Is the pressure finally beginning to ease in Victoria’s piping hot housing market?
We are only part way through May, which is typically a busy month, but early signs of a slowdown are appearing. As our most recent Q Report predicted, Buyer fatigue is becoming a reality, with industry experts reporting fewer offers being submitted per property, and numerous listings seeing their offer presentation dates come and go without a single bidder — not because the homes aren’t saleable, but because the buyers are telling their Realtors that they don’t want to show up to lose yet another gunfight.
We’re always tracking the numbers, and we are beginning to see the market data bear out what we’re hearing anecdotally from our industry colleagues. The sold price to original price ratio for single-family detached homes has been in decline for three straight months, as the chart shows.
Another metric we’ve included in several recent reports, the number of sales below asking for SFDs moved from the 25% of sales we reported in Q1 up to 31% in May, meaning the proportion of sales below asking grew by 24%.
April also saw the number of new listings increase by 10.4% and the total number of sales decline by 3%, compared to March. This has led to a slight increase in months of inventory for April, although the market is still well below historical norms. Even if we see a slowdown set in during Q2, it will still take several consecutive quarters of more listings than sales to see inventory rebuild.
Interest rates have moved up slightly, but not significantly, and the government’s latest tweak to the B-20 stress test is only expected to amount to a decrease of around 4% of buyer purchasing power, which has been widely expected to have little effect on the market as this change takes effect in two weeks. When the qualifying rate was last increased, there was a surge of activity just before the change took effect as buyers scrambled to beat the deadline. This time, we’re seeing sales volume move in the opposite direction. Given the backdrop against which individuals are making decisions, we attribute most of what we’re seeing coming down to buyers’ lessening willingness to participate in subject-free, blind-bid multiple offer home sales — which we all hope means a return to a more sane market.
So, if you’ve been struggling to get a purchase going this year, now’s the time to hang in there; things may well be getting easier. If you’ve been thinking of selling, it’s time to shine your property up. It’s still a seller’s market — we are still seeing multiple offers — but you will likely need to adapt your strategy back toward a more ’traditional’ way of doing things in the near future, depending on your product and price point.
As always, our market knowledge and analysis is available to you personally. If you need an expert consultation on your specific situation, hit ‘reply’ now, and we’ll get to work crunching your numbers.
In case you missed it, you can still read the in-depth analysis in our latest Q Report for free at victoriaqreport.com
Thanks for reading, thanks for sharing,
Dirk & Fergus