It would not be a surprise if the fear-of-missing-out (FOMO) trend among homebuyers becomes a thing in winter, especially should the current tight supply of housing continue to persist.
CoreLogic research director for Asia Pacific Tim Lawless said buyer’s FOMO was at its peak when the market was in full flight in 2021.
“While the trend is not back, yet, it does appear that some buyer demographics are highly motivated to get into the market,” Mr Lawless said.
Mr Lawless said the pool of available properties buyers are currently competing for has been the smallest in more than 10 years.
“As demand picks up against strong overseas migration and extremely tight rental markets, there's likely to be some renters who try to fast track their purchasing decisions as well,” he said.
“A sense of urgency will likely play a part in some decision making over winter.”
Sellers might be tempted to sell
The competition among property sellers is not as intense in the current market conditions, as indicated by the decade-low listing numbers.
In fact, the total number of homes listed for sale nationally is currently around 28% below the usual.
With the ramping up of demand, however, selling conditions have strengthened, with signs pointing to above average clearance rates, faster selling time and less negotiation.
“When listing volumes are very low, selling conditions strengthen, which means potential vendors thinking about selling may well be tempted to list now rather than waiting until the traditional spring period, when activity surges and there’s a spike in competition to sell,” Mr Lawless said.
Clearance rates, for instance, have been holding up at 70% or higher in recent weeks, while volumes are slowly on the rise at a time when they would traditionally start to drift lower.
Will the recent price uptrend be sustainable?
Looking at home values, however, there remains a concern about affordability.
Home values across the four largest capital cities all recorded an increase in housing values from the lows recorded in February.
The upswing is gathering momentum, particularly in cities such as Brisbane and Sydney, with the latter still leading the charge.
“Considering housing affordability measures remain stretched such a strong rate of growth is surprising and probably unsustainable,” Mr Lawless said.
Interest rates still spur uncertainty
Mr Lawless said any easing in monetary policy would see a lift in consumer spirits, accompanied by a substantial pick up in both buyer and selling activity.
“Logically, lower interest rates would be the catalyst for a further uptick in housing values,” he said.
“Of course, we're not expecting a rate cut anytime soon and there's speculation that rates may even rise a little bit further this year.”
These uncertainties could lower consumer confidence.
“We can’t ignore low consumer sentiment levels, which will also be having some dampening effect on the market’s current exuberance and we shouldn't expect to see a material lift in property activity until there’s an improvement in consumer confidence more broadly,” Mar Lawless said.
Photo by Bench Accounting on Unsplash.