Shortage of properties for sale holding up NSW housing recovery

Media release - 23^rd April, 2013

Strong market fundamentals a boon for homeowners considering move

• Robust buyer enquiry for Northern Beaches homes under $1.2 million
• Healthy demand for three bedroom homes around $800,000 in Ashfield, pushing up prices between 5% and 7% since the start of the year
• Buyers out in force at open homes in Maroubra
• Tax incentives could kick start homes sales in Wagga Wagga

Raine & Horne CEO Angus Raine is urging upgraders and empty nesters considering a location move, to list their homes for sale immediately, to take advantage of the strongest real estate market fundamentals since the GFC half a decade ago.

“We have low interest rates, population growth, improving rental yields, expanding buyer and investor enquiry levels, excellent auction clearance rates and an easing in mortgage lending conditions,” says Mr Raine.

“At the same time, consumer confidence is bullish, with the latest Westpac and Melbourne Institute report finding that 62% of those surveyed expected property values to jump over the next 12 months, while many of our offices are reporting buyer enquiry is up as much as 20% this year.”

However, Mr Raine confirms that agents from the Raine & Horne network are reporting a significant shortage of homes for sale to meet buyer demand.  

“It’s fair to attribute home owner restraint to a combination of political uncertainty and the demise of first home owner subsidies, while the GFC continues to impact the upgrader and empty nester markets five years on,” said Mr Raine.

Lachlan Yeates, Principal of Raine & Horne Dee Why/Collaroy, confirms the real estate market in his region is in positive territory, with buyer enquiry for homes priced under $1.2 million particularly healthy.

That said, Mr Yeates observes there is a shortage of homes for sale, with the GFC still proving a major factor.

To illustrate, Raine & Horne Dee Why/Collaroy is auctioning a home with a separate granny flat at 27 Nareen Parade, North Narrabeen on Monday 27^th April, which attracted 72 groups in 30 minutes to the initial open for inspection.

“This recently renovated home has a price guide of $850,000, and proves demand is strong for middle market properties in our region, yet we don’t have enough homes to go around,” says Mr Yeates, who claims the legacy of the GFC shouldn’t be underestimated.

“There were plenty of homeowners who took advantage of lower interest rates during the peak of the GFC five years ago, and healthy government subsidies, to snap up properties.

“Despite record-equalling low interest rates, many of these vendors aren’t ready to upgrade yet, and this is creating a shortage of listings in the Northern Beaches property market and further up the property ladder,” he adds.

Likewise, empty nesters have been sitting on their hands for the past five years, according to Mr Yeates.

“Many baby boomers were spooked by the poor performance of their superannuation returns over the past five years and therefore put their investment moves on hold, including a possible property downsizing,” says Mr Yeates, who estimates that around 50% of empty nesters in his region are sitting on properties worth around $1.5 million.

However, with superannuation returning to form and lower interest rates, Mr Yeates advises it won’t be long before more upgraders and empty nesters start to list their homes for sale.

“To beat the pack and take advantage of current healthy buyer demand, my advice to homeowners sitting on the fence is to list now, to give themselves the best chance of a speedy and profitable home sale,” says Mr Yeates.

In Ashfield, in Sydney’s inner west, Tony Andreacchio, Principal of Raine & Horne Ashfield, says since the demise of government subsidies, first time buyers have become as rare as hen’s teeth in his region, and this is impacting the number of homes for sale.

“We still have listings, it’s just that we have a lot less of them,” says Mr Andreacchio.

“First home buyers create a ripple effect, which enables those looking to upgrade to bigger homes to list their apartments, townhouses and houses for sale, so they can move to the next level of home ownership.”

That said, Mr Andreacchio confirms that three bedroom homes in Ashfield priced around $800,000 are highly sought after.

“Three bedroom homes are in short supply, yet healthy demand has pushed their values up between 5% and 7% in the first four months of this year, which makes now a great time to list a property for sale,” said Mr Andreacchio, who is tipping that political certainty after the Federal election on 14 September will result in a robust 2013 Spring selling season.

Tony Lucas, Director of Raine & Horne Maroubra, agrees there are seasonal factors at work, which are creating a shortage of homes for sale in his suburb.

“It is traditionally a quiet time for the Maroubra real estate market, as vendors have turned their attentions to the Easter holidays followed closely by the school holidays,” says Mr Lucas.

“Supply is likely to remain low over winter, before we see a jump in new listings around the end of July leading into Spring, when the volume of properties for sale should increase and stay firm until the end of the year.”

On the demand side, Mr Lucas confirms that buyers are strong on the ground at weekly open for inspections.

“There has definitely been an upswing in buyer demand and this is reflected in the strong property prices and competition we are seeing on the auction floor,” says Mr Lucas.

To illustrate this point, Raine & Horne Maroubra recently sold a ‘renovators delight’, which was a former doctor’s surgery at 927 Anzac Parade, Maroubra, for $877,500.

“Despite the home requiring plenty of work, we had seven registered bidders, and it sold under the hammer after some strong bidding,” says Mr Lucas.

“In previous years, a home like this would have struggled at auction, but currently conditions are ideal for vendors to potentially get a great price for their property.”

Likewise, there is a shortage of homes for sale in regional centres such as Wagga Wagga.

“Listings are down in Wagga partly because of political uncertainty,” confirms Grant Harris, Co-principal, Raine & Horne Wagga Wagga, who is suggesting some smart tax incentives aimed at owner-occupiers and investors could help encourage the sale of Wagga homes.

“For example, the interest on any funds you redraw from a mortgage against an owner-occupied home is not tax deductible if it’s used as equity to buy into an investment property,” says Mr Harris.

“By changing this situation we could encourage more investment and get real estate listings bubbling along, which would be great news for homeowners.

“Likewise, the state government could also do a bit more with some stamp duty relief for empty nesters to encourage them to move into smaller homes,” adds Mr Harris.

-ENDS-

For further media information please contact:

Angus Raine, CEO, Raine & Horne, 0409 920 697

Andrew Harrington, National Marketing & Communications Co-ordinator on 02 9258 5400