MONTHLY MARKET WRAP: JUNE 2019

Market showing signs of rallying

 

We’re calling June the strongest performing month the Sydney property market has seen since Easter 2017. We’d already seen earlier signs of the downturn easing pre-election and this noticeable improvement has come about following interest rate reductions to an historic low, with further cuts on the cards. It’s also being driven by discussion around the lending assessment rate being eased, no change to the political landscape and tight stock levels.

 

While the media has widely reported on these factors, it’s at the coal-face of the market that we are really seeing the change in full effect. There appears to be greater urgency on the part of buyers to make an offer, with larger numbers of buyers showing active interest per property. We have also recorded an increase in foot traffic at open houses and more bidders at auction, with properties selling faster and the auction clearance rate increasing. In fact, CoreLogic’s rolling 28-day data on Sydney property prices recorded an increase of 0.1% for June. While this is a modest improvement, it’s a further sign that the price decline cycle has halted.

 

While the improvement in market conditions is welcomed, there is no question that some economic headwinds remain. Interest rates are only being cut to historically low levels to kick-start a spluttering economy and improve consumer confidence. Buyers and lenders are still arm-wrestling through the financing process following the Banking Royal Commission, wage growth remains low as does inflation and despite rapid price declines, property still remains an expensive asset to trade in and out of. These elements appear to be contributing to the lowest level of property available our market has seen in more than two decades. Those making the decision to sell right now are doing so for a legitimate reason rather than just testing the market to see whether they can achieve a specific price. As the pool of available property is drying up, buyers are showing signs of frustration and we suspect this winter will see the lowest level of transactions recorded.

 

It’s amazing just how quickly the market moves. It was just a few short months ago that Sydney property listings were swelling, days on market were extending, the auction clearance rate was the lowest level in more than a decade and buyers adopted a ‘wait and see’ mentality. The market is now more balanced and a well-positioned property will attract an active buying audience and be snapped up at or before auction. When the clearance rate moves into the 60% bracket, as it presently stands, this typically points towards a market still favouring buyers. However, it’s also showing signs that blue-chip real estate is now attracting competitive bidding and prices are starting to exceed reserves again. We’re very comfortable navigating the current market conditions and sellers can expect to secure buying interest and buyers can also feel confident that prices are presently stable.

 

June’s Signature Performers

 

Posted in Uncategorized on 1st July, 2019