Rates remain on hold, causing buyer FOMO to explode: SQM
According to SQM Research, the Reserve Bank’s decision to maintain interest rates at 4.1 percent might lead to a rebound in buying activity over spring, fueling sharper price increases.
Louis Christopher, managing director of SQM Research, believes buyer demand will increase with another pause in interest rates.
“Buyers who waited on the sidelines for prices to fall have realized that the market has bolted, and are now responding by buying.
Considering that interest rates are likely to remain on hold for some time, I expect this trend to continue. I expect continued price increases through at least the end of the year, and the odds of a strong start to 2024 in terms of price increases are increasing.
There has been a surge in new listings across the country’s biggest housing markets as a result of rising house prices and stabilising interest rates.
The number of new homes on the market in Sydney last month increased by 10.5% to 13,780, the highest number since records began in August.
Canberra, which had a 22.2 per cent increase in fresh stock, recorded the largest increase among capital cities as well. New listings in Melbourne rose by 12.6 per cent to 15,075, the highest level since 2016.
“It is evident that vendors are feeling more confident than last year, which, I believe, can be attributed to a combination of better than expected buyer activity during the course of 2023 and the increasing likelihood that the RBA will reach its terminal rate,” Mr Christopher stated.
According to me, there is a rise in demand due to strong population growth and buyers’ fear of missing out. The result is an increase in asking prices, so vendors are responding to the stronger market conditions and are more willing to list their properties.”
In most capital cities, new listings rose over the month, with the exception of Brisbane and Darwin, which saw a drop of 0.6 percent and 14.2 percent, respectively.
According to Mr Christopher, so far, the sharp increase in new inventory has been mostly absorbed by buyers, as evidenced by the falling number of total listings and old inventory.
There was a decline of 1.9 percent in total listings nationwide compared to a year ago, with Sydney and Melbourne falling by 6.5 percent and 4.9 percent, respectively.
In addition, the number of properties that have been on the market for more than six months declined across the capital cities during the month, with the exception of Hobart, where it rose by 3.7%.
According to Mr Christopher, total listings are still lower than long-term averages. “We recorded 224,530 dwellings for sale nationwide in August, which is lower than the long-term average of around 240,000 properties.”
Propertybuyer’s chief executive, Rich Harvey, said it was likely that vendors were selling to upgrade or downsize as well as expatriates returning home.
The low inventory levels during winter have certainly resulted in pent-up demand from home buyers.
In the past month, the number of buyers looking for properties in Sydney has increased, according to BresicWhitney chief executive Thomas McGlynn.
In recent months, we have observed an increase in the number of buyers actively searching for properties, either through open houses or online.
The website traffic to our website recorded its largest month ever, so I believe that the demand is keeping pace with the extra stock, which is surprising considering the sharp rise in interest rates and living expenses.”
The number of properties selling under distressed conditions has declined by 18.9 percent compared to a year ago as fears of mass defaults on fixed mortgages receded.
According to Mr Christopher, the fear surrounding the reset of fixed mortgages is not playing out in the market because people are still in employment.
“As far as we know, there has not been a material spike in unemployment, and that might still occur, but at the moment, most of the working population is still employed, so there is no need to sell the home.”