The cities where homebuyers now have more choice
Rising home prices and stabilising interest rates have boosted confidence among vendors in Australia’s biggest markets, triggering an early increase in listing numbers ahead of the usual spring selling season.
Melbourne buyers in particular have been spoilt for choice after a period of low stock levels, with the unusual rise in the number of properties hitting the market in July giving buyers more homes to choose from.
New listings in Melbourne last month were up about 5% compared to June and about 9% higher than the same time last year, according to the latest PropTrack Listings Report.
Meanwhile, the number of new listings in Sydney in July was also about 9% higher than the same time last year after rising 2% month-on-month.
“While part of the reason for that growth is that last July was a slower month for both cities, it is not the whole story,” said PropTrack economist Angus Moore.
“There were more new listings in both cities in July than has been typical for this time of year over the past decade.”
Although July is usually a quiet month for the property market, new listing volumes in Melbourne were about 10% higher than a typical July over the past decade, Mr Moore said, while new listings in Sydney were more than 5% above average.
The improvement in market conditions comes as property prices recover in both cities. Sydney prices have surged 5.6% since the low point in November 2022, while Melbourne’s median property price was about 1% higher than the low in January this year.
Price growth across the country has been fuelled by strong demand from buyers amid a low number of properties hitting the market in the wake of the Reserve Bank’s interest rate tightening cycle.
The number of new listings in July was higher that usual in Australia’s two biggest property markets, giving buyers more choice.
Despite the increase in listings improving choice for Sydney and Melbourne buyers, the market nationally is still slightly tighter than last year, with new listings trending down since interest rates started rising in mid-2022.
The RBA’s decision to keep rates on hold in July and August would have boosted confidence among both buyers and sellers, with more certainty around a peak in interest rates encouraging people to transact amid the strengthening market recovery.
In Sydney’s eastern suburbs — where prices are about 3.5% higher than a year ago and up almost 2% in the past three months alone — listing volumes in July were 13% higher than the same time last year, with about 30% more properties listed than in June.
An uptick in new listings in Sydney’s eastern suburbs, such as this five-bedroom home in Maroubra, has given buyers more choice. Picture: realestate.com.au/buy
“I think a lot of people were holding off thinking the market was going to dip further,” said real estate agent and Ray White Eastern Beaches director Angus Gorrie.
“People now have confidence they’re going to get the price they want, so they’re going to try and sell now.”
“We’re certainly on the up – every month this year, prices have gotten better.”
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Despite the uptick in new listings, buyers in Sydney still have almost 12% fewer total properties to choose from than in July last year, with high levels of demand preventing properties from lingering on the market for too long.
Some vendors are holding off until more stock becomes available before making a move, said Sutherland real estate agent and Fox & Wood director Danny Fox. In the Sutherland region, new listings were up on last year’s numbers by about as much as the city overall.
“In that sub $2 million market, there’s not a lot of homes for sale and the demand is there,” he said.
“It’s almost like there’s a bit of a stalemate where potential sellers are reluctant to put their own home on the market until they can see more of the destination they want to buy.”
Investor turnover creates opportunities for first-home buyers
Although prices in Melbourne haven’t yet rebounded to the same extent as in Sydney, an increased number of sales by investors has given property seekers more choice.
About 30% of Victorian properties sold in July were investor sales, up from about 22% late last year.
“We are seeing investors making up a larger share of market activity at the moment, both in terms of sales and new buyers,” Mr Moore said.
The proportion of investor sales is at a five-year high in all states and territories except the ACT.
Meanwhile, loans to investors have increased throughout 2023, ABS data shows, driven by growth in NSW, Queensland and Victoria.
While tight rental market conditions might have made conditions attractive for some investors, high mortgage rates might be encouraging others to reconsider their position in an environment of much higher costs, Mr Moore said.
Some investors have faced a jump in repayments as their fixed rate mortgages roll onto higher variable rates, prompting them to sell properties to free up cash flow and realise gains in a rising market.
In Melbourne’s inner south, new listings in July were up 15% compared to the same time last year, and more than 34% higher than in June.
“A lot of apartment stock is coming to market at the moment,” said McGrath St Kilda principal Josh Stirling. “First-home buyers are tending to be the purchasers of those apartments.”
“It’s primarily led by investors exiting – they’re the most active seller group.”
“Rents are up, which has been good for landlords. However with rising interest rates, extra state taxes and potentially rental caps coming on, we’re seeing investors who might have been on the fence about holding a property now are exiting the market.”
“You’re more likely to sell an investment property before selling your own home, so for people feeling the pinch with interest rates, investment properties are the first ones to go,” Mr Stirling said.
More investment properties properties are hitting the market, improving the choice of affordable homes. This former rental apartment in St Kilda was listed for sale in July with a price guide of $280,000 to $305,000. Picture: realestate.com.au/buy
It’s not just rental apartments hitting the market, agents say. Some investors have begun offloading long-held houses that may have become too expensive to keep, attracting interest from first-home buyers or upgraders looking for an affordable entry point to desirable markets.
“A lot of that property has been rented out for a couple of years now, and is just a little bit harder to rent and harder to maintain as well,” says Jellis Craig Boroondara director and auctioneer Daniel Bullen. “So they’re just cashing in and downgrading their debt.”
If listing numbers continue to rise, particularly for established family homes, more owners may be inspired to make a move, Mr Bullen said.
“We have a lot of appraisals being done, with people wanting to know what their home is worth because they want to buy something better.”
Prices continue to surge in Australia’s tightest markets
It’s a completely different situation for buyers in other cities around Australia, PropTrack’s report found.
“Buyers in Perth are facing particularly restricted options, with the total number of properties listed for sale at a fresh record low in July,” said Mr Moore.
Meanwhile, listing volumes are about 40% below average in both Brisbane and Adelaide, despite the proportion of investor sales reaching new peaks.
Prices in these three cities hit record highs last month. Brisbane and Adelaide were largely insulated from price falls through the rate rise cycle, while Perth bucked the national trend, posting the strongest price growth of all the capitals over the past year.
“In our market it’s mainly local families driving the demand,” said Perth real estate agent Ben Keevers of Ray White Keevers Group North Beach. “Supply is extremely low, but the demand is super high.”
“It’s not unusual to be seeing groups of 30 to 50 buyers through an open for inspection.”
At the other end of the spectrum, buyers in Hobart have much more choice now than during the pandemic, when prices surged amid an extreme shortage of listings.
There are almost 38% more properties on the market in Hobart than a year ago after a 12% increase in new listings in July.
Given prices haven’t yet recovered most of the falls seen since the March 2022 peak, Hobart buyers have significantly more choice and bargaining power than over the past few years.
Buyers in Darwin also had more choice, with the total number of listings on the market 4% higher than the same time last year.
Listings have declined slightly in Canberra, although the total number of properties on the market is higher than usual.