The number of property listings on the market has jumped by 4% in the past month, according to new data from SQM Research, dashing hopes that the market had reached its bottom following a drop in the number of listed properties in June.
The figures come as the property market is urging the Reserve Bank to slash interest rates at next month’s meeting, with the building and construction industry now suffering more insolvencies and pressure from financers.
The new SQM data shows listings rose 4% to a total of 377,315 across the country, despite a 2% drop in June. Over the past year, stock has risen by 21.9%, or by 67,785 properties. Managing director Louis Christopher says the result was surprising.
“We thought the result would be more in line with seasonality, but this is a big jump again. It’s not a good position to be in as we go into the Spring selling season.”
Some analysts believed the reduction in listings would put more upward pressure on prices. However, the most recent figures suggest that prices are set to be subdued even into the Spring selling season, when even more listings are expected.
Darwin was the only capital city to record a decrease in stock, falling by 1%, with Hobart recording no change at all. The largest increases were in Brisbane and Darwin, which saw stock rise by 6% in both cities.
The largest year-on-year increase can still be found in Melbourne, where listings have risen by 45%. Christopher says stock listings have now “well and truly” reached 2008 levels.
“This is a bit of a negative for the market, we have a lot of stock out there, and given the recent finance approvals I think we’ll see continued pressure on prices from here.”
Yesterday’s data from the ABS showed the total number of new housing commitments remained flat in June, while the total value of commitments dropped by 1.4%.
“This really shows that vendors have to get price points right when they’re selling property. They have to make it sell well and make sure that’s right, given the chances of the market falling even further.”
Business owners and mortgage holders are pleading with the RBA to cut interest rates at next month’s meeting. Yesterday the Commonwealth Bank and Westpac slashed rates for fixed-rate mortgages, and markets are expecting a cut.
Christopher says it would be difficult to say how a cut would impact on the building industry right now.
“I’ve noticed since yesterday things have changed. Yesterday the market was pricing in a 50 basis point cut by the RBA’s next meeting. It’s calmed down, but overall the market is betting that the RBA will cut rates.”
“All bets are on a cut before Christmas. If that were to happen, that would certainly provide some optimism for the market.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
