New listings bump as home values lift

If the current pace of home value growth persists, CoreLogic’s economist predicted a 2 per cent increase in new listings this year, following near-decade-low listings.

Since the onset of COVID-19 restrictions in 2020, the total volume of dwellings available for sale in Australia has been declining.

CoreLogic data showed in April 2023, the number of listings reached “a near-decade low”, with a decrease of 31.5 per cent compared to the monthly average of the past 10 years and a 33.8 per cent decline from the average for April.

The slowdown in flow of new listings is partly due to prospective vendors “resisting sellings” amid declining home values.

However, the uptick in home values in March and April, alongside higher auction clearance rates and increased housing finance commitments, has indicated demand for housing could rise this year.

CoreLogic economist Eliza Owen explained the number of new listings is responsive to changes in home values.

“As the market has higher rates of growth, the number of vendors who decide to sell increases. On the contrary, as the market moves into a downswing, sellers hold off,” Ms Owen said.

As such, the outlook for new listings should, to a large extent, be determined by capital growth performance in home values, she explained.

“Going by the historic average, if national home values continue on the current trajectory through to the end of the year, that is rising at half a per cent per month (as recorded in March and April), home values would end the year around 4.1 per cent higher,” Ms Owen said.

This would equate to an increase in 2023 listings that was 2 per cent higher when compared to 2022, which would equate to 494,753 listings over 2023, on top of the 485,052 listings reported in 2022.

“However, the assumption of 4.1 per cent capital growth this year is a highly uncertain one,” Ms Owen said.

Further, the uncertainty around the trajectory for the cash rate, particularly given the latest monetary policy announcement showed a tightening bias, she added.

Another upside risk is mortgage serviceability. If households encounter financial difficulties, particularly due to rising interest rates and increased unemployment, there might be a need to sell homes involuntarily.

However, the current data suggests that this scenario is unlikely, as most mortgaged households have sufficient prepayment buffers and the number of new listings has been limited thus far.

[Related: Mortgage lending picks up for the first time in 14 months: ABS]