More homes hitting the market, as seller confidence grows

A low supply of homes for sale was a key factor pushing prices higher last year, in defiance of well-established historical trends in which home values always fall when interest rates rise. But the tide may be turning in buyers’ favour, with PropTrack data showing a 22 percent increase in new listings coming onto the market across the combined capital cities last month compared to February 2023.

Senior REA economist Angus Moore said the 22 percent lift was the highest increase in new listings across the capitals for the month of February since 2012. “Property markets in capital cities, Sydney and Melbourne especially, saw a strong start to 2024, with the busiest January and February since 2012 across the combined capital cities,” Mr Moore said.

“Supporting this busier start to the year … was strong demand, unemployment that remained low by historical standards, strong population growth, tight rental market conditions, and a more stable outlook for interest rates.”

The Reserve Bank announced on Tuesday that interest rates would remain on hold for a third consecutive month at 4.35 percent.

“Markets are no longer expecting a further increase in interest rates, with an expectation of cuts as soon as the second half of this year,” Mr Moore said.

The biggest increases in new listings were seen in Melbourne with 35.4 percent more homes for sale, along with Sydney at 33.6 percent and Canberra at 32.2 percent. There was an 8.5 percent increase in listings in Brisbane, and only a 2.1 percent increase in Perth and a 1.1 percent increase in Adelaide. Listing numbers dipped slightly in Hobart and Darwin.

There was a 7.8 percent increase in new listings across the combined regional areas, with last month’s volume broadly in line with the pace of activity that has been typical for the month of February over the past decade. The biggest increases in new listings were in regional Victoria at 12.8 percent, regional NSW at 12.2 percent and regional Tasmania at 9.8 percent. Mr Moore said that while new listings increased only 1.6 percent in regional Queensland, this was the first year-on-year increase in new listings recorded since August 2022.

Senior REA data analyst Karen Dellow said recent data from realestate.com.au’s Residential Audience Pulse Survey showed homeowners were feeling more confident to sell. The survey revealed that one in ten owners were contemplating selling their property when the survey was taken in January. Seller confidence has shot up, with 43 percent of respondents considering it a favourable time to sell, up from 34 percent last year.

“Western Australia has the highest seller sentiment, with 63 percent of respondents expressing optimism about the current market, marking a substantial 70.3 percent increase from last year,” Ms Dellow said. “NSW, Queensland, and South Australia have also witnessed substantial growth in seller sentiment over the past year, with NSW up 53.8 percent.”

Ms Dellow said the primary drivers behind increasing seller confidence were rising prices and growing buyer demand. More than a third of sellers anticipated further price rises in the next six months, the survey showed.

“Lifestyle changes, such as relocating to a different area or seeking a property with specific amenities like a pool or more space, were the primary motivations for selling. Downsizing ranked second, reflecting the preferences of Australia’s ageing population seeking properties better suited to their evolving needs.”