MONTHLY MARKET WRAP – NOVEMBER 2018

Lending restrictions create a new playing field

 

November continued to see the property market transition as buyers and sellers adjusted to a new environment where banks have reined in lending and are far more stringent with their applicant analysis. While these changes have been occurring over the past 18 months, it seems like the real impact has only started to hit the market over the past six weeks, with the auction clearance rate plummeting to the lowest levels recorded since the 2007 GFC and 1990, when interest rates were sitting at about 17%. It’s evident that many buyers remain motivated to purchase, however with a swift decline in prices there is some fear that they may be overpaying, which is a whole new way of thinking for most Sydneysiders.

During the month, real estate agents right across Sydney reported on the same environment, which is seeing many sellers hold onto higher asking prices while buyers make offers below the asking price and auction guides. Those sellers who actually need to sell are adjusting to meet buyer demand and are securing a sale while those who hold firm to a certain price are struggling to find a buyer. As a result, we’ve seen supply levels across the market increase by 15% over 12 months, providing plenty of options for discerning buyers.

In our view, it’s the speed of the market decline which caught so many off-guard and evidence is building that property prices are back to 2015 levels. It’s important to note that even at 2015 levels, this is the second highest price point in Sydney’s property history, which is more palatable than saying prices have declined by 15%. We are seeing the property cycle play out in real time as the market moves towards the bottom of the cycle and buyers who are looking for a long-term property solution are in the box seat in such market conditions. We did record some healthy sales over the past month as sensible sellers link up with buyers to find an agreeable price point at which to trade.

This is one of the more challenging selling markets we’ve seen in Sydney over the past 20 years and the key driver behind the change – tightened lending conditions – doesn’t appear to be abating anytime soon. Therefore, it’s fair to say the present selling conditions will be the norm for some time and in many ways these conditions actually reflect a more normal market. What Sydney experienced between 2012 and 2016 was a bull-run market and now we’re just seeing conditions rebalance and normalise. If you have finance in place, the market conditions represent the best buying environment we have seen in a decade and this cannot be under-estimated. Many buyers were hoping for these conditions when the market was booming. The question now is how many will actually take advantage?

 

November’s Signature Performers

 

Posted in Monthly Market Wrap, Uncategorized on 3rd December, 2018