During May we detected signs that the market was becoming more cautious following a spate of interest rate increases and twelve months of surging prices. We have continued to record some excellent sales during the month, but many of the more aggressive buyers who have been circling the market for the past twelve months are securing the majority of current stock and the new breed of buyer entering the market appears to be more cautious and concerned about present values and the likelihood of further rate increases.

Market barometers such as auction clearance rates, home loan approvals, foot traffic through open homes, email enquiry rates and web hits are all suggesting the market is transitioning from a frenzied buy-at-all-cost environment to a more level headed and calculated approach to purchasing. On Saturday 15 May clearance rates in Sydney dropped back to 62% declining 10% from the previous week. Independent auction house, Cooley Auctions, saw clearance rates plunge from 80% to 50% in the first week of May alone. "There are early signs that the heat's coming out of the market," auctioneer Damien Cooley said. "In the last week, the bidding activity hasn't been as spirited as we saw in February, March and the beginning of April."

It is important to remember that in the past twelve months Sydney house prices have risen three times higher than the historical annual average. Sale prices achieved this year are as strong as we have seen in the past decade and current price levels now appear to be holding firm rather than surging forward. We continue to see upgraders as the dominant buyer group in the local market and a limited supply of property is ensuring underlying demand remains positive. But we suggest that motivated interest on a typical quality property has reduced by about 30% through May. Our office is certainly adapting to the market changes and through our reported period we maintained a very strong auction clearance rate of 86% and successfully recorded the highest ever auction sale at 91 Louisa Road, Birchgrove for $7.4m.
 
Turnover remains very healthy through the area and the average sale price is sitting over $1m, which shows how solid the market has been. Given we are seeing lower levels of property enter the market, we remain confident that prices are now well established and should continue to hold stable whilst this dynamic remains in place. However, we anticipate there will be fewer ready-to-act buyers for properties and less bullish behaviour. No doubt, we will continue to see a few properties go silly at auction but already the signals are pointing towards a slight transition in the market. At this point, it’s just a minor adjustment which should be easy for buyers and sellers to digest