Australian Financial Review| Nila Sweeney| 17 July 2023
Some areas dominated by property investors are turning into buyers’ markets as big increases in listings outpace demand, potentially slowing price growth, industry insiders say.
Ipswich and Logan in the south-east Queensland region posted some of the sharpest increases in fresh listings in the four weeks ending July 9, jumping by 134 per cent and 70 per cent respectively, according to Suburbtrends data.
More than 370 fresh listings were added to the Ipswich for sale market, taking the total to 652, while Logan-Beaudesert district posted a 222 increase to 540 properties.
Zaki Ameer, founder of buyer’s agency DDP Property, said the steep rise in listings was sparked by rising interest rates and new homes being completed in these areas.
“Rental yields are falling because of higher interest rates and many investors are coming out of fixed rates at the same time, so their repayments have risen sharply,” Mr Ameer said.
“I think the investors who are selling up are the ones that own their own home and have used that equity to buy an investment property investment and are now finding they can’t afford to support the investment loan, so they’re offloading their rental property.
“A lot of brand new homes that have been recently completed in the Ipswich and Logan areas are now listed for sale, so that’s also having an impact on supply.”
Landlords selling into these areas were facing a markedly softer market as the rapid interest rate rises reduced borrowing capacity by around 30 per cent, Mr Ameer said.
CoreLogic’s data shows during the boom, Logan-Beaudesert prices jumped by 49.5 per cent, while Ipswich climbed by 42.8 per cent.
“Vendors who are selling now are facing more supply and buyers can’t afford to pay as much now because their borrowing capacity has been reduced sharply,” Mr Ameer said.
“Potential buyers are mostly investors, but their numbers are dwindling, so that’s a challenge for sellers in these areas.
“As such, I think we’ll start to see some properties staying on the market for longer and more vendors discounting their prices. We’ve been able to negotiate great deals for our clients in recent weeks and I think the situation will only get better for buyers in these areas.”
Wide Bay and Darling Downs in regional Queensland also posted a large jump in listings, with 484 properties and 214 added to these markets respectively, representing a 169 per cent and 198 per cent increase.
Meanwhile, Adelaide north, Brisbane north and Cairns also recorded a spike in listings of between 53 per cent and 59 per cent.
New listings also jumped sharply in Sydney over the recent four weeks, climbing by 14 per cent to 6189, which is the highest level since early April, according to a separate analysis by CoreLogic.
Eliza Owen, CoreLogic head of research, said listings could rise even higher in the coming weeks as more vendors were willing to test the market.
“Not only are listings higher than where they were this time of year, but they’re continuing to trend higher through what would normally be a seasonal downturn,” Ms Owen said.
“I think this could be a response to rising prices as well as surging mortgage repayments.
“If we see more out of season selling, that could take some momentum out of the market and could lead to a weaker selling environment.”
Nicola Powell, Domain’s chief of research and economics, said the unseasonal rise in listings could also indicate vendors were coming to the market earlier this year, spurred by the persistent price recovery.
“We’ve seen new listings in Sydney rise for two consecutive months, and it is unusual to see a monthly lift in June,” Dr Powell said.
“New listings are now 3 per cent higher than the five-year average, which is a massive turnaround, considering this is the first time since August 2022 that new listings have been above the five-year average.
“The unseasonal rise in new listings is helping to dilute the buyer indicator index, which means those buyers with greater intent will find a bit more choice.”