Australian housing supply reaches seven year high: Cameron Kusher

EXPERT OBSERVER

Across the combined capital cities, there is currently 5.3 months of housing supply available for sale.

If no more properties were advertised for sale it would take 5.3 months for current advertised supply to be purchased.

For this time of year, this is the highest months of supply figure any time since 2012.

To put the figure into context, at the same time last year there was a much lower 3.9 months of supply.

The lift in months of supply is a function of a lift in the amount of stock available for sale and the ongoing fall in transaction volumes.

The months of supply metric measures the volume of stock advertised for sale against the run rate of settled sales.

The result, expressed in months, provides an indication about how long it would take the market to absorb all the residential properties that are advertised for sale.

Currently, there is 4.1 months of housing stock available for sale in Sydney.

Although this still may seem like quite a low supply of stock for sale, in comparison to the previous seven years, the months of supply figure is now the highest it has been at this time of year any time over that period.

Months of supply is elevated due to much lower transaction volumes and an elevated volume of stock for sale.

In Melbourne there is currently 5.9 months of housing supply for sale.

Although that figure has reduced slightly over recent weeks, it is still currently higher than over the same period during any of the previous seven years.

Much like Sydney, a much slower rate of sale and much higher stock for sale has led to the heightened supply.

There is currently 5.9 months of housing supply for sale in Brisbane, which is the highest for this time of year since 2012.

The elevated volume of stock for sale coupled with falling transaction volumes are the factors driving the heightened supply.

Although stock is elevated relative to recent years it has been fairly steady at 5.9 months over recent weeks

Months of supply in Adelaide is trending higher, transaction volumes are steady if not slightly higher than a year ago however, the volumes of stock for sale is much higher.

There is currently 3.8 months of supply on the market and although that figure is lower than most other capital cities it is slightly higher than at the same time last year (3.7 months).

The ongoing weak housing conditions in Perth whereby values and transaction volumes continue to fall and stock for sale mounts has led to further increases in months of supply.

At 7.7 months of supply, supply is the highest it has been at this time of year, any year since 2012.

7.7 months of supply is also one of the highest amongst all capital cities.

A major contributor to the surge in dwelling values in Hobart over recent years has been the lack of stock for sale.

More recently, the volume of stock for sale has risen however, it remains quite low reflected by the fact there is just 2.8 months of supply on the market currently.

Although that figure is low, it is higher than at the same time last year (2.0 months) and 2017 (2.7 months) but it remains much lower than previous years.

The months of supply for sale in Darwin is higher than any other capital city at 9.0 months.

Darwin has a high supply of stock for sale and low rate of sale resulting in the high months of supply.

Despite the high figure, it is actually lower than it was at the same time of year for each of the past three years.

Canberra currently has 3.6 months of housing supply advertised for sale.

Although that is a comparatively low figure, months of supply in Canberra hasn’t been as high as it is currently since 2013.

Like most other capital cities, months of supply is elevated due to a heightened volume of stock for sale with sales actually higher than they were 12 months ago.

The months of supply figure highlights why the housing market is generally falling.

Credit conditions are tight which means fewer buyers and generally leads to a slower rate of sales.

Although vendors have responded by bringing fewer new properties to the market, total stock for sale remains elevated leading to a heightened months of supply figure.

CAMERON KUSHER is the head of research for the Australian branch of CoreLogic

Kusher regularly posts on the CoreLogic website.