In 2016, the total number of properties listed for sale across the country was 8.9% lower than seen in 2015. This reduced the availability and choice for those looking to purchase a property. As such the number of sales transactions in 2016 was 9.2% lower than in 2015. Low listing volumes at a time when interest rates have driven buyer demand higher have fuelled price growth. 2017 Listing and appraisal survey
Background In order to identify why listing number had fallen, LJ Hooker recently surveyed home owners to understanding their motivations and experiences with the appraisal and listing process. The survey, conducted in Q1 2017, received more than 2,700 responses from Australian property owners.More than 70% of all respondents had their property appraised, by a real estate agent, over the 12 months prior to completing the survey.
This is important because, home owners, generally, ask an agent to come and appraise their property when they are well advanced in their plans to list and sell their property.However, 60% of those that received an appraisal did not follow through and list their property for sale. Indicating that there are some major roadblocks stopping people from transacting.
What are the reason for not listing? In order to find out what the roadblocks are we asked, the 60% of respondents that said they hadn’t listed, what was driving their decision. The number one reason for not listing is, in fact, the lack of choice and stock on the market for sale.
• 35% stating that they did not list because they couldn't find another home to move into. The second and third reasons for not listing come down to the transactional cost involved in buying and selling a home.
• 26% of respondents didn't list their property for sale because the cost of buying their next home is too high. This provides evidence that the rising cost of government stamp duty charges is a major inhibitor and deterrent to property owners listing, selling and then buying another home.
• 18% also stated that the cost of selling is too high, which takes into consideration solicitor fees, conveyancing costs and real estate agents commissions.
So what next?
For those that decided not to list, we then asked what they planned, or did, with their property.
• 57% said they had decided to renovate their property instead of selling.
• 29% they will hold on to the property for now and list at a later date.
• 14% indicated they would rent their property out.
Would changing stamp duty help?More than a quarter of respondents stated that the transactional cost of buying their next was holding them back from listing, selling and buying another property. So, we decided to ask if government stamp duty was an inhibitor to listing their property.
First, we asked if simply lowering stamp duty would change the home-owners mind. We found that 51% of those that didn’t list, after receiving an appraisal, would do so if stamp duty was lower.
Secondly, we asked what they would do if stamp duty was abolished altogether and found that 61% of those that didn’t list, after receiving an appraisal, would do so if stamp duty was abolished altogether.
Conclusion Existing dwellings make up the majority of homes across Australia's property markets. While increasing the supply of newly built homes is important to grow the total stock base, there need to be incentives, options, and policy in place to ensure that people who want, or need, to sell can do so easily and without costly restrictions.
Governments at all levels need to work together to ensure that tax, superannuation, and planning regulations are integrated and accommodative to ensure they don't inhibit or deter the supply of new or existing properties from coming onto the market for sale.