Spring Listings Surge
Homeowners and investors are bracing for a surge in property listings over the next few weeks, as the spring selling season threatens to overwhelm an already weakened residential market in Australia. According to one of the country’s top property analysts, the market is already burdened with about 30,000 more properties than usual, and the upcoming spring season typically sees a 30-40% increase in listings.
“We’re going into a period of increased supply,” says Louis Christopher, CEO of SQM Research Group, in an interview with The Australian’s The Money Puzzle podcast. “Those property owners who have expectations over and above the market, I can assure you now they’re not going to sell in this market. There’s less demand out there, and now we are seeing sellers just piling up against each other.”
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Christopher’s warning comes on the heels of the first major housing developer collapse this cycle. The Bathla Group, which had 15,000 houses and apartments under construction in Sydney, entered administration this week. Property analysts have long warned that a combination of high interest rates, the removal of negative gearing on new properties, and higher capital gains taxes would send shockwaves through the market.
Banks like ANZ have already forecast an 11% drop in nationwide house prices, with Sydney expected to see a 14.5% decrease. Prices have been falling by about 1% per month recently. Meanwhile, building costs have jumped by 6% over the past year, putting further pressure on home builders.
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For homeowners, the downturn means higher mortgage costs and declining property prices. With 280,000 homes currently on the market, many will have to wait to sell. The total transaction cost of buying and selling a property in Australia can amount to about 7% of the property’s value.
Investors, too, face challenges. To cover higher mortgage rates, some may consider increasing rents. However, Louis Christopher warns of “demand destruction” and questions whether property owners can push through significant rent increases. He notes that there’s no evidence of rent increases in the most recent data.
