Home > Uncategorized > Has sales stock peaked for this property cycle?

Has sales stock peaked for this property cycle?


I saw this article written by Alistair Walsh, and featuring opinions of Louis Christopher of SQM Research (great company, great website!), which was re-posted on the Australian Property Forum, having been originally listed at Property Observer:

http://www.propertyobserver.com.au/residential/no-october-listings-surge-except-in-hobart-and-adelaide/2011110852253

There, Louis discusses his thoughts on whether sales listings have peaked for the time being, ie. for this cycle in the property market. It’s a decent read.

It briefly got me thinking about what I thought, and I wrote a brief piece, which I posted at the Australian Property Forum, but also post here.

Enjoy.

I’m not going to agree or disagree with Louis emphatically…

However, I will refer to the updated Australian sale-rent ratio chart from BurbWatch:

Posted Image
It seems that the next phase of the cycle has started nationally, indeed, where the sale-rent ratio will turn down. However, this can occur in a number of ways, just as long as the net result is for the sale-rent ration to turn down.

Honestly (and probably going out on a limb a little bit!), given the very high demand for rentals and the very low demand for sales, I am actually inclined to say that a likely trajectory for sales and rental listings is for each to rise slightly over the next 1-2 months, such that the sale-rent ratio still turns down.

These are for a few reasons for me thinking this, but the main reasons are new sales listings continuing to come onto the market steadily, due to seasonality and the perceived opportunity of moving a property amongst a climate of lower interest rates, actual and noticeable vendor price reductions, and a slightly renewed interest in buyers; this, combined with many listed vendors converting their properties to rentals, may result in a slight net increase in sales listings.

For rental listings, I am picking that many potential buyers will continue to instead keep opting to rent, but that there will be a net increase in listed rentals coming from sales conversions, again, such that the sale-rent ratio will continue to move lower.

So, I don’t outright disagree with Louis, but I do have a hunch that there will still be a slight increase in sales listings over the next few months…but my hunch is just not strong enough to just say “nah”.

I’ll admit that I already have a bit of a headstart, as the Burbwatch data to 11/11 shows that this is what has been happening already for a couple of weeks:

Posted Image

But I guess we’ll all find out soon enough.

Advertisements
Categories: Uncategorized
  1. michael francis
    November 18, 2011 at 12:07 am

    There is a third force at play in the rent-buy equation which is ‘shared accomodation’. Mates moving in with mates or young adults moving back in with parents to save costs. An increase from 2.2 persons per dwelling to 2.3 persons per dwelling would free up 200,000 dwellings. Vacant dwellings earn no income to offset holding costs such as debt repayments resulting in increased defaults. Inceased defaults, forced sales, crash in prices.

  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: