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With the Reserve Bank of Australia (RBA) hiking the cash rate since May 2022, reaching 3.35 per cent in February 2023, demand for new property has plunged — reflected in national property prices falling 4.51 per cent below their recent peak, earlier data revealed.
The uncertainty in the market has pushed prospective sellers back to ‘wait and see’ how the housing market unravels, according to Domain’s chief of research and economics, Nicola Powell.
“One of the interesting trends that we’ve seen is there has been a pull back in sellers in the market,” Ms Powell said.
“I do think this really is illustrative of seller sentiment where a seller doesn’t want to sell during a downturn.”
According to the latest CoreLogic data (February 2023), the new listings trend is moving through a seasonal low, at 22.1 per cent lower than the previous five-year average.
Ms Powell said the drop in new listings coming onto the market from August to September was particularly “unseasonable” because normally that dip is felt from winter.
Given the reduced properties on market, supply is building up that is expected to hit the market over autumn, she added.
Rental vacancy rate at lowest on record
In addition, given national vacancy rates have fallen to a record low of 0.8 per cent in January 2023, sellers fear being thrown into the rental crisis, according to chief executive and co-founder of Bridgit, Aaron Bassin.
While the record-low vacancy rates are a concern for renters, it’s adding to the hesitancy felt by home owners wanting to sell, Mr Bassin said.
“With vacancy rates on the decline and rental prices climbing, the hidden cost for homeowners looking to sell first then buy, is rising,” Mr Bassin explained.
“It’s hard to control the costs that come after selling with the uncertainty of not knowing when you will find and buy your next home and how high your temporary living and relocation expenses will get.
“Last year, we conducted research that found home owners who sold their existing property before securing their next home spent an average of $8,300 on relocation costs, including rent, storage and multiple moves.”
He added that given the high rental market, the cost to relocate will be higher and finding temporary accommodation will be “incredibly difficult”.
“In this market, it is critical that home owners looking to make their next move are well prepared so they can minimise these costs,” Mr Bassin said.
“Those wanting to buy on their own terms and regain control over the buying and selling process should consider bridging finance, which allows you to unlock the equity in your home before you have sold.”
New sales demand remains weak
In addition, sales volumes continued to trend lower as buyer demand slows.
CoreLogic estimated that in the 12 months to January, there were 500,550 sales nationally, down 19.1 per cent compared to the previous year although sales estimates remained 4.6 per cent above the decade average.
The weakened demand was also reflected in the latest lending data from the Australian Bureau of Statistics (ABS) to November 2022, which found new loan commitments fell by 3.7 per cent to $24.7 billion, following a 2.8 per cent fall in October.
[Related: Lending falls amid refinancing boom]
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