Sellers Should Have Confidence That Fantastic Results Are Achievable Right Now!

Last week's property news was dominated by the Reserve Bank's decision to leave interest rates on hold, however the real news here on the Gold Coast centres on the growing imbalance between the number of available listings for sale and the number of buyers looking to purchase.

Whilst the RBA leaving interest rates on hold was widely expected, one of the more newsworthy pieces was CoreLogics monthly update which focused on property trends throughout January from around the country.

The key piece of information in the CoreLogic report was that the number of new listings across Australia was in fact 11.9% higher than at the same time last year.

After watching the CoreLogic report, we have tried to drill down more locally and focus just on the Gold Coast to see if new listings here are keeping pace with the broader national trend.

With open home inspection numbers running at similar levels to the bull markets of 2021 and early 2022, a rise in new listings may well slow the price growth that we all feel is currently occuring in and around the Gold Coast marketplace.

Unfortunately, upon further investigation, the rise in new listing numbers across the country is something that we are not experiencing here on the Gold Coast.

When we look at realestate.com.au's latest statistics over the first quarter of 2023, the Gold Coast had 4705 new listings come to market over the three month period.

As of February 11th, the Gold Coast has had 2086 new listings so far for this current quarter.

If we look at this as an average, at the corresponding time last year, the Gold Coast was averaging 52 new properties coming to market each day whilst so far in 2024, the number is just 49 new listings coming to market each day.

With a dramatic increase of buyers that we can all feel and see and new listings actually falling, our initial thoughts of exceptionally strong market conditions can be justified.

Whilst it will be at least another 60-90 before we get a clearer picture of any early 2024 price gains, there is little doubt that sellers have wonderful conditions available to them right now if they choose to sell.

If homeowners are considering selling, they should have every confidence that a fantastic result is achievable right now. 

Especially whilst new listing numbers here on the Gold Coast remain at historically low levels.

This week we have two lead articles. One is the CoreLogic market update for the month of February and the second is a piece from REA focussing on the Reserve Bank's decision to leave interest rates on hold.

Please see below.

RBA keeps rates steady amid signs of cooling inflation

The Reserve Bank has responded to decelerating inflation by holding interest rates steady at the first board meeting of 2024.

At its February meeting the RBA left the official cash rate unchanged at 4.35% and updated its economic forecasts, during the first of its revamped two-day meeting format.

While the surprisingly low inflation result for the December quarter wasn't enough to convince the board to cut rates just yet, the board said it was a sign that higher interest rates were working to ease demand in the economy.

The annual rate of inflation in the December quarter eased to 4.1% according to Consumer Price Index figures released last week by the Australian Bureau of Statistics, down from 5.4% in September and well below the 4.5% that had been forecast by the RBA.

The RBA said goods price inflation was lower than its November forecasts, reflecting easing supply chain disruptions, but service price inflation had declined more gradually and in line with earlier forecasts and was still high.

"To date, medium-term inflation expectations have been consistent with the inflation target and it is important that this remains the case," the board said in a statement.

"While recent data indicate that inflation is easing, it remains high. The board expects that it will be some time yet before inflation is sustainably in the target range."

Despite easing inflation, the RBA warned that there was still the possibility that rates could be hiked, depending on the economic data.

"The path of interest rates that will best ensure that inflation returns to target in a reasonable timeframe will depend upon the data and the evolving assessment of risks, and a further increase in interest rates cannot be ruled out."

Addressing the media after the board meeting, Ms Bullock refused to rule out the possibility of further rate hikes, and said the bank’s job wasn’t done when it came to controlling inflation.

"We’re not ruling in or out anything," Ms Bullock said

"We have maintained the option that there has to be more rate rises. The optionality needs to be maintained because we need to be driven by the data."

"The board does understand that people are doing it tough. That's why it's really important to get inflation down."

"If we can get inflation back down, then interest rates will come down to a more normal level."

Prop Track economist Anne Flarety said the decision to keep the cash rate steady was widely expected after the latest figures showed inflation slowed faster than the RBA had predicted. 

"Headline inflation came in at 0.6% over the December quarter, the lowest growth in consumer prices since March 2021 and below the RBA’s forecasts," Ms Flaherty said.

"This continues the trend of declining annual growth in consumer prices and increases the probability that interest rates have hit their peak in the current cycle."

Slowing inflation brings forward rate cut timeline

The RBA has also revealed its latest economic forecasts in its quarterly Statement on Monetary Policy, released at the same time as its cash rate decision.

The bank now expects CPI inflation to decline to 3.1% by June 2025 before reaching 2.8% in December 2025 and 2.6% in June 2026.

The forecasts are based on an assumption that interest rates have peaked and will be cut in the second half of this year.

The RBA's forecast assumes the cash rate will remain at its current level of 4.35% until mid-2024, before falling to 3.9% in December and 3.2% by mid-2026. 

The forecast assumptions imply interest rates will be cut twice this year as inflation approaches the target band.

But Ms Bullock said even though the bank assumed the cash rate would come down, that wasn’t a guarantee it would happen.

"There is a cash rate assumption in the forecasts and there has to be," she said. "We need some sort of assumption to work with there, but I emphasise the word assumption."

"It isn’t a commitment, it isn’t a forecast, it isn’t even an expectation, it’s something to work with."

Rate hold expected to boost market confidence

Although a steady cash rate won’t boost buyers’ borrowing power — which has declined by about 30% since the interest rate rise cycle started in May 2022 — Ms Flaherty said the decision to hold will increase confidence in the housing market.

"Today’s decision is good news for the housing market which looks set to benefit from a more stable interest rate environment in 2024," she said.

"Greater confidence around where interest rates are sitting should support further recovery in buyer and seller confidence."

Interest rates appear to have peaked, Ms Flaherty said, but high inflation had eroded real wages and made it difficult for households to save.

"Despite this, house prices have displayed remarkable resilience, with buyer demand remaining strong relative to the supply of homes coming to market."

The PropTrack Home Price Index showed property prices remained steady in January, although the national median value is up 5.26% annually while capital city prices are up 6.07%.

Total property listings across the country have increased year-on-year but declined sharply in Perth, Brisbane and Adelaide, where the low supply of homes and affordable prices amid the high rate environment have pushed up prices as much as 15%.

But while lenders have been shaving the rates on their fixed term mortgages, the prospect of cuts later this year is driving borrowers towards variable home loans. Mortgage Choice home loan submission data shows the vast majority of borrowers opted for a variable rate loan in January, with just 2% opting for a fixed rate loan.

Mortgage Choice chief executive Anthony Waldron said sentiment among borrowers had improved recently.

“The Mortgage Choice brokers I’ve spoken with as the year gets underway are reporting a strong sense of optimism in the market,” he said.

“This hold decision will be welcomed by buyers and borrowers around the country.”

Click here for CoreLogic's National Housing market update for February 2024.