Stock down, but housing not out of the woods

by Adam Smith09 May 2012

Stock levels are finally beginning to trend downwards, but this doesn't mean house prices are set for recovery.

Figures from SQM Research have shown housing stock decreased by 4.2% in April. The month also marked the most modest year-on-year increase recorded in the last 12 months, with stock up only 0.3% on last April.

The research company has claimed the figures may indicate that stock levels have finally peaked.

"It is becoming more evident that the number of real estate listings has reached its peak. Indeed, for a number of cities now, stock levels are trending down. Those cities include Perth, Brisbane, Darwin and possibly Sydney, though we note Sydney stock levels have been volatile of late," SQM managing director Louis Christopher said.

But Christopher warned that tapering stock levels do not necessarily equate to house price recovery.

"While stock levels may be peaking, that doesn't mean prices have suddenly stopped falling. As the ABS data illustrates, house prices were falling in the March quarter and we think they are still falling as we speak," he said.

Should stock levels continue to decline, though, Christopher said price rises should eventually follow.

"I'd like to see a sustained decline in stock levels before calling a real bottom in prices. But overall, the worst now is likely behind us with this current downturn, especially taking into account this week's rate cuts," he said.

Related stories:

Stock steady, but beware 'dented sentiment'

Home loan data favours the bulls: SQM

Housing market 'picking itself off the floor'

 

COMMENTS

  • by sidbroker 10/05/2012 9:34:30 AM

    There will be a massive recovery as soon as we run out of accomodation to put them in.