After a challenging period for sellers, there’s new data that suggest vendor confidence is on the rise, with new listings headed back towards traditional levels.
According to PropTrack, new listings across Sydney have increased 27.7% in January compared to the same time last year. While January 2023 was a slower period for new listings, the recent surge was also well above average for this time of year. In fact it was the strongest January Sydney has seen since 2011.
At the same time, total listings are now higher and that is also giving buyers more choice. The total number of properties listed for sale across Sydney increased 3.2% compared to December to be 8.1% higher than the same time last year.
However, the total number of properties listed for sale is still below the long-term average which suggests conditions are still tighter than what we were experiencing prior to Covid.
Regional NSW also had a busy start to the year, with 12.3% more new listings than at the start of 2023. The increased level of listings has been something that has been going on since around early-to-mid 2022 after a period of very tight supply during Covid, plus the huge demand from buyers trying to escape the government-imposed lockdowns.
The total number of properties listed for sale regionally is now only slightly below where it stood pre-Covid.
One of the main factors behind the increase in listings is that confidence has returned to sellers. When the Reserve Bank of Australia started hiking the official cash rate, one of the biggest impacts was on buyers’ borrowing capacity.
We saw buyers unable to purchase the same level of property they could only a few months earlier and that meant sellers weren’t getting the same level of interest and prices started to decline. For many vendors who were in a position where they weren’t forced to sell, they simply pulled their properties from the market and didn’t sell.
Many others never went to market as the uncertainty around interest rates kept them on the sidelines and the lack of supply that we had been seeing for the past few years remained.
Sydney is a housing market that is often the most sensitive to higher interest rates as property prices are typically the highest and borrowers can often be the most leveraged. However, now that interest rates are nearing their peak, we can see that confidence amongst vendors is returning.
It also can’t be ignored that prices have rebounded heavily over the past 12 months and that means that many vendors are again able to achieve great prices for their properties. This is certainly the case in many of the blue-chip areas at higher price points, where demand is still incredibly strong. However, in these areas, the availability of quality properties remains low.
Higher new listings are often a sign of confidence in the market as vendors will only sell if they believe they will get the best possible price they can. While there is a portion of forced sales, we are still only seeing very low levels of distressed listings. That’s even with the rapid increase in interest rates that are weighing on household incomes.
There are other drivers of demand which are also helping give confidence to vendors including low unemployment and surging population growth which is at the highest level on record and putting extreme pressure on the supply of housing.
While there is a possibility of further interest rate increases if inflation remains higher than anticipated, financial markets expect rates to start coming back down later in the year. That’s only likely to add a tailwind to property prices across Sydney and give vendors even more confidence to sell.
For active buyers, 2024 could be a great opportunity to acquire a high-quality property in a blue chip after a few years of very tight conditions.
