The Australian real estate market often experiences a flurry of activity in the spring as sales and listings rise. However, spring 2022 is
anticipated to be quite different due to rising mortgage rates and deteriorating consumer sentiment.
Here is what to expect.
1. There will be an increase in auctions and new listings.
A newly marketed property for sale—one whose marketing campaign began within the previous 28 days—is referred to as a "new
listing." They are the stream of brand-new homes coming on the market or the new homes that appear when you reload a listings page.
Although the number of new listings is on the decline this year, data from CoreLogic shows that a rise is imminent in the next few weeks. CoreLogic's RP Data Platform is a key indication of changes in the number of listings. At the end of August, the number of Comparative Market Analysis (CMA) reports produced on the platform grew by 8.2%. In other words, the anticipated spring lift in new listings is about to take off.
These spring listings are also expected to trickle through to the auction market. The number of expected properties waiting to be auctioned off typically lifts from September, and continues to rise through to the beginning of December.
2. Each region will experience its own version of seasonal market growth.
The national average for new listings between winter and spring in the 5 years prior to the pandemic grew by 19.6%. The seasonal spike
depends on the city. Those with cooler climates often face a greater seasonal effect than markets in more temperate regions. Colder cities being Canberra (42.4%), Adelaide (33.7%), and Hobart (31.6%).
The average number of new listings in Adelaide Hills has doubled between 2015 and 2019. Additionally, through the spring, there is a
noticeable increase in new listings in several regional, lifestyle regions including the Mornington Peninsula, Surf Coast, and Huon Valley.
Due to the fact that Adelaide's property values have just recently reached their peak, many homeowners may be interested in "cashing
in" during the spring selling season. The CoreLogic Home Value Index for Adelaide fell by 0.1%, however values have increased by about 45% since the start of COVID in March 2020.
3. This spring won’t be like last year.
It is unlikely that this year’s spring sales season will be as strong as last year’s. CoreLogic calculates that there were 154,294 new
listings during the spring of 2021. This is greater than the 144,985 springtime average from the previous decade. A record number of auctions were conducted at the end of 2021, with the week ending December 12th seeing the most ever (4,981).
Given the increase in COVID cases and prolonged lockdowns across the nation, it is likely that there were more postings concentrated near the end of 2021. This is because those months would have been challenging for sellers. In other words, as soon as lockdowns ended, pent-up demand from homeowners was released, forcing sellers to play "catch-up." Additionally, through the spring of last year, national annual capital growth rates averaged 21.3%, giving vendors a strong incentive to "cash in" on price increases.
Market conditions are substantially different as we approach spring 2022. Because of rising interest rates, buyer enthusiasm is waning,
homes are taking longer to sell, and sellers are having to give bigger price cuts to close transactions.
4. Long-term homeowners are more likely to sell.
The average hold times of sold properties are rising, which is an intriguing sign of a declining property market. This is due to the
increased risk of loss posed to recent buyers when selling during a downturn. In comparison, those who have owned their property of a longer period are more likely to gain, regardless of the market’s current situation. Home values have reportedly climbed by more than 380% over the previous 30 years, and have generally trended higher over time.
National property values have only increased by 4.7% over the past 12 months, with annual value changes likely to be in negative by the
end of the cycle.
5. Sellers will need to pay attention to buyer feedback and be flexible with prices.
Although activity increases for both buyers and sellers during the spring selling season, this does not indicate a seller's market.
Properties are taking longer to sell. The average days on market has risen to 33 in the past 3 months from just 20 in November 2021. Sellers, or vendors, are more likely to lower the asking price of their homes. This is also known as ‘vendor discounting’. Nationally, vendor discounts are resting at -4.0%.
Correspondingly, the average auction clearance rate is consistently below average throughout the major auction markets.
As this spring and early summer is anticipated to be a more competitive selling environment, serious sellers will need to be realistic about their pricing expectations and make sure they have an effective marketing campaign for their property.
Because of rising mortgage rates, buyers may not be able to borrow as much as they could a few months ago – which has contributed significantly to the price drops. The average owner-occupier home loan amount has decreased countrywide. Borrowers can see greater restrictions as a result of the anticipated increase in the cash rate in the upcoming months.