Stock on the market: some over-supplied, others under-supplied

By Michael Matusik, 25th September 2012

There are 22 million people and 5.82 million detached houses in Australia. Three out of five, or 60%, are located in a capital city – although only 40% of houses for sale are in the capitals.

About 5% or 300,000 of Australia’s houses were for sale in August, which is about 10,000 more houses than for the same time last year – an increase of about 3%. This means there are 4,000 more houses for sale in the capitals than a year ago, and about 5,500 more on offer in the regions. Yes, stock levels are rising – but where?

All up, there are about 120,000 houses for sale across all the capitals, and 175,000 for sale in the regions. Houses make up 75% of all dwellings for sale across the eight capitals, and hold 85% of market share in the regions.

There are fewer “for sale” signs of late in Perth (down 1,700), Brisbane (down 1,400) and Darwin (down 275 or a whopping 25%). In contrast, the remaining five capitals all saw an increase in detached housing stock for sale, especially Melbourne – where there are 5,500 more houses on offer than this time last year.

In the regions, houses for sale dropped in SA and Queensland, remained steady in the NT and Tassie, but increased in Victoria (up 3,800), NSW (up 1,750) and WA (up 1,450).

Does this mean things are pretty crappy for detached housing in Melbourne and Victoria? And things are looking up for Queensland, SA and Perth?

Not necessarily.

When you cross-reference the “for sale” detached house figures with the numbers of detached houses in each capital and regional market, the results tell quite a different story.

Despite the lift of 4,000 extra houses for sale this year, the total of 120,000 houses for sale in all capitals actually represents just 3% of stock.

I reckon a turnover of between 4% and 6% for detached houses is normal; anything less than 4% is a bit tight or under-supplied. Anything over 6% is obviously a bit loose or over-supplied.

So, that means the under-supplied detached housing markets are:  Sydney (2%), regional NT (2%), Darwin (3%) and Perth (3%).  (The percentage refers to the number of detached houses listed for sale against the total number of detached houses).

Detached housing markets at equilibrium are: Adelaide (4%), Brisbane (4%), Melbourne (4%), Hobart (5%) and regional NSW (6%).

The over-supplied detached housing markets are: regional WA, especially the Margaret River area (14%), regional Victoria (9%), regional Queensland, including the Gold and Sunshine Coasts and Cairns (8%), regional SA (7%) and the rest of Tassie (7%).

That changes things a bit, doesn’t it? Or perhaps it just confirms what most of us already knew.

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Michael Matusik

Michael Matusik is a leader in residential market analysis and property advice in Australia.

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