Sydney property market and its wild ride had to run out of puff. Well, it had to happen and it has done so at precisely the same time of year that every other boom has ended during my property career: spring. But the question remains, is this seasonal, or has the Sydney property market peaked?
Why do property booms end in spring?
Because it’s the time of year when macro environmental forces are most likely to have maximum impact because the volume of stock on the market peaks at what is traditionally known as “selling season”. In this case, the impact of the banks tightening up on investor lending and increasing interest rates has coincided with more properties hitting the market.
It’s the basic economics of supply and demand: more listings and fewer buyers. Often buyers are weary after trying to battle it out in a winter market when there are not enough properties to go around. Instead of going into a buying frenzy when the weather warms, many of them decide to take a break. At the very least, they feel less pressure because they can see that there is choice available to them for the first time in months.
Where are the good buys for 2015?
Here we are, only 6 weeks away from Christmas and Sydney’s auction clearance rate has plummeted from just under 90% to just over 60%. And it looks like a Mexican standoff between buyers and sellers – with pretty much everybody you talk to deciding they are going to wait until next year.
Except, of course, for the poor people who had already listed their property for sale and have had the rug pulled out from under them. They are faced with the unenviable decision to either lower their price expectations and meet the market or to take their property off the market and wait for more favourable conditions. But this is really a lose-lose situation for many people, since such properties are often unfairly tainted in the minds of future buyers and it is not necessarily an option for owners who have already bought elsewhere.
But this still doesn’t necessarily mean that the Sydney property market peaked and the boom is over. Next year will probably bring fresh optimism created by the summer holiday stock shortage.
Off market property – Gems or fools gold?
When auction clearance rates drop we see a marked increase in the number of “off market” listings. Of course we all love the idea of buying something that’s not available to the masses, but they aren’t always great buys. A committed vendor is a motivated vendor and often people who don’t want to openly advertise their property are simply not committed enough. They want to test the water without paying for costly marketing and avoiding the risk of over-exposing their property to sensitive buyers.
As buyers’ agents, we see complete property cycles run year in year out, so we are not as likely to be caught out by sudden market changes. For a savvy buyer, this represents an opportunity.
But only if you can find a good property owned by a motivated vendor.
First published: 19 Nov 2015
DISCLAIMER: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.