Listings jump as days on market grow

Matthew Sullivan and Simon Parker

A significant rise in the number of residential property listings for the month of November in Melbourne is due to an “accumulation” of properties that have failed to sell rather than a surge in new listings, the head of a Victoria-based real estate group has said.

Figures released by SQM Research found that in the month of November, national listings increased by 5,631 to a total of 388,848. This figure represents a 16.7 per cent rise on the November 2010 result, and a 1.5 per cent increase month-on-month.

Adelaide and Melbourne experienced the largest year-on-year increases, with the number of residential property listings climbing 47.9 per cent and 47.2 per cent, respectively.

But despite the significant jump in listings, Nigel O’Neil, chief executive of hockingstuart Group, said the figures for Melbourne were largely the result of longer days on market figures, which have stretched out in the last year.

“It’s pure accumulation, there’s no rush of new properties coming on, it’s just a build-up [of listings] over time,” Mr O’Neil told Real Estate Business.

“Across our network, from a year-on-year [perspective], our days on market have gone from about 45 days to 55 days.”

“That’s about a 20 per cent increase in days on market in the last year, October to October. If you go back six months prior to that, it was around about 32 days. So, if you’re looking at a 18-month [period], then you’re looking at an increase in days on market from 32 days to 55 days. That’s a large increase in days on market.”

“It’s not where you want it to be but you’re still pretty happy to be selling properties that come to the market within two months [in Melbourne].”

For Richard Luton, principal and director of ACT-based Luton Properties, while longer days on market is also an issue in his region, a raft of new listings is also behind the 21.5 per cent year-on-year rise in the number of properties available for sale in Canberra during November.

“Our listings definitely highlight these figures as we have certainly seen an increase in the number of homes listed in recent months,” he told Real Estate Business.

Mr Luton, whose group has seven offices in the ACT, said the release of several new apartment block and high-rise living areas would have an effect on the number of listings available in Canberra.

He added that “days on market have blown out a little here in Canberra [as well], which could be skewing monthly listing figures a bit.”

“Confidence is still a little shaky and this is clear at our open for inspections. This time last year we would have to eight to nine people interested in buying every property we listed, but this has now fallen to as low as three to four [buyers].”

“But with interest rates dropping and rents rising I expect to see enquiry levels pick up, and in fact this is already occurring in a number of our offices.”

SQM Research managing director Louis Christopher said it's not surprising to see these figures climb, considering November is usually the spring ‘peak’ for online listings.

"However, if we do not see a significant decrease in stock levels for December, it is fair to say that the current state of the Australian housing market may be worsening rather than improving in certain localities," he said.

“At 388,000 properties, the market is generally considered to be oversupplied with listings at this point in time. It is enough stock to continue to put downward pressure on house prices,” Mr Christopher said.

“House prices started falling back in the September quarter of 2010 and that was when stock levels were at 307,000. That said, I think once we see stock levels peak and start coming down, we are likely to see the bottom in the market take place, and in our opinion that could happen as early as February”.

Perth was only capital city to not record a year on year increase, in fact, the number of listings retracted 0.8 per cent in November 2011, when compared to the same period last year.

In a November market wrap, Real Estate Institute of Western Australia (REIWA) president David Airey said a fall in median house prices coupled with increased first home buyer interest and rising rents pushed stock on market down in September.

“First home buyer activity has been very strong, the level of discounting by sellers has flattened out and rental yields for investors has improved,” Mr Airey said.

“The number of properties on the market dropped by 14 per cent on June to 14,959 but this is largely due to sellers withdrawing from the market rather than through sales.”

Mark Merenda, principal of Bell Merenda Real Estate in Northbridge, Perth, has been posting strong results for the last six months on the back of strong first time buyer activity, and he doesn't expect this trend to end anytime soon.

“Most of the properties I sell, tend to be in the $200,000 to $500,000 price bracket, which has performed consistently well for the last six months,” Mr Merenda told Real Estate Business.

“Our listing figures are relatively high. It is still a challenge to sell in the current market, but what we are selling is generally to first home buyers, who are still very active in the market.”

“I expect this trend to continue considering our rental department is extremely busy. Rental vacancies are low and rents are high, so this may be a strong factor in more people purchasing property over the next three to six months.”