Spring season a ‘litmus test’ for housing market

The spring selling season will test the strength of the Australian residential property market, which may have reached its peak, according to RP Data.

Home sales reached their high point in November last year when 45,640 house and unit sales were recorded over the month and the rolling six-month trend was moving higher.

However, transaction numbers through to the end of July this year show that the number of home sales has levelled compared with the seasonal highs of late last year, according to RP Data.

On an annual basis, transaction numbers are still rising but not at the same growth rate as recorded one year ago.

According to RP Data research director Tim Lawless, the recently released housing finance data from the Australian Bureau of Statistics (ABS) is pointing towards a peak in housing market activity.

The results showed a moderation in the pace of growth for owner-occupier mortgage commitments with the annual change in owner-occupier housing finance commitments peaking in November last year and mortgage demand, excluding investors, virtually flat over the past 12 months.

RP Data also noted a rise in average selling time and rate of vendor discounting in the months leading up to spring; the average number of days to sell a home reached a recent low of 36 days across the combined capital cities over March this year.

Since that time the average days on market figure has trended higher to reach 47 days.

Mr Lawless noted that when the pace of home sales slows, it can largely be the result of seasonal factors such as in the winter months.

Transactions also fall sharply towards the end of December and most of January, as well as at times of national holidays such as Easter.

For these reasons, he said that the spring season will provide a timely litmus test for the housing market.

However, he says the question is whether transaction numbers will rise to eclipse last year’s recent high, or has the peak in buyer demand moved.

“We are already seeing listing numbers ramping up at a faster rate than last year, the big question is whether buyer numbers will match the pace of listings to absorb this additional supply,” Mr Lawless said. 

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