The change in the local property market identified last month has been reinforced by the latest statistics for June. A significant shortage of new listings matched to a steady level of sales has resulted in a significant reduction in inventory. This is beginning to put pressure on buyers resulting in the first signs of a strengthening in prices.
The adjacent chart ably demonstrates the change in the market. The red trend line tracks the level of new properties listed for sale as it dips below the blue line denoting the level of sales. This is clearly a position that is not sustainable for long.
The median sale price of houses over the past 3 months edged up 11% as compared to this time last year at $1.825m, additionally the sales price of units edged up 2% as that segment of the market continues to show signs of recovery.
Whilst this upward pressure on price is good news for sellers; it’s important to recognise that actual sales numbers remain very low. Just 37 properties were sold in the past 3 months, down 22% compared to the same time last year. This low sales volume is largely a function of insufficient choice for buyers who don’t feel pressured to buy. The chart below shows the trend of sales volumes with a consistent sales volume tracking below the same time last year as it has been for the past 8 months with little sign of any improvement.
Typically, Winter tends to be a quieter time for new listings, however it does open up the opportunity for people thinking of listing their home for sale as they will be competing for buyers in a less cluttered market. This could just turn out to be the best opportunity in the market. My advice is don’t wait for Spring – get on the market now, find those keen buyers, lock in a longer settlement and thereby secure yourself a great negotiating position come Spring to be cashed-up and able to negotiate hard for the best choice of new properties as they come onto the market.
The majority of Devonport properties are traditional stand-alone family houses and this segment is experiencing strength, albeit off low volumes, The chart below shows the unusual sight of divergent trend lines, with property sales showing continued weakness and yet the trend line shown rising.
Such can be the situation in certain circumstances in economics as a shortage leads to rising prices. This is not that common in property markets where normally sales volumes track ahead of prices. Strong sales growth generates confidence, which tends to lead to rising prices. Conversely slowing sales tends to foresee weakening prices.
The current situation is not likely to remain for long, as the supply side of the market, aware of the steady demand and strengthening prices will naturally lead to new listings, which will then flow into rising sales volumes. It is also likely that the rising inventory will remove some heat from the pricing side of the equation.
The market for owner occupied and investment units is enjoying somewhat of a resurgence in terms of sales volumes which are trending up significantly, albeit off a low base. Having seen year-on-year sales volumes down 70% this time last year we now see sales volumes up 70% as compared a year ago.
The reality is that two years ago the annual rate of sales of units was 43, last year at this time it fell to 14 sales per year. In the past 12 months total sales have risen, but only to 25; far from the levels of two years ago, such are the vagaries of statistical analysis.
This somewhat more active market is though not as yet having an impact on the median sale price of units which at $665,000 is up just 2% as against this time last year.