Why more home owners just decided to sell their properties

More home owners have been deciding to sell their properties over the past month than at the same time last year, and the increase in supply could dampen property price growth.

The increase in listings comes as another housing researcher revised his forecasts to warn that dwelling prices in Sydney and Melbourne are likely to fall this year, and rise less than expected in Brisbane and Perth, amid global economic uncertainty.

There was a 16.7 per cent rise in new property listings in Melbourne and 8.4 per cent in Sydney over the past month, compared to this time last year, Cotality figures show. The figures measure the 28 days to March 8, compared to a year prior.

Brisbane’s new listings edged up 0.7 per cent but Perth fell 13.9 per cent as home owners sat tight amid a property boom.

Cotality head of research for Australia Gerard Burg said new listings had largely started to trend higher over the past couple of weeks, adding that east coast home owners may think now is a good time to sell.

“We’ve seen home values at a peak in both Sydney and Melbourne, on a quarterly basis, just start to edge a bit lower,” he said.

“It may be some vendors sitting on the sidelines waiting for a bit more certainty about where the market is heading, may be drawn in now thinking, ‘we’ve hit the peak this cycle, values are likely to come off a little as demand conditions weaken, so maybe now is the time to try and sell’.”

He said supply and demand in Sydney and Melbourne were returning to more normal trends, compared to last year when demand was stronger than supply, which pushed home values higher.

“As they are moving closer together, there’s going to be a bit less support for home value increases,” Burg said.

The comments come as SQM Research separately forecast dwelling prices to fall in Sydney and Melbourne this year, revising down its outlook amid the risk that the war on Iran could keep oil prices high and push up inflation and interest rates.

Sydney dwelling prices are set to fall between 2 per cent and 6 per cent in 2026 under SQM’s new base case. It previously expected price rises of 3 per cent to 6 per cent.

Melbourne dwelling prices are forecast to fall between 1 per cent and 4 per cent, SQM said, down from a previous forecast of gains between 4 per cent and 7 per cent.

This assumes the cash rate rises to 4.35 per cent by mid-year and annual inflation peaks at 4.4 per cent to 5 per cent for the June quarter. If interest rates rise higher and inflation keeps accelerating, price falls would be steeper, SQM said.

The forecast for Perth price gains was trimmed to 10 per cent to 13 per cent for this year, and the forecast for Brisbane’s price rises was cut to 7 per cent to 11 per cent.

SQM Research managing director Louis Christopher said the situation with global events and the economy was fluid.

“The war in itself is unlikely to have any type of direct impact upon buying decisions and selling decisions,” he said.

“It is what the war does to the economy which may well have an impact. If for example, the war creates skyrocketing inflation which the Reserve Bank has to lift rates on, that has an impact [on] prices and sales.”

He thought resources markets such as Perth and Darwin would be more exposed to elevated energy and commodity prices, meaning additional income in their economies, feeding through to price growth in the housing market.

This was not the case for Sydney and Melbourne, which also have housing markets that historically had been more sensitive to interest rate changes, he said.

Burg said there is a lot more activity in the affordable end of the market, with strong value growth and greater competition, which he said was likely to continue.

He thought overall demand would be softer going forward, especially if interest rates keep rising. Population growth has also been slowing, he said.

But he said even if there was a little more supply than last year, the supply picture was still relatively tight. “That would probably limit any downside risk to home values,” he said.

“We see this little bit of an improvement of the existing stock coming onto the market compared to where we were last year. But [due to construction costs] it is still very constrained in terms of the ability to supply new stock into the market.”