Australia's spring property season is shaping up to be unusually sluggish, as sellers retreat from a weak market and unsold homes pile up.
New property listings in the four weeks leading up to 23 August were 8.2% below the five-year average, property analytics firm Cotality data shows.
Advertised stock levels remain elevated overall, suggesting homeowners are holding back from adding to an already crowded market.
Cotality head of research Gerard Burg said the findings painted a subdued outlook for spring, usually the year's main buying and selling period.
"They're seeing home values going backwards across the country and they're seeing pressures on the demand side," he said.
Sellers pull back ahead of spring
Sydney is leading the downturn, with new listings 14% below the five-year average in the four-week period.
Burg said the retreat was sharpest in the city's wealthiest areas, including the eastern suburbs, north shore and inner west.
Declines have been more modest in outer suburban areas, a trend also unfolding in Melbourne, where city-wide listings fell by 9%.
Similar pullbacks were recorded in all capitals except Adelaide, which Burg said appears to be earlier in the adjustment process.
Buyers gain more negotiating power
But the number of homes being advertised for sale remains elevated, with nationwide listings over 137,000 in the four weeks to 23 August, 1.7% above the five-year average.
That added supply, combined with a four-month national downturn in house values, makes the market unusually buyer-friendly.
Sydney buyer's agent Simon Cohen said the opportunity for buyers was greater than any he had seen since the COVID-19 pandemic.
"If you're someone who can afford to buy, you are able to take advantage of a market with deals that we haven't seen for a very long time," the Cohen Handler chief executive said.
Cohen said most vendors were only listing out of necessity, driven by circumstances either financial or personal, such as divorce.
"This isn't a market where you put your property on the market just to test it," he said.
Cotality’s Burg agreed buyers were in the "driver's seat" but stressed affordability pressures would keep many on the sidelines.
"It's only really a buyer's market because so many buyers have been pushed out," he said, citing rate hikes and cost-of-living challenges.
Rates remain key to the outlook
The findings come four months into a housing downturn, with house prices falling about 2% nationwide and 2.8% in the capitals.
History showed downturns tended to last no more than 12 months, but much would turn on the timing of the next interest rate cut, Burg said.
Commonwealth Bank on Thursday updated its Reserve Bank forecast to say the RBA’s next move was likely to be an interest rate rise in November in a move designed to attack persistent inflation pressures.
Assuming no further inflation shocks were in store, Burg said Cotality did not expect the current 4.35% rate to fall until well into 2027.
