Garth Davis – Sydney Morning HeraldInvestment Property expert
The stale property listings languishing on market in Perth
Picky property buyers are taking their time to choose a new home on the back of eight consecutive interest rate rises, leaving more listings to languish on the market – and for longer.
There were 14 per cent more “stale” property listings – homes that have been for sale for more than 180 days – on the market in Perth in December than a year earlier, including an increase of 4 per cent in one month, SQM Research figures show.
Stale listings rose in almost every capital city; they tripled in Hobart, were up 47 per cent in Sydney, and gained 27 per cent in Melbourne. Only Adelaide and Canberra bucked the trend.
“They typically are properties where the vendor is asking way too much money,” SQM Research managing director Louis Christopher said.
“The major issue is vendors listing their properties with an asking price that is well and truly above the market.”
Christopher said most major Australian centres except mining towns had liquid property markets, where there would be a buyer for any home for sale, making stale listings uncommon during a normal market but increasingly frequent during downturns.
He said this could lead buyers to worry that a property must have something wrong with it if it had not sold quickly.
“These type of properties, they start developing a bit of a stigma around them,” he said.
“[Buyers think] there must be something that they can’t see, and they get quite concerned.
“Vendors, if they want to sell their property in this market, they have to meet the market.”
House values have risen by 3.6 per cent in Perth over the 2022 calendar year, bucking the trend seen over east where property values have fallen 12.7 per cent since their peak in Sydney and 8.3 per cent in Melbourne, according to CoreLogic data.
SQM also found a fall in the number of listings selling under distressed conditions nationally in December, which remain well below pre-COVID levels.
The number of distressed listings fell 5.3 per cent nationally and 8 per cent in WA. For the year, distressed listings were down nearly 20 per cent in the west.
Christopher said the number of forced sales was unlikely to jump unless the cash rate rose above 4 per cent and made it hard for homeowners to meet their mortgage repayments.
Garth Davis from Property Powerhouse said buyers had become more discerning, with properties in the higher price bracket listed for longer on the back of eight consecutive interest rate rises in 2022.
“Properties in top price quartile are taking longer to sell, and that is because they are the most expensive and where affordability is tighter,” he said.
“Buyers in that top price point are looking for value, and sellers are not willing to discount, which means the properties stay on the market a little bit longer before they are sold.”
Davis said once interest rates stabilised in 2023 the property market properties would start to sell faster again and there would be less “stale” stock.
Buyers’ agent Peter Gavalas, from Resolve Property Solutions, said overpriced homes – or those with property flaws – were among those languishing on the market.
“Some sellers are expecting more and are pricing a premium into their expected price, which hasn’t been seen for the last three to six months,” he said.
“Although newer or renovated properties are still drawing a premium and multiple offers.
“With older properties that need work, people are factoring in building costs, building labour shortages and supply issues so a lot of owner-occupier buyers are avoiding properties that need either updating, renovating or knockdown and build.
“Land sales have dropped dramatically due to the same reason.”
Gavalas said given the uncertainty surrounding when the interest rate cycle would peak, there was some hesitation from buyers in the market.
“There has been some people spooked by the eastern states, but that’s only 20 per cent of buyers,” he said.
“Good properties priced correctly in good areas are still in demand and there are a lot of buyers looking for these properties.”