Light at the end of the lockdown tunnel as property listings surge

The spring selling season is well underway as the return of in-person property inspections drives a listings resurgence.

The latest PropTrack Listings Report showed a 22.5% monthly jump in new properties listed for sale nationally on realestate.com.au during September.

The result was driven by Melbourne and Canberra, where new listings surged 74.8% and 42.1% respectively, despite in-person inspections only resuming halfway through the month.

Economist at realestate.com.au Angus Moore said the benefits of in-person inspections, as well as the further easing of restrictions, will continue in October.

“The effect of eased restrictions in Melbourne and the ACT was only partly felt in September, as these changes came into effect mid-month,” Mr Moore said.

“We’re going to see the full effect of the change in restrictions in October.”

Seasonal factors also came into play with new property listings up in every state and territory.

“The increases in new listings in September were broadly consistent with the typical pick up we see as the spring selling season gets underway,” Mr Moore said.

Spring selling season kicks off around Australia

In Sydney, new listings rose by 31.6% in September compared to August, led by a surge in listings in the inner west (53.4%) and Northern Beaches (42.4%) regions.

New listings rose 8.4% in Brisbane with growth in most regions. Buyers looking in the inner city and north Moreton Bay enjoyed strong increases in new supply, up 23.7% and 18.9% respectively.

All regions of Adelaide recorded an increase in new listings, with the number of new properties up 5.4% during the month, after a 37% jump in August. The strongest growth was recorded in southern suburbs.

View all capital city listing volumes in the listings report.

Perth recorded a second straight month of growth in new listings, rising 3.2% in September, with the largest growth seen in inner city and north west suburbs.

Hobart recorded its highest level of new listings in six months after a 7.3% increase in September.

Darwin listings bounced back in September, rising 17.4% since August when a snap lockdown prompted sellers to press pause.

Mr Moore said despite the September surge in new listings, buyer demand still far outstrips supply.

“We continue to see really strong demand, as we have through most of 2021, from buyers into a fairly limited pool of listings, which makes conditions very attractive for sellers,” Mr Moore said.

Total listings rose 3.1% nationally during September, but remain 21.8% lower than a year ago, with supply particularly tight in the regions.

“During COVID there’s been a trend of people moving to the regions,” Mr Moore said.

“What that’s meant is that there has been a big uptake of the available supply by people moving out there and we haven’t seen new supply come online to replace that.”

Total listings in regional areas are down by almost a third (32.3%) compared to the same time last year, while capital city listing volumes have fallen 9.7%.

“It’s a combination of in some markets very restricted new listings because of lockdowns, so there just hasn’t been new supply coming on the market; and buyers taking up existing supply and new supply not coming online to replace it,” Mr Moore explained.

“Given the relatively low level of stock currently for sale, we expect strong selling conditions to remain for at least the next few months.”

Expectations of an early rate rise

While activity usually ramps up this time of year, Mr Moore said factors such as low interest rates and pent-up demand following months of lockdowns will further drive selling conditions.

“There’s a lot of motivated buyers, we’ve still got low interest rates and we’re coming out of lockdown,” Mr Moore said.

“Total listings are at a low level. We’ve seen relatively little supply available for buyers, which means that this spring will be a good time for sellers to be jumping in the market.”

The minutes of the Reserve Bank of Australia’s October board meeting, released Tuesday, acknowledged low interest rates are fuelling borrowing activity, noting aggregate household debt is growing faster than incomes.

“New loans were being taken out at historically low rates, and existing borrowers were benefiting from refinancing at lower available rates. Loan commitments had remained high in August and growth in housing credit had picked up further in six-month-ended terms,” the minutes showed.

However, the RBA said the trade-off to lifting interest rates to cool housing prices and debt would be a weaker jobs market and economy.

“Members also agreed that, while less accommodative monetary policy would, all else equal, see lower housing prices and credit growth, it would result in fewer jobs and lower wages growth, which would in turn create further distance from the goals of monetary policy – namely, full employment and inflation sustainably within the target range.”

CBA senior economist Kristina Clifton said the comments suggest macroprudential policy will be the key tool to keep housing-related risks in check while interest rates remain so low.

This month the banking regulator APRA reintroduced measures to safeguard lending standards, increasing the minimum interest rate buffer banks must use when assessing a home loan application.

“APRA’s decision to increase in the loan serviceability to 3% from 2.5% previously is the first step to addressing these concerns,” Ms Clifton said.

“If housing prices and lending remain firm into 2022 we could see a further lift in the serviceability buffer,” she added.

The minutes said other options that could be used would be portfolio restrictions on individual lenders’ shares of lending at high debt-to-income ratios, or limits on lending at high loan-to-valuation ratios.

The prospect of low interest rates for years to come has been key in driving borrowing and property activity, however financial markets are at odds with the RBA’s timeline, pricing in a rate hike as early as next year.

The RBA’s view is that inflation will not reach its 2-3% target band for a sustained period until 2024 at the earliest, which would be a catalyst for an interest rate rise.

Ms Clifton said the Commonwealth Bank expects global inflationary pressures will help to push domestic inflation back to its target well before then, with the conditions for a rate hike to be met in May 2023.

“The RBA require the inflation to be sustainably within their 2‑3% target before they start to normalise the cash rate.  We see the trimmed mean rate of inflation lifting to 2.2% at the end of 2022 and 2.5% mid 2023,” Ms Clifton said.

Westpac chief economist Bill Evans expects the first hike to occur in the first quarter of 2023.

“Our unemployment and inflation forecasts are consistent with the board achieving its objectives much earlier (Q1 2023) than the 2024 central case,” Mr Evans said.

Focus now turns to the Statement on Monetary Policy, released in November, when the RBA releases its updated forecasts for economic growth and employment.

“Of considerable interest will be whether the bank adjusts its current inflation forecasts in the November Statement on Monetary Policy to reflect some of these recent global developments,” Mr Evans said.