House prices are poised to jump higher across a number of suburbs such as North Sydney, Stanmore and Freshwater in Sydney as their inventory levels fall below one month’s worth of stock, new research shows.
Belmont and Highton in Geelong, Conder and Evatt in Canberra and Dapto in the Illawarra region could also post strong price growth in the months ahead despite the broader slowdown in values across the capitals.
“Most of these suburbs are undersupplied because owners are holding tight,” said Kent Lardner, director of Suburbtrends.com.
“When you consider how many homes are owned for 10 years or more in these suburbs, the proportion of off-market homes is much higher.
“When inventory levels and days-on-market are low or trending lower, this places upwards pressure on prices. While we may see many parts of Australia at peak or starting to reduce marginally, these suburbs still have potential growth.”
In North Sydney and Mosman, inventory level has dropped from 1.3 months to under one month in the past year. With only 1.1 per cent of houses changing hands, the steep competition has pushed prices up by 32 per cent in the past year.
In Stanmore, in Sydney’s inner west, inventory level has fallen from 2.5 months to under one month during the same period. Only 5.7 per cent of the total housing stock was sold in the past 12 months, igniting a 28 per cent jump in house prices.
In Freshwater and Collaroy, only about 4.7 per cent of the total housing stock were listed for sale, triggering a house price increase of 27 per cent and 39 per cent respectively.
An inventory level of less than one month means that if nothing else is listed for sale from today onwards, there will be nothing else available to sell within three or four weeks.
The research commissioned by HOOD.ai found that of the 20 most undersupplied markets, 13 suburbs have recorded a sharp drop in inventory to less than one month. Meanwhile, 14 were tightly held, with stock turnover levels at 4.8 per cent or less.
Hood.ai chief executive Tommy Fraser said buyers who wanted to move to these 20 suburbs would struggle to find a house because owners were refusing to sell.
“Part of the reason Australia has been experiencing a property boom is because stock levels have been low, which has forced buyers to compete harder and bid up prices,” he said.
“That story has really played out in these suburbs, where inventory levels have been incredibly low over the past year. As a result, the median house price of most of these suburbs has experienced a double-digit percentage increase over the past year.”