Reports of Sydney downturn ‘premature’
By Brad Caldwell-Eyles
Brad Caldwell-Eyles comments on this topic in this Domain Group article by Jennifer Duke.
Reports of Sydney downturn ‘premature’ as auction results soar
Despite expectations of a slowing Sydney housing market, buyers did not sit on the sidelines in February with the auction market recording a 72 per cent city-wide clearance rate, new data shows.
Sydney recorded a 0.2 per cent decline in property values over the three months to February, but surprised with a 0.5 per cent jump over the month, CoreLogic data released on Tuesday revealed.
The jump comes on the back of strong auction clearance rates, with the inner suburbs of Sydney clearing up to 82.3 per cent over the month, with 10 suburbs recording 90 per cent or above, according to Domain Group data.
This “remarkable” result was pulled back by sluggish results in the south west, 49 per cent, and the west, 52.9 per cent, Domain Group senior economist Andrew Wilson said. The median auction price was pushed up to $1.2 million over the period.
“There’s no doubt this strong performance in Sydney is driven by higher priced inner suburban areas has pushed up the median, despite the dragging down effect of the outer areas,” Domain Group senior economist Andrew Wilson said. These rate-sensitive outer markets had not recovered from the rising interest rates from the banks and investor restrictions, Dr Wilson said.
Yet the city, east and northern suburbs have seen the continuation of a “strong bull market” where fewer listings have caused a surge of competition with home buyers. “Reports of the death of the Sydney market were a little premature,” Dr Wilson said.
“The inner-city, higher-priced regions are up and running,” he said.
Double Bay-based estate agent 1st City’s Brad Caldwell-Eyles had expected the rebound in February’s auctions for the city and east areas despite the “wind knocked out” of 2015. “The city and east is vastly less prone to ‘rate shock’ and so prices have remained reasonably stable,” Mr Caldwell-Eyles said. The “wobbly” equities market had also spurred on attention to local auctions. The strength in the market has been so pronounced that several homes have sold pre-auction after strong campaigns, including 28 Courtenay Road, Rose Bay and a penthouse at 4.1/18 Bay St, Double Bay, which sold prior to even its sales campaign. “Our current campaigns are all receiving very solid buyer interest, there is no doubt that market has warmed back up,” he said.
Di Jones estate agents recently sold a “completely dilapidated” two-bedroom, one-bathroom Paddington terrace for $1 million, said sales agent Iggy Damiani. Sixty-three contracts were issued for the property.
Paddington made the list of the top auction clearance rate suburbs, with nine of every 10 homes sold under the hammer in February. “The inner city market is continuing to continuing to perform well,” Mr Damiani said. “The buyers are certainly still out there. They may not be willing to pay over the odds like this time last year, but they are still out there,” he said. “The biggest difference to spring 2015 is the lack of stock on the market once again,” he said, noting this shortage would underpin the market’s strength.
Director of Richardson & Wrench Mosman/Neutral Bay Robert Simeon has seen a similar decline in stock levels on the lower north shore as well.
In Mosman, just 1 per cent of the 4800 homes in the suburb are currently coming onto the market for sale. “We don’t see these ratios changing anytime soon as this is a direct result of a record low cash rate,” Mr Simeon said.
“When we look at the economic horizon we see that some property niche markets will have corrections in 2016 – those being the ones that posted record capital appreciation over the past three years,” he said. “The property markets within that magical 20 kilometre radius of the Sydney CBD again appear to be very well insulated.”
Despite low clearance rates in the outer areas, Starr Partners’ Doug Driscoll said he didn’t think auctions were struggling in the west as they have “never been an overly popular method of sale” in the area.
“In the first six to eight months of last year however, the market was frenzied and auctions were the way the buying and selling population preferred to do things,” he said. Now the market is returning to the norm of private treaty sales, where historically 15 to 20 per cent of homes are sold at auction in the west, compared to 40 to 45 per cent in the east, he said.