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> > Market Begins to Swing - LJ Hooker Buyer / Seller Index Shows

Market Begins to Swing - LJ Hooker Buyer / Seller Index Shows

Market remains in favour of sellers - but it's changing

Sellers Market Passes Peak

The LJ Hooker buyer/seller index shows that the national property market is slowly swinging back to a more balanced market; although it remains firmly in favour of sellers. The Q4 2014 result is the tenth consecutive quarter of favourable conditions for sellers.

The Q4 2014 index result shows that despite strong growth in the number of listings buyer demand continues to outstrip properties on the market for sale. This trend has ensured that the LJ Hooker buyer/seller index remains in favour of sellers; however, this result shows the market has begun to swing back to a more balanced market, from the record sellers’ market result seen in Q3 2014.

 

 

New Listings Begin to Satisfy Demand

Over the quarter listing activity rose by 13%, on a national basis, increasing supply and pushing the market in favour of buyers. However, the limited amount of stock on market over prior quarters and ongoing demand from buyers ensured that these new listings were easily absorbed. This in turn saw sales grow by 8% over the quarter. The net result meant that the national property market remains in favour of sellers, for the time being.

 

Local Economies Drive State Markets

While the national property market continues to favour sellers, the strength of state and local markets remains dependent on the performance of their economies. Recent declines in commodity prices, lower investment in mining and resource sectors, the softening of the Australian dollar and falling oil prices are all currently having varying effects on local markets across the country. These indicators all have a positive and negative impact on employment and profitability of local businesses and therefore affect buyer demand and listing levels within these regions. This is reflected in the state-based index table, which shows that 5 out 8 markets are in favour of sellers while 2 are in favour of buyers and 1 is balanced.

 

Q4 2014 State- Based Index Results
  Market Favours
NSW Sellers
VIC Sellers
QLD Sellers
WA Buyers
SA Sellers
ACT Buyers
TAS Balanced
NT Sellers

 

Interest Rates to Determine Future Strength

Interest rates will continue to play a pivotal role in dictating the strength of property markets across the country in 2015. If the RBA cuts rates, as most economists forecast, buyer demand will lift and the LJ Hooker buyer/seller index will move back strongly in favour of sellers. Stability of interest rates will see demand remain consistent and slowly see the index swing back towards a balanced market as new listings rise and lower economic growth impacts demand.

 

Finance data forecasts shift to buyers’ market

By overlaying ABS Housing Finance data, as an indicator of buyer demand, we can forecast the future direction of the LJ Hooker buyer/seller index. The data shows that the index lags a shift in housing finance commitments by approximately one quarter. The latest data shows the “rate” of growth in finance commitments has continued to slow, indicating the index should again shift closer to a balanced market next quarter.

 

Methodology

The LJ Hooker buyer/seller index looks at the number of new listings that have occurred during a period and compares it to the number of unconditional sales during that same period. The basic premise is that:

  • If listings growth is higher than sales growth the index will result in a buyers’ market, conversely;
  • If sales growth is higher than listings growth the index will reflect a sellers’ market.

 

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