Will The 2022 Property Trends Continue in 2023?
The completed 2022 Calendar year saw some significant momentum changes in the property market.
Whilst the majority of our report this week includes our early 2023 statistics and property information from around the country, it is our own 2022 data that gives us an insight into what trends have arisen in the Central Gold Coast area. These trends look set to continue through at least the early part of 2023..
As we review our office numbers from each quarter of the 2022 calendar year, clear patterns in market sentiment can be seen.
Over the course of the 2022 Calendar year, some of our key Residential sales statistics were as follows:-
Q1 January- March
Number of Inspections 3691
Number of Offers 568
Number of Sales 136
Q2 April - June
Number of Inspections 3079
Number of Offers 354
Number of Sales 110
Q3 July- September
Number of Inspections 3046
Number of Offers 294
Number of Sales 93
Q4 October to December
Number of Inspections 2825
Number of Offers 231
Number of Sales 91
Whilst it is easy to look at the decline in number of sales for each quarter, the key area to focus on is the substantial drop in the number of offers that we are receiving from buyers.
This significant drop in offers highlights the difference between a buyer who was scared of missing out on a property in a rising market early in 2022 to that of a buyer who was increasingly nervous about paying too much for a property in a falling market late in 2022.
As you will see from our office statistics, our average number of offers dropped from 586 over the January to March 2022 quarter to 231 over the recently completed October to December quarter, a drop of more than 60%.
With respect but many sellers and many agents are still holding out hope for a buyer that will pay late 2021 or early 2022 prices but our own evidence shows that rising interest rates, reduced affordability and declining overall confidence has taken its toll. We now have a standoff between what a seller wants for a property and what a buyer is prepared to pay and as a result of this gap, days on market are now rising sharply.
Increasing days on market and what that means for a seller is a topic that we will look at closely in next week's report.
Whilst we are on the topic, an article appeared in the Gold Coast Bulletin and on Realestate.com.au this week discussing the gap that we are currently seeing between sellers and buyers.
The article is our feature story this week.
Homes languish on market as sellers ignore slowdown signs
Unsold properties are piling up as the market downturn takes hold. Here’s why.
ANALYSIS
A Joke doing the rounds among real estate agents gave some context to latest listings figures, which show unsold properties piling up as vendors hold out for boom-time prices despite the market downturn.
The punchline: property is not moving because vendors are still expecting 2021 prices, while buyers swayed by negative rhetoric are putting in offers more akin to 2008, when the economy was reeling from the Global Financial Crisis.
This disparity not only puts agents in a pickle when it comes to clinching a sale, but has also led to a spike in the number of older listings on the market, while new stock coming online remains below pre-pandemic levels.
Data released by SQM Research confirmed the share of old listings — those which had been advertised for sale for 180 days or more — surged in every Australian capital city, except Adelaide and Canberra.
The Gold Coast recorded a 35 per cent spike in old listings in December 2022, compared to the same time last year.
Meanwhile, new listings for the month came to 666 — down from 1008 in 2021.
SQM head of research Louis Christopher said one quarter of Qld’s total listings had been on the market for more than five months, with Brisbane notching up a 40 per cent spike in the number of old listings over the month.
Properties which take that long to sell are typically less desirable stock, such as homes on main roads, or those priced well above market value.
Among the Gold Coast’s old listings on realestate.com.au, a Surfers Paradise unit which has languished on the market for four years is a more extreme example.
Indeed, Glitter Strip high-rises account for many of the longest stayers, along with vacant blocks of land and the odd retro Sovereign Islands mansion.
But a Gold Coast agent, who asked to remain anonymous, said he just withdrew a Mudgeeraba property which, in better times, would have ticked the boxes for a wide range of buyers.
The five-bedroom home with a pool and granny flat was priced at offers over $950,000 and withdrawn from sale after four months on the market.
“No offers, noone turned up at the open home — crickets,” the agent said.
“During Covid-19 we were getting 80 families turning up at open homes in Mudgeeraba. Now zero, nobody turning up.”
With a further rate rise possible when the Reserve Bank of Australia meets next month, vendors and buyers alike are holding out.
“This rise in older stock completely confirms the depth of this housing downturn and is very typical of what was recorded in past downturns where you see a build-up of unsold property,” Mr Christopher said.
“There’s a dearth of new listings, so vendors would have been reluctant to sell into this downturn and they’ve been holding out as much as they can.”
And although most local real estate agents say the Gold Coast has matured beyond its notorious boom-bust cycle of previous decades, Mr Christopher said a major price correction could not be ruled out.
He said a cash rate of 4 per cent or more would increase the risk of a surge in distressed activity, which so far had not dramatically increased.
“What is really critical is that sellers list their property at an asking price that meets the market,” Mr Christopher said.
“The market is not moving up — it’s sideways or going down — and so sellers really risk sabotaging their own campaign if they list their property with an asking price that is too high.”