It's a significant time of year for investors in shares vs. property, with the ASX earnings season ending last week and the busy Spring auction period beginning this week.
As we reported yesterday, the S&P/ASX 200 Index (ASX: XJO) finished flat for the month of August, while the national median home value lifted for a 19th consecutive month, according to CoreLogic data.
Brokers were busy during August reviewing their ratings on many ASX shares following the release of company results. Meanwhile, property agents were listing many homes for auction in September.
Spring is traditionally the busiest season for the Australian property market. There is typically a significant lift in listings, and this can cause a rebalancing of supply and demand.
Supply and demand have been key influences on home prices in 2024. The seasonal rise in listings this Spring will, therefore, provide an interesting test.
In the strongest markets of Perth, Brisbane and Adelaide, supply is well down on long-term averages amid high buyer demand.
This has led to home values rising by 24.7%, 16%, and 15.5%, respectively, over the past 12 months.
In weaker markets like Melbourne and Hobart, supply outweighs demand, giving buyers the upper hand. Prices have risen by just 0.2% in Melbourne and fallen 1.2% in Hobart over the past year.
Meantime, home values have risen by 5.6% in Sydney and 1.7% in Canberra over the past year.
Head of Research at CoreLogic Australia, Eliza Owen, said:
CoreLogic analysis indicates that sellers will have an advantage this spring in Adelaide and Perth, and some of the more affordable markets of Brisbane, such as Beaudesert.
But for some sellers in Melbourne, Hobart and Sydney, spring does not necessarily mean it is a good time to sell. Prospective vendors should asses the state of their local market, as they may find there is more competition for sellers in the months ahead.
In a recent article, CoreLogic revealed the average uplift in listing numbers across the capital cities in Spring vs. Winter.
The colder regions of the country typically see a larger increase in listings during Spring.
The cities that usually see the largest increases in stock are Canberra (34.7%), Hobart (27.9%), Adelaide (26.8%), and Melbourne (26.7%).
Hobart and Melbourne are already oversupplied and prices are pretty soft. Canberra is at the very start of a new growth cycle following its post-COVID boom correction.
Thus, if stock levels increase in line with historical averages and demand does not commensurately rise, home values in these cities may weaken over Spring.
The same risk applies in Sydney, where the average Spring uplift in listing numbers is 20.3%. The city has experienced only moderate growth in home values over the past year.
Data from CoreLogic also indicates the pace of price growth in Sydney is slowing. Home values rose by 1.2% over the three months ending 31 May compared to 0.8% over the three months ending 31 August.
The average increase in listings in Spring is lower in Brisbane at 10.6% and Perth at 16.5%.
What's next for shares vs. property?
CoreLogic is expecting about 2,250 homes to go under the hammer in Spring's first round of Saturday auctions this weekend. Auction listings are expected to increase to about 2,400 next Saturday.
In terms of what to expect from shares vs. property, an analysis of historical trends by AMP Ltd (ASX: AMP) shows September is usually the weakest month of the year for shares.
The typical pattern is for ASX shares to strengthen from October or November through to July the following year.
The Market Matters team also notes the historical September trend.
In their newsletter this week, the analysts said:
Over the last decade, September has been the worst month of the year for the ASX200.
MM is neutral on the ASX200 over the coming weeks, but further gains wouldn't surprise as the "Goldilocks Trade" is back in vogue.
We expect another period of elevated volatility before Christmas as the risks of a recession &/or high valuations could weigh on sentiment.
We want to "buy dips" with more gusto than selling "pops".
You can check out the latest median house prices in all capital cities and regional markets here.
