There's a growing glut of homes for sale in Sydney and Melbourne

© Getty

• A glut of homes are already up for sale in Sydney and Melbourne, with listings increasing over 18% from 12 months ago.
• October and November are months that traditionally see a strong increase in new listings hit these markets.
• The number of auctions across Australia's capital cities will increase 30% this week compared to seven days earlier.

A glut of homes are up for sale in Sydney and Melbourne, and it could be about to get even larger.

According to data from CoreLogic, there were 29,709 homes listed for sale last week, up 18.1% on a year earlier.

As the chart below from Cameron Kusher, Research Analyst at CoreLogic, shows, there hasn't been this many property listings in Sydney at this time of year in over six years, recently surpassing the levels recorded back in 2012, the last housing downturn in the city.

© Supplied

The recent increase has come despite new listings in Sydney -- defined as those properties that have not been put up for sale within the past six months -- having fallen 12.9% to 7,239 over the past year.

"There is a relatively low volume of new listings coming to the market, however, total listings continue to climb as already listed stock is harder to shift."

The trends in Sydney are also evident in the Melbourne market with listings jumping by 18.4% over the past year to 35,289, the highest level at this time of year since 2012.

However, unlike Sydney, new listings in Melbourne are also increasing, lifting by 1.8% to 9,224 from 12 months earlier.

© Supplied

"New listings are relatively high and increasing rapidly each week and total stock for sale is also climbing quite quickly," Kusher says.

"A lot of people are listing stock for sale in a market where there is already many properties for sale."

Given October and November traditionally see a seasonal uplift in new listings ahead of summer holidays, there's likely to be a lot more properties hitting the market, providing a true litmus test for demand at a time of tighter lending standards and lower local and foreign investor activity.

This week, auction volumes across Australia's capitals cities will jump to 2,782, up 30% on one week earlier. The largest increases will be seen in Melbourne and Sydney.

Clearance rates in Sydney and Melbourne currently sit at or just above multi-year lows at around 45%, levels that in the past have signalled further and potentially larger declines in home prices.

Median home prices in Sydney and Melbourne have already 4.5% and 4.7% respectively since the beginning of the year.