Days on market, time on market, median days to sell… what does it mean and what might it tell us?
When you are following the real estate market, ‘days on market’ becomes a familiar term. It basically means the number of days a property spends on the market before it is sold.
It is, in a sense, a measurement of a real estate listing, which is as important as highest median prices, strongest growth, and so on.
The common perception is that a property with a high ‘days on market’ (DOM) could be less desirable than others or over-priced. When talking DOM, be clear whether it relates to a current listing or takes in previous or multiple agent listings. Sometimes this is overlooked in a buyer or seller’s research.
This week, DOM or time on market came up in numerous real estate conversations and media reports.
CoreLogic’s Property Market Indicator data showed that the average time for houses on the market began to come down in most Australian capital cities. Hobart faired best at 38 days, Sydney recovered to 50 days and Melbourne lowered to 48 days. Hobart was also best in the unit market at 36 days. For Sydney and Melbourne units, the recovery was to 52 days and 45 days respectively.
It is fair to say that properties typically sell quickly in strong markets and tend to take longer to sell in in weaker markets.
The median time on market for a dwelling nationally was 60 days over the three months to April 2019, according to Corelogic, and had risen significantly being up from 35 days at the same time a year ago.
The study showed that the median time on the market grew across both capital city and regional markets, except for regional South Australia which was the only one to experience a fall in the time spent on the market. It appeared that the regional markets in each state had longer DOMs recorded than the capitals.
Brisbane and regional Queensland showed a considerably more moderate decline than in Sydney and Melbourne.
Remember, this is talking nationally, a picture made up of numerous individual markets all performing at their own pace even within the regions outside capitals.
Since the end of April, two things have happened. Firstly, Scott Morrison is still the Australian Prime Minister and any plans to curb negative gearing and capital gains tax concessions appear to be off the agenda. Secondly, the Australian Prudential Regulation Authority (APRA) announced it might scrap the seven per cent stress test buffer for home loans. Add an expected interest rate cut (or cuts) in the coming months, and there’s all the makings of a good boost of confidence in the property market.
‘Days on market’ recorded in June and September quarters might paint a different picture in Australia.
Real Estate Institute New Zealand (REINZ) discloses the ‘days to sell’ period when it publishes the monthly median house value and volumes sold.
According to REINZ, in January this year the median days to sell, nationally, was 48 days, which was two days longer than for the same month last year. Excluding Auckland, it was 46 days, which was no change from the same month last year; while in Auckland it was 51days, six days longer than the same month last year.
Across the regions, Marlborough had the lowest days to sell at 33 days, down from 42 at the same time last year.
Although the increases weren’t huge, the median number of days to sell a property nationally increased to its highest level in nearly seven years.
It is clear that a realistic approach to market value may be in order for homeowners who want to sell their property in a more reasonable timeframe.
REINZ said January data pointed to a two-tiered real estate market continuing, with 14 out of 16 regions experiencing annual increases in the median price for residential properties, including five new record median prices, while Auckland and Canterbury saw prices fall.
The five regions that experienced record median prices were Waikato, Manawatu/Wanganui, Marlborough, Otago and Southland. Outside of those records, Gisborne, Northland and Wellington were the regions with the greatest annual increase in median prices.
The latest ASB Housing Confidence Survey, which had most New Zealand respondents seeing now as neither a good time nor a bad time to buy a house, was for the three months to April.
Similar to the Australian story, that was mostly carried out before a significant event – the Government’s decision not to introduce any Capital Gains Tax.
It is likely that the prospect of a CGT was weighing on house market sentiment. As in Australia, this factor could be a great confidence boost for the real estate market.