Exclusive Research – Conditions Peak for Sellers

Is This the Peak for Sellers?

The national buyer/seller index shows that the national property market is strongly in favor of sellers with a record result being recorded for Q3 2019. The latest result shows the index has recorded the ninth consecutive quarter of favorable conditions for sellers.

What Does the Q3 Result Mean?

The Q3 2019 index result shows that demand from buyers is currently outstripping listings faster than any time on record. This is because a number of large capital city markets are continuing to record low levels of new listings at a time when strong buyer demand is in place. This has led to a situation where properties are selling faster than can be replenished by sellers.

Low Interest Rates has Lifted Affordability and Buyer Demand

The lack of listings has occurred in many instances because up-graders, and those looking to sell, prefer to purchase a property before they list their current home for sale. This has been intensified by rising levels of buyer demand. This demand has been driven by increased affordability from falling interest rates which has seen investors and owner occupiers compete for the limited amount of stock of on the market.

Market Favor Dependent on Local Economy

Despite the national index being strongly in favor of sellers, this may not be the case for local markets across the country. It is possible to find markets that are balanced, or in favor of buyers, with the strength and performance of state, regional and local economies deciding the index outcome. This can be seen from the state based index table which shows that 5 out 8 markets are in favor of sellers while 2 are balanced and 1 market is in favor of buyers

Is This the Peak for Sellers?

The large growth in favor of sellers has led to the question of when will the index swing back towards a more balanced, or buyers, market? By overlaying a lead indicator we can evaluate where in the cycle we are currently sitting and forecast any future swing. Overlaying ABS Housing Finance data (buyer demand) onto the index chart we can see that it leads a swing in the index by approximately one quarter. By analyzing the finance data we can see that after strong growth over recent years, the “rate” of growth in finance commitments has begun to slow. It is expected that, as a result of this slowdown, the record Q3 2019 index result may also be the peak, in terms of ‘favorability’, for a sellers.

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