A New Wave Of Properties Coming To The Market

It has been suggested for a number of weeks now that the incredibly low number of properties on the market is likely to change in the later stages of 2023 and into 2024.

An article that appeared in the Australian Financial Review newspaper last week gives us an insight into how one segment of the market is likely to go through a transformation moving forward.

With rate rises starting to bite in many areas, suburbs on the Gold Coast including Mudgeeraba & Merrimac have been identified as areas where listing numbers are predicted to rise sharply.

We are now seeing more properties come to market but many of these new sellers are property owners who are not under financial stress. 

The new wave of sellers seem to be property owners who have looked at the current supply v demand equation and they are choosing to sell now before the level of supply lifts.

The article that appeared in the Australian Financial Review discusses properties coming to market with the focus centred on holiday homes and investment properties.

In almost every property cycle, the first initial increase in sales volumes will be seen through investors selling properties that are excess to their needs.

These sellers are often unemotional and they will sell knowing that they are likely to sell for a profit now and are not prepared to pay higher rates whilst waiting a significant period of time before another lift in prices is likely.

These sellers quickly recognise that rate increases will soon affect their available funds and they realise that many other property owners will be facing a similar experience.

In short, they understand the importance of getting in first.

Once momentum is created and properties on the market outweigh the number of willing buyers, property prices start to fall. 

When this cycle is in full swing, prices can fall quickly so owners who have experienced these conditions before will likely be the first owners to sell.

The article below with the headline "Hundreds of holiday homes up for grabs as rates rise" will give you an understanding of how interest rates are starting to influence decision making.

In addition to the Australian Financial Review article, we have added CoreLogic National Housing market update for the month of July.

These two pieces are our feature stories this week.

Please see below.

Hundreds of holiday homes up for grabs as rates rise

Hundreds of properties in some of the most popular holiday locations in the country are expected to hit the for-sale market over the next three months as some property owners look to offload secondary assets amid surging mortgage repayments, data from CoreLogic’s Propensity to List modelling shows.

A substantially higher portion of homes on the Sunshine Coast, Gold Coast and Richmond-Tweed are likely to list, while some outer suburbs in Melbourne have already seen a spike in stock.

Tim Lawless, CoreLogic research director, said many of the areas with the highest propensity for properties to list could be considered as lifestyle markets and likely have a larger than average portion of secondary dwellings such as holiday homes.

“With mortgage repayments comprising a larger portion of household income, along with high cost of living pressures, it could be the case that more second-home owners are looking to offload their holiday home or investment property in these markets,” Mr Lawless said.

“Another possibility is that vendors who have been thinking about selling are recognising that market conditions are favourable at the moment. Listing now, while stock levels are low and prices are rising, makes sense rather than waiting until spring when selling conditions may not be as favourable.”

Mooloolaba on the Sunshine Coast topped the suburbs with the highest number of properties predicted to list over the coming three months at 234 or 3.9 per cent of all properties in the suburb.

Mudgeeraba on the Gold Coast followed with 192 properties expected to hit the for-sale market within three months, or 3.8 per cent of all properties in the suburb, and Banora Point in the Richmond-Tweed region with 188, or 2.8 per cent.

More than 500 properties are forecast to list across Parrearra, Merrimac, Main Beach and Ballina over the next three months.

“It’s always been a fact that, in times of any economic turmoil, holiday homes are among the first assets to go," said Margaret Lomas, founder of Destiny Financial Solutions.

“Often holiday homes are mortgaged with an investor loan, and at times rented to others when it isn’t being used.

“With the latest round of rate rises, and more forecast to come, these same holiday homes are being offloaded to ease up cash flow for the owner, and secondly because those same holiday homes, if they are partially rented out, are seeing less occupancy as the interest rates force many to shelve their holiday plans.”

Mr Lawless said the expected number of properties about to hit the market in those areas was substantially higher than the long-term average.

“Over the three months leading into September, the decade average nationally is for 1.4 per cent of properties to list for sale,” Mr Lawless said.

“To see some suburbs recording a much larger portion of properties that have a high propensity to list could be an indication that more vendors are becoming motivated to sell.”

Property owners also seemed motivated to sell in some of the most heavily mortgaged areas where listings spiked in the past four weeks.

In Melbourne’s Melton-Bacchus Marsh area, listings jumped by 19.4 per cent over four weeks, and increased by 20 per cent in the past year.

This is despite house prices falling by 1.2 per cent since the peak and weakening by 0.7 per cent in the past three months.

Casey and Geelong also recorded a sharp increase in new listings, rising by 33.2 per cent and 10.9 per cent in the past four weeks respectively.

“This is really unusual to see this lift in listings during a seasonally slow winter,” said Eliza Owen, CoreLogic head of research.

“It could be that people are wanting to sell proactively because they may have issues with mortgage serviceability down the line. They could want to get ahead of that increase in listings in spring. Or maybe people don’t have a choice but to sell.”

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Core Logics National Housing Market Update July 2023.