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Supply glut threatens prices

Supply glut threatens prices

by Reporter 0 comments

James Mitchell

The number of houses and apartments for sale has soared, creating a supply surplus that could push prices down over the next 12 months.

According to independent advisory firm SQM Research, the nation's stock levels increased, on average, by 68.7 per cent in the year to March 2011.

In Melbourne, the number of listed properties jumped 104.6 per cent compared to the same time last year.

SQM Research managing director Lois Christopher said the increase in supply would ultimately lead to correction in house prices.

“Asking prices will come off, and quite substantially...we believe Melbourne house prices, for example, will correct in the order of around 5 to 7 per cent,” Mr Christopher told The Australian Financial Review.

SQM Research's analysis of residential listings showed a 4.6 per cent jump in Western Australia over the last month, taking the yearly increase to 74.8 per cent.

Nationally, online residential listings rose by 3.9 per cent during April to 370,638.

SQM said the increasing supply of stock was sufficient evidence that a housing glut has officially set in, and as stock levels continue to increase, house prices would fall.



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