February defies predictions as property prices stabilise 

February delivered a month of surprising property results, particularly given that borrowers absorbed a ninth cash rate increase. The RBA went on the offensive, with hawkish commentary stating that they will not hesitate to “lift rates higher and for longer” in order to curb inflation. Following this strong stance, it was predicted that property prices would continue to trend downwards during the month, however the opposite occurred. Not only did Sydney prices stabilise but CoreLogic data revealed a very slight increase in values of 0.3%. The auction market also gathered momentum, delivering the best clearance rate since February 2022.

The lower level of listings was a key component in the better-than-expected February results. We saw fewer new properties coming to market each week which had the benefit of generating urgency on the part of buyers to make an offer. Sellers have been conceding on price since April last year and far better value for money is now on offer for buyers as many have acknowledged, however they have realised they may also need to lift their own personal bearish bias on the market. While we’ve continued to arm-wrestle on price when negotiating, the disparity between where a buyer sees value and a seller is willing to trade significantly tightened in February.

We secured some impressive results during the month, which included the highest sale price in the Inner West this year when Daniel Patterson and Chad Egan sold the magnificent waterfront holding at 3 Wrights Point, Drummoyne for well over $13m. We also recorded an auction clearance rate of 86% and our average time on market was 26 days. We continued to see incredibly strong numbers at our open homes with certain properties drawing in more than 50 parties to the first inspection. It’s clear to us that many people are passively watching the market to see what unfolds in the first quarter of 2023, however they have identified this year as the time to make a move at some point. Sure, there is a sector of buyers trying to pick the absolute bottom, which if they pull off, will be more luck than strategy.

There are still many moving parts unfolding in the economy that can have a direct impact on the performance of the property sector. At the time of writing, US inflation remains stubbornly high which has traders here in Australia predicting that the RBA will raise the cash rate four more times to 4.4%. APRA has also suggested that it won’t change the serviceability rate of 3% on top of a current mortgage offering from the banks. This means that if the RBA lifts the cash rate to 4.4%, mortgage rates will be near 7%, while the serviceability assessment rate will see borrowers’ repayments reviewed at 10%. We can’t see that scenario unfolding and the RBA has a history of missing the mark, as have most market forecasters. We think most people involved in buying and selling real estate now would be happy if this current performance just held but we suspect we’ll see a changing landscape again in March.