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More sellers have been found lifting asking prices midway through a sales campaign in recent months, a new report has revealed.
Domain’s Asking Price Edits report has looked at how vendors are increasingly confident in commanding greater asking prices as inquiries and inspection attendance rise across capital city markets.
“The percentage of sale listings with an asking price increase mid-campaign is a unique insight that provides a timely leading indicator of market conditions and prospective price growth,” Domain’s senior research analyst, Dr Nicola Powell, said.
She explained that “an upwards asking price revision during a sales campaign provides greater transparency and helps set price expectations for all parties involved”.
“This all ultimately allows buyers and sellers to understand the current market they are transacting in,” she said.
With most capital cities now deemed a seller’s market, the percentage of sales listings with an asking price increase mid-campaign has increased year-on-year across the board — ultimately nearing multi-year highs, according to Ms Powell.
Sydney saw the highest percentage in April 2021 at 9.3 per cent, far higher than last year’s 6.6 per cent, which was also the highest recorded across all capital cities at the time.
Melbourne followed with 7.8 per cent, then Darwin with 5.7 per cent, Brisbane with 4.6 per cent, Canberra with 4.3 per cent, Perth with 4.2 per cent, Adelaide with 4.1 per cent and Hobart with 4 per cent.
With Sydney and Melbourne recording the highest percentage of asking price revisions upwards, Dr Powell expects the upper end of the market to continue leading price growth in the coming months.
Looking into state regions, New South Wales’ Sydney - Eastern Suburbs recorded the highest percentage at 14 per cent, followed by Sydney - Sutherland with 12.7 per cent, Sydney Inner West with 12.1 per cent, Sydney Northern Beaches with 11.7 percent, and Victoria’s Melbourne - Inner South with 11.4 per cent.
Growth now easing
While annual data points to a hike in the proportion of sellers increasing asking prices mid-campaign, monthly data has displayed the opposite.
Of all capital cities, only Perth, Adelaide and Hobart recorded increases, while Darwin remained stable.
“This data set proves that the strong pace of price growth recorded this year is unlikely to continue at such a rapid rate,” Ms Powell noted.
Melbourne and Sydney data, in particular, highlighted “the swift pace of Sydney’s housing market and the pent-up demand built in Melbourne as the city emerged from last year’s extended lockdowns”, the researcher added.
|
April 2021 |
March 2021 |
April 2020 |
|
|
Sydney |
9.3% |
9.9% |
6.6% |
|
Melbourne |
7.8% |
8.9% |
5.5% |
|
Brisbane |
4.6% |
5.1% |
3.8% |
|
Perth |
4.2% |
4.1% |
2.5% |
|
Adelaide |
4.1% |
3.7% |
2.0% |
|
Darwin |
5.7% |
5.7% |
1.2% |
|
Hobart |
4.0% |
2.4% |
1.7% |
|
Canberra |
4.3% |
5.5% |
3.3% |
What does it mean for capital growth?
Ultimately, Ms Powell pointed to a correlation between annual dwelling price growth and the percentage of homes for sale that had an upward asking price adjustment during a sale campaign, wherein the increase of one could lead to the increase of another, and vice versa.
After all, price revisions often provide “an on-the-ground lens of buyer sentiment and level of market competition”, according to her.
In Sydney, for instance, house prices were rising by $1,145 a day throughout the first three months of 2021.
Therefore, over a four-week sales campaign, this capital growth would have added another $32,060 to a property’s market value.
“It is understandable that during a period of sharp median price increases, more homes experience an asking price hike mid-campaign,” Ms Powell said.
“This data set suggests that prices will continue to grow in the coming months. However, the fast pace of price growth recorded in early 2021 is likely to be less steep, supported by the fact most capital cities are now easing from a recent peak in asking prices being raised.
“As revised higher asking prices on homes for sale rise or fall, it is expected that there would be a slight lag in the pace of property price growth.”
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