The level of residential property listings in Adelaide has plunged by more than six per cent, signalling a shift from an over-stocked market.
National figures released by SQM Research show Adelaide, Hobart and Perth all experienced substantial monthly declines of over four per cent, whilst the only capital city to record a rise during July was Darwin, increasing by a mere 0.9 per cent, or just 12 listings. Louis Christopher, Managing Director of SQM Research, said the tightening of stock comes after a prolonged period of excessive supply across Australia.
“Nationally, listings are still elevated,” Christopher said.
“However, there is now a large contrast between the readings of certain cities.
“Take Melbourne as an example – despite apparent high clearance rates at auction, there is still too many listings on the market, creating headwinds for a Melbourne housing recovery. In contrast, Sydney is clearly experiencing a shortage of listings in the market, which is putting upward pressure on real estate prices.”
Adelaide’s stock levels remain high on a per capita basis..
Housing finance figures have risen for the sixth consecutive month, providing some evidence the home construction sector is staging a recovery.
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The number of home loans approved in June rose 2.7 per cent, the Australian Bureau of Statistics said.
The result was better than the 2.0 per cent rise economists were expecting.
Macquarie senior economist Brian Redican said the strong result didn’t mean the Reserve Bank of Australia (RBA) wouldn’t cut the rate again later in the year.
“Given that this is the one sector that is moving forward you’d hope that it has a bit of momentum behind it,” he said.
“The RBA governor, in his recent speech, indicated there was scope for both investors and first home buyers to come into the market and that’s part of the reason why the RBA has been cutting rates. It’s not a reason to stop cutting rates.”
Redican said the only minor concern in the figures was that lending for the construction of new dwellings only rose 0.2 per cent.
“That’s the component of these housing finance numbers that you’d hope would be accelerating rather than decelerating,” he said.
“Certainly, the headline number was a good outcome.”
JP Morgan economist Tom Kennedy said the stronger-than-expected result highlighted the fact that the housing sector was responding to the record low cash rate.
“This is actually the sixth consecutive monthly increase we’ve seen. We haven’t had a negative print yet for 2013,” Mr Kennedy said.
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“We’re starting to get to pretty good numbers with commitments up 13 per cent on year-ago terms.
“It’s, obviously, a positive sign that does suggest there is a little bit of activity perhaps picking up in the residential housing market.
“Although activity across the economy is pretty soft, it does look like housing is perhaps one sector that is responding to the low interest rate environment.”
The RBA on Tuesday cut the cash rate a quarter of a percentage point to 2.5 per cent from the already record low of 2.75 per cent.
In another report released today, housing construction has improved slightly, but overall activity in Australia’s construction sector has fallen for a 38th consecutive month.
The Australian Performance of Construction Index (PCI) came in at 44.1 points in July; readings below 50 indicates activity in the sector is falling.
Australian Industry (Ai) Group director of public policy Peter Burn said the fading mining-related construction activity was not being offset by the other construction sub-sectors.
“While the house building sub-sector approached an expansion in activity, apartment-building slowed at a steeper pace and commercial construction was also slower in July,” he said.
“The industry continues to face a tough and uncertain environment characterised by tight credit conditions, a lack of public sector building activity and subdued investor sentiment.
“The further reduction in the cash rate announced yesterday will be welcomed by the construction industry and can be expected to exert a much needed favourable impact over the next few months.”
Housing Industry Association chief economist Harley Dale said the transition of the Australian economy driven by mining investment to one driven by other sectors is not taking place.
“A recovery in non-resource-related construction activity is crucial to a successful rebalancing of growth,” he said.
“The latest Australian PCI update takes us in the right direction with an improving profile for detached housing and engineering construction providing encouragement, although both sectors are still in negative territory.”
