Supply is tight and tightening at a time when demand is increasing.

Every month, Cotality releases its latest market charts, and I eagerly await opening them to review several key points. One of my favourite charts is the comparison of new listings and total listings. 

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While I would like to see it broken down by different cities, detached houses vs units, and using ten-year averages rather than five, it's particularly relevant at a time when demand is increasing strongly. 

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To hold the price of horses back, what you would want to see is the supply (the number of properties available for purchase) increasing in line with demand. 

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However, what is clear is that it has been decreasing, in a drought that is significantly down from five-year and even more so from ten-year averages.

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In a tight market that is becoming even tighter, demand is growing daily from first-home buyers due to the 5% scheme, investors seeking higher yields and lower rates, and upgraders returning because they do not own homes that suit their long-term needs. 

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What has surprised us all is the influx of cash from the intergenerational wealth tsunami, particularly over the past couple of years, but if you combine that with increasing borrowing capacity and confidence to take on peak debt as rates fall - it doesn't take a rocket scientist to understand that the ticket price to play property musical chairs will increase. 

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While everyone was surprised by the RBA rate cut "delay" this week, and particularly the money markets, which were pricing it as 100% likely to happen, I couldn't help but laugh when it didn't.

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However, the key point is that it isn't a change in direction; it's just a pause, likely for one month until August 15, and buyers know rates are heading in one direction in H2 2025.

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I would ignore agents talking up the number of listings coming in the spring; I have a feeling similar to the last few months that it will be tighter than in previous years, and we will likely be disappointed by late November. 

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The next six months will have a similar feel to the post-election period in 2019, if you remember what happened then.

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