Market Mismatch Drives Surge in Off-Market Property Purchases Across Australia

In a striking development within Australia’s real estate sector, a growing number of buyers are turning towards off-market properties as sales volumes rise while listings plummet. This trend, highlighted by the Real Estate Buyers Agents Association of Australia (REBAA), reveals a significant market mismatch that is reshaping the property landscape.

According to the latest data from Cotality, annual sales activity has seen a notable increase of nearly three per cent. However, this uptick in sales is juxtaposed against a substantial decline in available listings, which have dropped by nearly 15% over the same period. The situation is particularly pronounced in Darwin, where listings have fallen by a staggering 45% while sales activity has soared by 60% over the past year. All capital cities have recorded double-digit reductions in listings, with Hobart experiencing a 33% drop compared to the same period last year. Overall, total stock levels are down nearly 20% compared to the five-year average.

Melinda Jennison, President of REBAA, points out that this market mismatch is not only driving property prices higher but also prompting buyers to explore off-market properties as a viable option. “When you have stronger sales activity but significantly lower listings available, it’s clear that more homebuyers and property investors are seeking off-market opportunities in an attempt to secure their next homes and investments,” Jennison explains.

However, accessing off-market properties is not without its challenges. “With property prices rising in most jurisdictions, off-market properties are not the easiest to access for the everyday property buyer,” Jennison adds. It is estimated that up to 20 per cent of properties nationwide, or about 100,000 per year, are sold off-market. However, precise figures are elusive due to the private nature of these transactions.

Jennison advises buyers to be aware of the complexities involved in searching for off-market real estate. “Number one, it is not easy for buyers who may purchase a home a few times in their lifetimes to find off-market property,” she says. “This is because they simply don’t have the networks or the relationships with sales agents to be on their radars when these types of properties become available.”

Moreover, understanding the distinction between truly off-market properties and those marketed to databases pre-market is crucial. “If buyers receive an email from a sales agent with a ‘first look’ at a property that already has all the snazzy photos and styling, this property is not off market,” Jennison clarifies. “It is part of a marketing campaign for a property that will eventually be listed for sale publicly – unless someone pays a ridiculously high price for it that the agent and the vendor simply can’t ignore.”

Off-market properties, or pre-market properties often grouped under the same definition, are typically promoted to a select group of people, including buyers’ agents, because the vendor has chosen to sell discreetly. “Often, even in strong market conditions such as now, vendors desire a private sale over anything else, perhaps because it is a deceased estate, they are going through a divorce, or they simply don’t want the hassle of open homes every weekend,” Jennison notes.

Purchasing off-market can be a strategic move, particularly in a market where listings are scarce. “Purchasing off-market can be a sound strategy because it reduces competition with other buyers, especially when listings are thin on the ground like they are at the moment,” Jennison advises. However, she cautions that while off-market properties are often considered the ‘Holy Grail’ of real estate, buyers must conduct thorough due diligence to avoid overpaying or buying a property with hidden issues. “That said, although they are considered the ‘Holy Grail’ of real estate, buyers must undertake the necessary due diligence to ensure they are not being sold a lemon wrapped up in a shiny off-market cloak that may also be overpriced,” she warns.

In conclusion, as the Australian real estate market grapples with a mismatch between rising sales and dwindling listings, the pivot towards off-market properties highlights the adaptability and resourcefulness of buyers. However, it also underscores the need for careful consideration and professional guidance in navigating this increasingly competitive and nuanced market.