Message from Dan White, Ray White Group Managing Director

While our Australian sales results for September 2022 confirmed that the market didn’t enjoy a typical spring bounce and came in well shy of our September 2021 results, they showed that overall market activity has not declined in recent months despite continued negative speculation. Our data also confirmed that the Queensland market continues to significantly outperform New South Wales and Victoria, as it has done since the start of COVID-19 in 2020.

We recorded $5.1 billion in sales in Australia in September, up 3.5 per cent on August. This lack of a significant spring bounce resulted in a 16 per cent decline in sales value compared with September 2021. When comparing sales results to September last year, New South Wales had the largest decline at 36 per cent, while Queensland had the smallest at 11 per cent. For the first time in many years, both South Australia and Western Australia experienced a decline in sales year on year. Victoria only had a two per cent decline, however this is likely because Melbourne was in lockdown for most of September 2021.

The value of residential stock listed for sale during the month was $5.5 billion, which was approximately nine per cent less than last year. It was also down from $6.1 billion in August, which again goes against the usual trend for this time of year. New South Wales saw the sharpest reduction in new listings across all markets, reflecting anecdotal stories from our members that potential sellers are more hesitant to go to market.

This increased caution from potential sellers comes at a time when other key metrics stabilised during September and pointed towards a more balanced market between buyer and seller.

One of the metrics that’s stabilised in recent months is market liquidity, being the speed, or the efficiency, of sales. This is best determined by analysing the median number of days it takes to sell a property. We’ve seen days on market steadily increase from 27 days since the last quarter of 2021, reflecting an increasing disconnect between the expectations of sellers and buyers. Our median days on market in September steadied at 35 days. For properties listed as auctions, the median days was 29, and for properties listed as private treaty sales it was 41. While these numbers are higher than the average of the past two years (32), the trend we’ve seen since the start of the year of increasing days did not continue in September.

This steadying of the market has also been reflected in another important metric - clearance rates. A clearance rate shows the percentage of properties that are sold by a certain number of days since they came onto the market. We think the 45 days clearance rate is most relevant. For August, the 45 day auction clearance rate averaged 62 per cent. For context, at the height of the boom in November last year, it was 76 per cent and it was 70 per cent in March of this year. The 45 day private treaty clearance rate averaged 38 per cent (59 per cent in November 2021 and 55 per cent in March 2022). Again, these clearance rates have stopped falling in recent months.

Another sign of a more consistent market was our auction bidder statistics. We recorded an average of 2.5 active bidders per auction in September. While this is only a marginal increase on August, it’s the first increase in bidder numbers we’ve seen this year.

One might assume that given these statistics, there must be many more properties being sold via auction. However, this isn’t the case. The percentage of total new listings being marketed via auction has remained flat at around 34 per cent, well down from the near 40 per cent mark earlier this year.

So in summary, our September figures illustrate:

• a consistent level of sales being made as per recent months, but missing the traditional spring lift in activity;

• a steadying of the median days on market, clearance rates, and auction bidder numbers for the first time since earlier this year, showing a narrowing of the gap between seller and buyer; and

• early signs of a reduction in new listings and auctions, which again is unusual for this time of year, and also unusual given the improvement in the key metrics we monitor.

It seems the extensive and consistent negative media headlines we’ve seen in recent months are taking a toll on the confidence of potential sellers to come to market. There was no shortage of media stories that might put doubt in the minds of potential sellers, and give them reason to delay any plans to sell.

However, there’s still 2.5 months until Christmas and we may still see more stock come to market, especially if October activity continues to follow the trends of September. And potential vendors that are contemplating whether to wait until 2023 will begin to recognise the risks of doing so, given the range of domestic and international issues that may come into play the longer they wait.

On another matter, it’s not surprising, based on the information above, that our own internal median price indices show that after a period of price decline since early 2022, they’ve flattened out over the past few months. These indices also show the outperformance of the Queensland market, especially in comparison to New South Wales and Victoria. The growth of Brisbane’s median house price over the past three years has been twice that of Sydney and more than three times that of Melbourne.

There are no doubt many factors contributing to the growth of Queensland’s median prices, but high on the list must be its population growth which has been by far the strongest of all states in recent years. Its significantly lower capital city median house price is another.

Finally, a look at our customer experience numbers. Have our customers rated their experience of selling and buying differently since the start of the new interest rate cycle and changes in the market? Our results show us that our scores (we use the Net Promoter Score (NPS) regime have remained very steady over the past 12 months, despite a more challenging result for sellers. Our overall NPS scores sit within a +79 to +82 range on a monthly basis over the past 12 months. This reminds us that the experience we provide our members, and the service we deliver, is determined by our creativity, effort and ability to create competition and not on the state of the market itself.

Dan White
Managing Director
Ray White Group