‘Staying put’ owners cause house sales crash

Posted on March 16, 2009 by peter 
Filed under Australia Real Estate News · Tagged:

House sales have crashed on a national level as middle and high-end owners avoid listing their properties as the financial turmoil continues.

While property clearance rates – the proportion of auctioned properties being sold – continued to improve in the southern capitals over the weekend, property volumes reveal a grimmer story.

In Sydney the auction clearance rate was 63 per cent, up from 47 per cent the same weekend last year. But the number of properties sold slumped from 229 last year to just 127 at the weekend.

In Melbourne the auction clearance rate remained steady – at 66 per cent – but the number of properties listed for sale crashed from 1265 the same weekend last year to just 396.

In Brisbane and Adelaide, markets dominated by private-treaty sales, the cupboard had almost been stripped bare, with clearance rates and property volumes both taking a dive.

In Adelaide only 25 properties were put up for auction compared with 108 for the corresponding weekend in 2008, and with eight auction results yet to be reported, 17 properties had already been passed in.

Only 38 properties were placed on the market in Brisbane compared with 115 for the same weekend last year.

Real Estate Institute of Victoria head Enzo Raimondo said it was the decline in properties available for sale that had driven the recovery in clearance rates. “We’ve seen a decrease in transactions right across the board,” Mr Raimondo said.

He said home owners had become unwilling to sell unless they were forced to. “While we’re seeing a lot of increased activity in the lower end of the market, the median to higher end where most of the action usually takes place has slowed down to a whimper,” he said.

SQM Research managing director Louis Christopher said first-home buyers had buoyed lower-end sales, but he cautioned them not to rush into the market because prices were likely to fall.

“Buying a property because of the increase to the first-home buyer’s grant is like having a baby because of the baby bonus,” Mr Christopher said. “It’s not a wise move.”

But despite the slowdown in sales, research from the Market Intelligence Strategy Centre found the “real” home lending market had proved far more robust than official data suggested.

According to MISC, the value of new mortgage settlements rose 18.5 per cent to $46 billion in the December quarter, which it attributed to the Reserve Bank’s three rate cuts during the quarter, totally 2.75 percentage points.

MISC cuts its figures from actual mortgage settlements derived from state governments’ stamp duty data. This method differs from that of the Australian Bureau of Statistics, which uses mortgage commitment data provided by selected lenders.

The ABS data showed a 20 per cent fall in December-quarter residential building approvals, seasonally adjusted, while the value of owner-occupied housing finance rose 3.49 per cent.

Mr Raimondo said if the unemployment rate steadied and confidence was restored into the economy, the market would see an upturn in the spring quarter. “(But) if the financial crisis worsens and unemployment rises then it’s going to put a real damper on the market.”