Why there's not enough property for sale right now

The number of property listings on the market slumped in the run-up to Easter, leading to fears home prices will surge further as demand continues to outpace supply.

With the volume of houses and units for sale in Sydney dropping last week by 12 per cent over the week before, in Brisbane by 8 per cent, in Adelaide by 9.7 per cent and Darwin by 11.4 per cent, Melbourne showed a miniscule rise of 1.5 per cent.

The only other exceptions to the downward trend were Hobart, where listings rose by 18.7 per cent for the week to March 28, Canberra by 10.7 per cent, and Perth by 7.1 per cent.

While many vendors tend to avoid the Easter break as it can prove disruptive to a sales campaign, especially with school holidays tagged on, and Anzac Day, it seems there are mightier forces at work.

“I think we’re currently seeing a depletion of current stock in the market, where buyers are absorbing all the old listings as well as the new as there’s a real shortage of supply,” said Domain senior research analyst Nicola Powell.

“That’s likely to translate into stronger price growth, so there’ll be a point at which affordability is going to bite, which will end up deterring some buyers, especially first-home buyers. Most markets are really robust,” Dr Powell said.

“We’re seeing strong demand, higher house finance and in Sydney, we’ve had a clearance rate of over 80 per cent for eight weeks in a row, while in Melbourne last weekend we saw the highest volume of auctions since 2018.”

The monthly figures show low listings, too, actually dropping 11.8 per cent in Darwin over the previous month and rising only by 4.5 per cent in Sydney, 1.8 per cent in Brisbane, but by 8.6 per cent in Melbourne and jumping by a substantial 14.5 per cent in Adelaide. In Hobart, the monthly rise was tiny, at 2 per cent and Canberra at 2.1 per cent, while in Perth listings leapt up by a massive 25.8 per cent.

But with low listings over most state capitals, the danger is that the shortage of stock could spiral, with a lack of supply dissuading potential vendors from putting their homes on the market in case they can’t find anything to buy.

That’s true for some pockets of Melbourne, says Margaret Duncan, of Belle Property St Kilda. She’s struggling with a lack of stock generally, and a lack of bigger family homes – in huge demand after the COVID-19 lockdown made locals keener to have more space for the future – in particular.

“People now want to buy something a bit bigger because they’ve spent so much time huddled together, they can’t bear the thought of doing that again,” Ms Duncan said. “But, for every one we sell, we have the under-bidder and the under-under bidders all looking for more, and people not wanting to sell in case they can’t find something.

“With such a lot of competition for limited listings, it’s pushing prices up and up.”

In Sydney, it’s the same story. Listings are down now, but everyone’s hoping they might pick up after Easter – yet there are no guarantees.

“There’s a 100 per cent shortage of listings and I can’t really see when it’s going to free up,” said Debbie Donnelley, of PPD Real Estate. “It’s an absolutely crazy market, and it looks only about to get crazier.”

A two-bedroom apartment she recently sold on Etham Avenue, Darling Point, in original 60-year-old condition, had a reserve of $2 million but sold for $3.3 million, at the same time as a two-bedroom house, also unrenovated, sold for $2.4 million instead of its expected $2 million.

SOLD - $3,300,000

72/10 Etham Avenue, Darling Point NSW 2027

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That kind of frenzy is being felt across the country. In Canberra, Luke McAuliffe, of Luton Properties Gungahlin, just had 100 groups through a three-bedroom house in Ngunnawal on its first open-for-inspection, and 80 through another property in Taylor.

“There hasn’t been a chance for stock to keep up with demand,” Mr McAuliffe said. “Supply just can’t keep up. It’s hard to say when it’ll ever even up, or slow down.”

In Brisbane, the low number of listings, with only a 1.8 per cent rise over the month, is also putting pressure on prices.

“We’ve had an undersupply of property for the last three months and the market is coming through very strongly with some good sales,” said Jackson Evenden, of Ray White Sherwood.

“With low listings, we’ve achieved good prices, but the momentum going forward we feel will encourage more people to put their properties on the market in the hope of getting 15, 20 or 25 per cent over what they might have got 12 months ago. And, then, worst case scenario, they’ll just rent until more property comes on.”