The biggest factor holding back our property market

Over the four weeks to July 8 this year, RP Data tracked 301,414 unique properties advertised for sale across the country. While the number of homes available for sale is very high, the volume has been reducing and is actually about -7.4% lower than when supply levels peaked last November.

It’s important to note that the total listings count includes both new listings (i.e. properties that haven’t been advertised over the past six months) and re-listings (properties that have been advertised at least once previously over the past six months). The measurement of new listings compared with re-listings is an important one, as it provides an insight about why listings numbers are so high.

At a national level, RP Data counted 42,473 new properties advertised for sale over the four weeks to July 8, 2012. This figure was actually -4.6% lower than at the same time last year and -38.4% lower than the historic peak. New listings are currently at virtual record low levels outside of the highly seasonal Christmas/New Year period.

Clearly, the large number of homes available for sale is due to a lack of absorption rather than a large number of new listings being added to the market. Transaction volumes are tracking about -13% lower than what was recorded at the same time last year. Additionally, homes are taking longer to sell. Both of these factors are contributing to the higher stock levels.

An encouraging sign that market conditions are improving is that selling time has been trending shorter over 2012 and there has been a subtle improvement in transaction volumes as well. Both these factors, together with the fact that new listings have also been diminishing, is resulting in a reduced level of effective supply. How do we calculate the number of homes for sale?  

Firstly, we need to acquire the listings data. RP Data has an exclusive arrangement with Australia’s largest real estate portal, which provides us with a direct feed of all their listings data, including the complete address of the property that is not always available to the public. We also ‘key’ listings from all the major capital city and regional media around the country. The net result is that we are capturing what is likely to be close to 100% of all properties that are being advertised for sale around the country.