Too many sellers, not enough buyers will keep market soft: John Symond

An oversupply of sellers and not enough prospective buyers is the reason the housing market is soft and will remain soft for some time to come, according to Aussie Home Loans founder and executive chairman John Symond.

He says the problem is worse for those selling expensive homes with greater demand for more affordable properties from first home buyers and investors.

“It’s taking a lot longer to sell a property, and the properties are banked up,” Symond has told the Australian Financial Review.

“There’s a lot more sellers out there than there are buyers.”

RP Data reported that the number of properties advertised for sale had ballooned to 306,000 in February, compared to 259,000 a year ago while capital city house prices have fallen about 4.35% over the past year.

The latest SQM Research listings figures for March show double-digit growth in listings in Melbourne and Sydney and increases in all capital cities.

According to Symond, the “supply-demand situation will ensure prices will remain soft for the foreseeable future”.

Symond is calling on the RBA to cut interest rates which should improve overall consumer confidence and lead to an increase in the number of prospective buyers.

He says consumer confidence has taken a “battering” with people continuing to reduced their household debt and reluctant to spend on big items such as housing.

“I don’t think it’s a structural problem, I think it’s a confidence problem brought about by concerns everywhere you look, whether it’s globally, the local political scene, as well as the non-mining sector. They are all struggling,” he says.

“All the economic data is trending down. This is why I believe the RBA ought to step in. They are the only ones who can instantly inject confidence by dropping rates.”

In his April Australian Housing snapshot Paul Braddick, head of property research at ANZ, says house prices will fall further before bottoming out sometime in 2012.

“After softening considerably in the second half of 2011, the housing sales market has shown tentative signs of life in recent weeks. While we expect prices to find a floor in 2012, we are not convinced that the nadir has been reached,” Braddock writes.

"Heightened job security concerns are weighing on sentiment and with house prices falling, buyers perceive little urgency to enter the market," he adds.

Glyn Morgan, chief executive officer of the Professionals Real Estate Group, also believes that the current problem is consumer confidence and is urging the Reserve Bank to take action.

“RBA governor Glenn Stevens has pointed out that there are differences in the performance of Australia’s industry sectors and he wants more information before taking the next step,’’ says Morgan.

“I am saying that he could walk into any local real estate agency or the local shop and he could quickly find out what the problem was.

“The whole thing comes down to consumer confidence and it is falling again.

Morgan says the problem is particularly bad in the tourism hotspots such as Gold Coast, Sunshine Coast, Cairns and Port Douglas.

“I understand that the RBA has to view the economy as a whole but the two speed economy has left the nation divided between winners and losers.

“I think if you speak to most people on the street, you find that they are a lot worse off now than they were at the beginning of 2008.

“This is despite the fact economists and the Reserve Bank say the economy is travelling relatively well,” he says.

Larry Schlesinger

Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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