong as it was last year.”

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