If the current growth in home prices continues, listings could increase by two per cent this year, according to an expert.
“The outlook for new listings should, to a large extent, be determined by capital growth performance in home values,” Ms Owen said.
“Going by the historic average, if national home values continue on the current trajectory through to the end of the year, that is rising at half a per cent per month, home values would end the year around 4.1 per cent higher.
“This would equate to an increase in 2023 listings that was 2 per cent higher when compared to 2022.”
Ms Owen said an additional 2 per cent on the 485,052 new listings over 2022 would equate to 494,753 listings in 2023.
She said the total volume of dwellings for sale in Australia has been trending lower since the onset of COVID-19 restrictions in 2020.
As of April 2023, there were 138,144 listings observed over the month, which is near decade-lows, while total listings were 31.5 per cent below the decade monthly average, and 33.8 per cent below the average for April.
“Given 2022 saw a fairly lack-lustre spring selling season, a continuation of recent capital growth could see higher volumes in the second half of this year than last year,” Ms Owen said.
According to Ms Owen, between late 2020 and April 2022, available stock for sale was depleted via a rapid rate of absorption, with homes selling quickly amid low interest rates and a surge in buyer demand.
During this time, there was an elevated volume of new listings being added to the market but strong selling conditions meant properties were typically selling within 27 days.
She said the current low volume of listings in the past 12 months has been the result of a slowdown in the flow of new listings, where prospective vendors may be resisting selling amid lower home values compared to early 2022.
“As national home values bottomed out in March 2023, the volume of new listings was even lower than at the onset of the pandemic in March 2020, and 10 per cent below the previous five-year average,” she said.
Despite the recent run-up in property prices over the past few months, Ms Owen said that the assumption of 4.1 per cent capital growth this year is a highly uncertain one.
“It is early in the recovery phase of the home value cycle, and there is no guarantee that the capital growth trend of recent weeks will continue,” she said.
“There is still some uncertainty around the trajectory for the cash rate, particularly given the latest monetary policy announcement showing a tightening bias from the Reserve Bank.”
Ms Owen said there is a scenario that presents an upside risk for new listings.
“This would be a situation where vendors may need to sell their home and not voluntarily,” she said.
“This may include households struggling to service a mortgage at higher interest rates, particularly amid rising unemployment over the course of the year.
“However, this scenario seems unlikely at present, given the low volume of new listings to date through rate rises, and strong pre-payment buffers across mortgaged households.”