Buyers in the box seat if spring brings flood of new housing stock

By Jonathan Chancellor
Wednesday, 10 August 2011

Buyers look set to be in the box seat as a fresh spring listings potentially overwhelm the already burdened patchy market.

The number of national residential property listings increased by 4% during July 2011 to 377,315, according to SQM Research.

Melbourne was the capital city to record the largest increase year-on-year, with stock rising 45% since July 2010.

The national stock level sits 21.9% higher year on year, increasing by 67,785 since July 2010.

“This latest rise in stock levels does not bode well for spring, when seasonally tens of thousands of new listings come on to the market,” SQM Research managing director Louis Christopher says.

“Unless there is a flash interest rate cut by October, house prices will almost certainly head south from here.

“It won’t be a collapse of the market as there are still few forced sellers; however it won’t exactly be pleasant for the sellers.

“Buyers are largely going to be in the commanding position when it comes to negotiations this spring.”

Christopher says the swell in July listings revealed potentially that sale stock had not yet peaked for the cycle and the May and June monthly declines occurred solely due to seasonality.

Darwin was the only capital city to record a monthly decrease in July in stock, falling by 1%.

Hobart experienced no change in stock, while the remainder of capital cities recorded monthly increases.

Both Brisbane and Darwin recorded the largest monthly increase in stock levels, both rising by 6% to 31,859 and 45,725 respectively.

“No capital cities have experienced a year-on-year decline in listings, with Brisbane recording the least yearly growth – increasing by 16% since July 2010,” Christopher says.

“Melbourne has consecutively experienced the highest level in stock for some time now, and this can be attributed to the large amounts of new residential developments currently being completed in this capital city.”

SQM's weekly list of the most discounted properties in Australia turns up no surprises this week, with no new entries since last week. These properties have been on the market a long time and have been deeply discounted, but even they cannot find buyers in this oversaturated market.

1 Flora Street, Midland, WA, 6056

On the market since: August 16, 2009

Initial asking price: $1.9 million

Current asking price: $850,000

Reduction: 55%

Days on market: 715