Australia’s housing market is facing a potential crisis as new listings remain low and households face the possibility of losing paper wealth worth billions of dollars. According to Tarric Brooker, an Aussie journalist and commentator, the impact of rising rates on housing arrears and compelled sales will not be as swift as some might expect. Brooker believes that it’s not challenging to keep wolves from the door, especially with the leniency of today’s banks and regulators. However, with the latest chart from Corelogic indicating that new listing volumes are not improving, things are continuing to deteriorate.
The recent trend of lower listings is observed to be affecting most regions of Australia, especially the largest capitals. As per Corelogic, listings are currently running 21.3% below the already depressed 5-year average and sitting near the lows that are usually associated with winter. Brooker fears that any rebound in new stock could trigger renewed downwards pressure on housing values, unless the increase was absorbed by a commensurate uplift in buying activity.
Furthermore, Aussie households face the possibility of losing $600 billion of paper wealth, which was never earned, according to Parra Power. The wealth loss, which is easy come, easy go, could result from the continuing trend of low listings and the slow down in the housing market. The lower than average flow of fresh stock added to the market is likely to be a key factor supporting housing values. For the past month, CoreLogic’s Daily Home Value Index (HVI) has shown that in some cities, a lack of new stock has stemmed the decline in values.
According to Corelogic, there is a good chance that the flow of new listings has moved through a seasonal peak. Historically, weeks nine to eleven mark the seasonal high point in the flow of new listings before the trend eases leading into Easter and the cooler months. However, activity across CoreLogic’s RP Data platform, where real estate agents generate reports to prepare properties for sale, has consistently tracked below the levels of the past two years and is once again trending down, indicating that fewer properties are being prepared for sale.
While most areas of Australia are recording a lower than normal number of fresh listings, there are some capital city exceptions. Hobart, Darwin, and the ACT are bucking the trend of lower listings through the first 11 weeks of the year. In Hobart, where advertised stock levels are rising from a low benchmark, new listings are up 6.2% on the previous five-year average and 8.9% higher than the same period a year ago. New listings are 7.5% higher than average in Darwin (but almost 20% lower than a year ago and well below the highs recorded in 2014 and 2015) and 2.0% higher across the ACT (but almost 11% lower than a year ago).
According to Macro Niro, “You guys must be joking. Using Corelogic data to determine market conditions is like using Pfizer data for vaccine safety.” However, as per the current trend of lower listings and the slow-down in the housing market, it appears that Australia’s housing market may be headed towards a crisis.
While some capital cities are experiencing a rebound in new listings, most of Australia’s regions are recording lower than average fresh stock added to the market. This trend is likely to be a key factor supporting housing values. However, the lack of new stock could trigger renewed downwards pressure on housing values, unless the increase is absorbed by a commensurate uplift in buying activity. The trend of lower listings and the slowdown in the housing market could lead to Aussie households losing $600 billion of paper wealth, which they never earned. As such, the future of Australia’s housing market remains uncertain.