Where have all the listings gone?

If you’ve been looking for a property and thinking there aren’t as many for sale as usual, you’d be right.

The number of listings across the Upper North Shore in June 2023 was down 12% compared to June 2022 (2,930 v 3,143), according to SQM Research.

And June 2022’s figure was already down compared with pre-pandemic levels, a time when the number of properties for sale in our area sometimes cracked 4,000 in a month.

With that in mind, we thought it was time to take a look at what’s behind the current low listing levels and what needs to change to reverse the trend.

Part of a long-term trend?

First of all, it’s worth noting that, for a city of our size, not a lot of property changes hands. Melbourne – which has a similar population – routinely registers 50% more listings for sale than Sydney does.

It also seems that, as Sydney grows, fewer people are selling. In fact, the average duration we hold a house in our city has blown out to 12.4 years, according to realestate.com.au. That’s up from 9.3 years in 2010.

We hold onto apartments for slightly less time, 9.6 years. But it’s still up from 7.7 years in 2010.

Given people hold onto property for longer, fewer properties naturally come to market. So the next question is to logically ask why people are holding onto their properties so long?

Stamp duty costs

We think one of the main ones is the high cost of transfer duty in NSW, which can make changeover costs, or the cost of moving house, expensive. This cost, which needs to be paid upfront when you buy a property, has become even more burdensome as the cost of Sydney property has risen post-pandemic, as the table below shows.

* Source for property data relaestate.com.au

In other words, the upfront cost involved in buying into the median home in Lindfield is now almost $90,000 more expensive than it was four years ago – something that acts as a disincentive to sell and upgrade.

Renovating rather than moving

Walk down any street in Hornsby Shire or Ku-Ring-Gai and you’re likely to see tradespeople at work right now. Major renovations – and even knock down rebuilds – are proving to be more popular than ever.

We believe the popularity of renovations is being driven by several factors, including the high cost of transfer duty making it an attractive choice. However, it also affords people an opportunity to get their home just the way they want it. That’s something that gained importance during the pandemic, when we tended to spend more time at home and lifestyle became a key factor in people’s property choices.

Again, the popularity of renovations is leading to fewer listings. That said, the number of renovations may begin to fall off as rising construction costs start to bite.

The impact of high interest rates

Of course, there’s no escaping the impact interest rates have had on our local market over the past year and a bit. Since May 2022, the RBA has announced 12 different rate hikes, raising the official cash rate from 0.1% to 4.1%.

Rate hikes affect listings in a couple of ways. First, it adds to the cost of borrowing. Most people who sell also need to buy, so they often find their budget shrinks. They often also find that they can borrow less.

Second, and what we’ve noticed more often, is that they create uncertainty. People don’t know when the rate rises will end, or the effect they will have on the economy. So they hold off listing, preferring to stick to the status quo. That means fewer properties come to market, and less transactions take place.

Lack of options

Finally, a lack of listings can become self-perpetuating. People don’t list because they need to buy somewhere new. However, there’s nothing available on the market that suits them. This, we’ve noticed, has been especially true in certain market segments such as downsizers.

There simply aren’t enough properties suitable for this important demographic in our local area. So they often choose to remain in the family home. This means one less property for someone upgrading from an apartment to a family home; and potentially one less property on the market for someone looking to buy their first apartment further down the property ladder.

In other words, low listing levels drive listing levels even lower still.

There are also too few properties generally across Sydney to meet its growing population, with more development needed just to house an expected population increase over the next year and beyond.

When will it end?

The good news is that we’re starting to see more properties come to market. CoreLogic reported that in June 2023, the number of listings across Sydney ticked upwards, adding to choice and reducing urgency in the market.

We believe rising construction costs may also have tipped the balance in favour of moving house again, instead of trying to renovate. And, as more properties begin to come to market, we’re also likely to see more people begin to list, so that activity returns. Plus, there’s always an increase in listings in the Spring selling season.

In short, we believe the second half of 2023, will present buyers with more options than the first half. That makes this a good time to list and move into your next home.

Want more?

Thinking of buying, selling or renting on Sydney’s Upper North Shore, including Ku-Ring-Gai and Hornsby Shire? Get in touch.