Why stock on market matters
In amongst the various property data sets that are regularly released is one that probably doesn’t get enough attention in my opinion.
I’m talking about stock on market, which is a metric that compares how many properties are currently for sale now versus one month, one quarter or one year ago.
Apart from during a pandemic, as it turned out, stock on market usually doesn’t unexpectedly change dramatically from month to month.
Rather, in strong market conditions, we often see a lower volume of stock on the market, which is a more demand than supply situation and generally results in strengthening prices.
Conversely, when markets are a bit sluggish, there are more listings than active buyers, which often causes prices to decrease.
What is interesting with the latest stock on market research is that the state of our property markets, when it comes to active listings, is not as bad as many would have us believe.
That’s because in our two biggest cities, stock is generally at the same levels as they were in August last year.
However, they are the outliers compared to our other capitals, with stock set to increase further in Sydney and Melbourne it seems as the economic fallout from the pandemic hits some homeowners in the months ahead.
Low stock, strong demand
In other capital cities, though, the opposite is true because there is significantly less stock on the market than there was at the same time last year.
Take Brisbane, for example, where listings are down nearly 10 per cent compared to August of 2019.
Sure, part of the reason for the reduction of stock is because of the economic uncertainty, with many people opting to stay put rather than move forward with selling their properties.
However, the low volume of properties is creating strong demand for listings in some Brisbane locations and that is pushing up prices.
I was recently interviewed by the Sunday Mail in Brisbane about this very situation because the start of the spring selling season was looking much different to years gone by.
My experience on the ground in Brisbane over recent months meant I had first-hand knowledge about the current scenario of more demand than supply.
Indeed, we have recently started to invest in different locations because emotional buyers, that’s first home buyers and upgraders generally, have been competing against each other to the point that prices were no longer financially viable for investors.
On the other hand, investors need to make sure that a property’s buy-in price will not cause such a drag on their cash flow that it won’t be financially viable to hold for the long-term.
In some Brisbane suburbs, this has certainly been the case, which is why we are now active in other locations where the numbers stack up much better for investors.
Don’t get me wrong, there are still hidden gems to be found in the pockets suffering from a lack of supply, but they are few and far between.
Of course, only time will tell whether stock on market levels will normalise over coming months.
In the meantime, though, we are ensuring that every property we buy for clients has been secured for a price that will hold up to investment scrutiny in the months and years ahead.
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