Brisbane listings up 40%, clearance rate at 20%: 'a lot of houses sitting there'

Brisbane has emerged as a potential epicentre of the property downturn, with listings up 40 per cent year on year and a clearance rate of 20 per cent, according to commentary on the Property Buzz podcast.

Liam Garman told co-host Phil Tarrant that the combination was a warning sign about the health of the city's homeowners rather than a sign of a busy market.

"Mate, that is a lot of houses that are sitting there that can't get sold," Garman said.

He said there were only two reasons a vendor lists into a falling market. The first is that they are comfortable selling at a loss because they intend to buy in the same conditions, using the downturn to pick up an extra bedroom or to downsize once the children have moved out.

"Still, I don't think there's many of them because a lot of people are going to be sitting there a little bit nervous," he said.

The second reason, which Garman believes is doing most of the work, is acute financial distress. "The alternative is you can no longer afford to hold that home," he said, adding that he thinks "it's the latter that will be driving that 40 per cent increase in listings and a 20 per cent clearance rate".

His conclusion: "There's going to be a lot of people out there that are going to settle for a lot less than they would have 12 months ago."

Garman said he did not believe Sydney would be the worst-hit market, pointing instead to Brisbane pockets that had been heavily promoted during the boom. If price falls run to 10 to 15 per cent in those areas, he said, "I think they're going to be in a lot of pain."

Part-time job losses the number to watch

Garman linked the listings surge to the latest labour force figures, which showed unemployment rising to 4.7 per cent from 4.6 per cent.

The number he said had been overlooked by most analysts was the fall in part-time employment, which he put at 74,000 over the month.

"When you hold multiple part-time jobs, you'll still be counted as employed," he said. The people losing work were not generally those in full-time roles but "people that have stacked up multiple jobs to make sure that they meet the bills".

"To make sure that they can pay their rent, to pay their mortgage, these are the people that are being really acutely hurt in today's economy," Garman said.

Tarrant said the International Monetary Fund had warned Australia faced trouble ahead and the loss of hundreds of thousands of jobs. He said he was "telegraphing a spike in unemployment" because many businesses had not yet adjusted to the current climate.

Both expect further monetary tightening. Garman said there would "have to be at least one or two more rate rises", which would push borrowing capacity lower again.

Stock sitting longer, agents feeling it

Tarrant referenced a Domain report suggesting around 25 per cent of properties were on market for six months or more, which he attributed to vendors' price expectations running ahead of the market. Garman cited a median days on market figure of 39 days, up from 28 a year earlier.

Tarrant said agents he had spoken with reported owners simply withdrawing and converting homes into rental stock when they could not achieve their asking price.

"They can't shift it and they're not going to get what they think it's worth," he said. He predicted "a gradual erosion to the normalisation" of how people value real estate rather than a single moment of reckoning.

Tarrant said agents were under pressure because their business depends on volume rather than price. "They need listings, and people aren't listing unless they need to list."

He said a well-known buyer's agent had told him during the week that "so many real estate agents are now driving Ubers" to supplement their income.

Garman, who said he had tried to buy in Brisbane in 2021 or 2022 and found agents would not return calls, argued the agents who survive will be those who do the basics. "If you're good to your buyers, if you nurture them, if you stay and support them, in six months to a year it will get back into an equilibrium."

Listen to the full episode: Brisbane Clearance Rate Plummets. Is The Property Market Freezing?