Prices stabilise as buyers and sellers readjust to the new market dynamic

One month down in the Spring market and how are we looking? All in all, better than August, with the auction clearance trying to climb off the Sydney-wide 40% mark (SQM Research) and the speed of price declines easing across our city. We detected an improvement in buyer engagement and transactions as they acclimatise to the new higher rate environment. We had some informative conversations with mortgage brokers during the month, who advised us that the new wave of borrowers has already had 20% slashed off their borrowing capacity. However, if they have moved through that process, they are now ready to purchase and even absorb further rate hikes. We’ve also seen new listings tighten right up to kickstart the Spring season and this lower level of supply matched with a better prepared buyer pool has stabilised the market, at least for a few weeks.

We were impressed with a range of sales during the month, with the pinnacle outcome sold by Daniel Patterson at 42 Drummoyne Avenue, Drummoyne. The exceptional waterfront home only traded 11 months ago for $13.1m but Dan set up an outstanding expressions of interest campaign, delivered some of the best marketing you’ll see for any sale and secured a result that netted the seller solid growth despite owning the property for less than a year. Number 42 Birchgrove Road, Balmain was another sale that defied media reports. The property traded last year yet Danny Cobden and Sam Elvy ran a hot auction that achieved 13% growth in the short period of ownership. These confident statement sales helped to buoy an uncertain buyer pool who were moving through the market trying to understand values and how to best engage. Despite some strong sales and a more reliable pattern starting to emerge in the market, we’re still seeing overall conditions favour buyers.

The key difference between the August and September markets is that sellers can now expect to secure a buyer if they align presentation, marketing and price expectations. During August that experience wasn’t assured. This month, however, the level of online enquiry and foot traffic increased, which is most encouraging, although we’re seeing buyers taking more time to reach a decision while also looking across far broader regions for the best value. CoreLogic data is reflecting what we’re experiencing on the ground with the speed of the price declines slowing and even starting to crab sideways. Is the worst behind us? That’s a tricky question as choppy waters lie ahead with the US and UK still increasing rates and the RBA poised to potentially lift by another 50 basis points at the October board meeting. One thing that almost appears certain is that we’ll see a lower level of new listings through October, and even with another rate increase this will keep even the most cautious buyers focused on the smaller pool of available buying options.