What to make of this year's spring selling surge

Spring is typically the busiest time of year for Australia’s real estate market for both buyers and sellers, but how did this year stack up?

The home price uptrend has persisted despite the higher interest rate environment, and national prices cycled through their 23rd consecutive month of growth in November.

As a result, sellers remained confident and listing activity was busier than usual this spring.

The PropTrack Home Price Index indicates national home prices hit a fresh record in November, though the pace of growth has slowed since earlier in the year.

New listings volumes trended higher as more properties hit the market throughout the selling season.

According to the latest PropTrack data, the number of listings that came onto the market Australia-wide this spring (September, October, and November) was 13% above the prior 5-year average from 2019-2023.

Not only that, but it was also the busiest spring selling season since 2021, during the pandemic price boom.

The number of properties that hit the market this spring was 8% higher than the same period last year, offering much more choice for those looking to buy.

That was good news for buyers, with more choice meaning less competition for properties listed for sale and less urgency to transact – a factor behind slowing home price growth in recent months.

Despite the higher interest rate environment, weak economic growth and subdued consumer sentiment many homeowners are anticipating their next housing move, with most having seen a significant increase in home equity after the price rises of recent years.

Buyers right around the country experienced this increase in choice, with every capital city except Darwin recording busier than usual activity this spring.

Adelaide recorded activity in spring that was more typical, with the number of new listings hitting market across September, October and November just a little above the average over the past 5 years. But still buyers had 6% more choice through this spring compared to the same period in 2023.

But there are some parts of the country where listing activity surged. Price growth also differed across the country with the balance between listing activity and demand a driving force behind that varied performance.

Canberra, Melbourne, Perth, and Sydney recorded stronger-than-typical spring selling seasons, with 21% more new listings in Canberra than has been typical, and 16% more in both Melbourne and Perth.

Canberra was particularly busy. This was Canberra's busiest spring in at least a decade.

The surge in selling activity rebalanced conditions quickly in some markets, with buyers spoilt for choice.

For much of this year Sydney home prices defied affordability constraints.

However, now in combination with the large uplift in stock hitting seen through spring, price growth has levelled out, slowing sharply with the increase in choice for buyers.

Prices in Sydney increased by a modest 0.08% in November and are now up 4.28% year-to-date and 4.55% higher than November 2023.

While the increase in properties hitting the market in Sydney this year has been met with strong demand, greater stock for sale has been a contributor to the sharp slowing of price growth, along with affordability constraints and the sustained higher interest rate environment.

The lift in choice in Sydney has also given buyers the upper hand, with more power to negotiate.

It is likely Sydney home prices continue to see this slower momentum maintained in the months ahead until interest rates begin to move lower in 2025 and reboot buying activity.

In Perth, although this spring was the busiest since 2021 with a 16% surge in new listings relative to a typical spring and 19% uplift compared to 2023, total stock on market remains constrained.

One reason Perth has remained the hottest market in the country is relative affordability. Tight rental markets and population growth have also been a driver of strong demand.

But low stock levels have also intensified competition. Total stock on market is historically low – almost 30% below typical levels for this time of year – as new listings have been absorbed amid strong buyer demand.

However, despite home prices growing faster than in any other capital, growth has slowed sharply with buyers enjoying more choice over the past quarter, in line with the slowing momentum seen in other markets.

While Brisbane has recorded a slight annual increase in total stock on market this spring, stock remains historically low – almost 20% below the average seen over the past 5 years.

Although price growth has slowed, buyers have been active this year across the country. National sales volumes in the 48 weeks of 2024 to date have well outpaced (+9.3%) the same period to date in 2023.

However, as conditions have slowed sales volumes have levelled off. National preliminary sales volumes through spring were 16% lower than in 2023.

Every capital has recorded fewer sales throughout the spring selling season this year compared to last, but sales volumes have dropped off most in Perth and Sydney, falling 25% and 17% respectively.

In the months ahead, home prices are expected to continue to lift, though the pace is expected to remain softer trailing the strong growth in prices over recent years.

The variance in the volume of properties listed for sale will remain a factor driving varied performance across the capital cities, with multi-speed market conditions set to remain into 2025. Perth, Adelaide and Brisbane are likely to continue to record stronger growth, though conditions have slowed quickly in Perth.

Although the loss of momentum in housing conditions in recent months has set the scene for a tepid start to 2025, once interest rates begin to fall next year, affordability will ease slightly, bolstering confidence and fuelling activity among potential buyers.

While home price growth is currently slowing, it is expected to regain momentum once interest rates begin to fall, though the timing of rate cuts remains uncertain.

If conditions warranting rate cuts emerge in May 2025, improved affordability and buyer confidence are expected to drive renewed demand and price growth through the second half of the year.

By Eleanor Creagh

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