A new report from CoreLogic showed that the flow of new listings has been on the rise since mid-June and over the four weeks ending 13 August, the number has risen 3.3% above the previous five-year average.

This was the first time that the flow of new listings rose above the five-year benchmark since September last year.

A separate report from PropTrack showed that there are early signs of picking up in Sydney and Melbourne in July, amid what is typically the quieter winter season.

The PropTrack report noted that this could indicate that the property markets are already warming ahead of the spring-selling season.

CoreLogic research director for Asia Pacific Tim Lawless said while the rise in new listings could be attributed to the improving vendor sentiments due to the positive turn in housing values since March 2023, there is also anecdotal evidence that more homeowners feel the need to sell amid a peak in the fixed-rate cliff.

“Data on mortgage arrears continues to show a historically small portion of borrowers are behind on their mortgage repayments, however we are likely to see mortgage stress becoming more evident through the second half of the year,” he said.

Impact of the fixed-rate cliff on the housing market

CoreLogic head of residential research Eliza Owen said the new listing counts seemed to be in an unusual trend, particularly in July when there was an increase of 2.8%.

“New listings have historically trended lower through July, amid a seasonal winter slowdown — for the past five years, new listings have moved -3.6% lower from June to July,” she said.

“The trend has been especially notable in Sydney where new listings have moved 7.6% higher through the month, and in Melbourne where new listings moved 8.6% higher.”

For Ms Owen, this rise in new listings could be at least partially attributed to more motivated selling of homeowners who are struggling to keep up with rising mortgage repayments.

“It could even be indicative of some homeowners selling based on foreseen issues with mortgage serviceability, with a sizable number of expiring fixed-term facilities toward the end of this year,” she said.

Still, Ms Owen said there are other likely reasons behind the out-of-season uplift in new listings, especially as selling conditions improve with the growth in home values for the past few months.

“Some prospective sellers may also be looking to get ahead of the spring selling season when competition among vendors is likely to be more intense, a tactic which has been noted in liaison with some real estate agencies,” she said.

While the rise in new listings is not necessarily a sign that higher mortgage costs are forcing owners to sell, Ms Owen said it is an important metric to follow as the more owners go through the fixed-rate cliff.

Fixed-rate tsunami — has it peaked?

Data from the Australian Bureau of Statistics showed that the proportion of new home loans written on fixed rates peaked at more than half of secured housing finance in July and August of 2021, compared to pre-COVID levels of 15%. 

The majority of fixed rate loans are taken out with a term of three years or less — this means that the biggest number of facilities were expected to expire this year, around 880,000 loans, followed by another 450,000 next year.

Ms Owen said while the fixed-rate tsunami numbers appear big, context and perspective are crucial.

“While variable-rate mortgage holders have been feeling the pinch of rate rises and high cost of living pressures, official data suggests arrears remain in check and are still below pre-pandemic levels, and rising home values since February has likely only further reduced the incidence of loans in negative equity,” she said.

According to the Reserve Bank of Australia (RBA)’s Statement on Monetary Policy for August 2023, the share of borrowers rolling off fixed-rate mortgages onto a much higher rates peaked at just 5.5% of outstanding credit in June quarter.

“It will stay high for the rest of this year, before declining in 2024. These expiries will see the average outstanding mortgage rate continue to increase as the effect of the rise in the cash rate since May 2022 flows through to a greater share of borrowers,” the RBA statement read.


Photo by Andy Dean Photography on Canva.