Australia Property Listings Rebound Could Dampen Price Growth This Spring



The Australian property market has experienced a remarkable turnaround in 2023, with home prices steadily increasing despite continued interest rate hikes. One contributing factor to this surprising price growth has been a lower supply of new property listings. However, as more homes hit the market ahead of the spring selling season, experts anticipate that this influx of listings could potentially impact price growth in the coming months.

The Australian property market has experienced a remarkable turnaround in 2023, with home prices steadily increasing despite continued interest rate hikes. One contributing factor to this surprising price growth has been a lower supply of new property listings. However, as more homes hit the market ahead of the spring selling season, experts anticipate that this influx of listings could potentially impact price growth in the coming months.

Australia Property Listings Rebound Could Dampen Price Growth This Spring

The Impact of Listing Volumes on Price Growth

An analysis conducted on the correlation between new listings and home price growth reveals that fewer new listings are associated with higher price growth, after accounting for other factors. Notably, recent new listings from 1-2 months ago have the highest correlation with home price growth. Therefore, the recent surge in listing volumes could potentially impact the upward trajectory of prices in the near future.

Correlation between New Listings and Price Growth

At the local region level, correlations indicate that the lower rate of new listings observed in the first half of 2023 is equivalent to approximately a quarter of the price growth witnessed during the same period. This suggests that while strong demand plays a significant role in driving price growth, a shortage of new listings has also contributed to the surge in prices.

Surprising Price Growth in 2023

The property market in Australia experienced a decline in 2022, with home prices falling persistently due to a series of interest rate increases. However, the year 2023 has seen a notable turnaround, with national home prices increasing each month, despite the continued interest rate hikes. This unexpected growth has been attributed, in part, to the lower supply of new listings, which has intensified competition among buyers and counteracted the effects of higher interest rates.

Analysis of New Listings and Home Price Growth

To investigate the relationship between new listings and price growth, a model was developed that accounts for regional variations. By removing broad national trends, such as interest rate fluctuations, the model aimed to determine whether lower-than-expected new listings in a specific region were associated with higher-than-expected subsequent price growth. The results revealed a clear correlation, with the strongest effect observed two months following a decline in new listings.

Implications for Home Price Growth

While the results of the analysis are not directly comparable to national home price growth, they suggest that the 15% decrease in new listings seen in 2023 is equivalent to roughly a quarter of the average monthly price growth observed this year. This indicates that while lower new listings have supported price growth, they are not solely responsible for it. Strong demand, coupled with limited new supply, has been the driving force behind the surge in home prices.

Potential Impact of Increased Listings

There have been indications that sellers are responding to the high buyer demand and rising prices by bringing more listings to the market. However, this influx of listings could potentially dampen price growth later in the year, particularly as the market gears up for the spring selling season. Importantly, the impact on prices is likely to be felt within one to two months after new listings are introduced.

The Australian property market has witnessed a surprising rebound in 2023, with home prices defying expectations and steadily increasing. A lower supply of new listings has played a significant role in driving this price growth, intensifying competition among buyers. However, as more homes enter the market ahead of the spring selling season, experts anticipate that price growth may be tempered. The interplay between listing volumes and price growth highlights the importance of balancing supply and demand dynamics in the property market.

Australia Property Listings Rebound Could Dampen Price Growth This Spring

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