Burbs Property Sales Update: 7th May

Well, Easter is well and truly out of the way and the industry is looking forward to a big upswing in the market.

In short, there were a total of three recorded sales (in the CM Property pullout) over $500k for the Burbs and Surrounding areas over this past week, one of those over $1m. One of the three sales was in the Burbs itself – in Sherwood.

A search on realestate.com.au shows there are 598 properties for sale in the Burbs and Surrounds over $500k. Rounding those 3 sales up to 5 (to account for potential sales not recorded in the CM), that equates to roughly 120 weeks of supply – or 2.3 years. At that level of supply we are in for a rough ride. For supply/demand to be in equilibrium you’d be looking for supply of around 5 to 6 months. We have more than quadruple that number. That Brisbane has a housing supply problem is beyond debate and something both property bulls and bears can agree on.

Remember though, the figure of 598 does not include all those properties being ‘marketed on the quiet’, of which there are an increasing number and it doesn’t include all those that were on the market recently, failed to sell and were withdrawn. These should, strictly speaking, be included in the overall supply number as well because the owners’ intentions are likely to remain intact. So the real supply number could be well north of 120 weeks. And, if we take the actual recorded sales as gospel (i.e 3 this week) the supply number (598/3) is actually around 200 weeks! (or nearly 4 years of supply). At that level you have armageddon.

House sales need to ramp up from 3 to around 20 per week (in the $500k plus camp) for anyone to legitimately declare a recovery and I struggle to see that happening soon, or indeed at all while rates are headed north. With first time buyers on strike there is no longer any support at the lower end of the market to allow the complex to "trade up" -- a classic Ponzi scheme, if ever there was -- so a collapse is inevitable.