Sydney prices rise again in May

As we close out the fifth month of the year, Sydney property prices have almost edged up by 5% over the past several months. May also recorded the two strongest weekend auction clearance rates in the past 18 months, reinforcing that buyer demand is outpacing the number of listings coming to market. The low supply of property is the central driver behind the market recovery and even bearish commentary from the RBA suggesting rates will have to go higher and remain that way for longer hasn’t been enough to deter buoyant buyer sentiment. Across our regions, listing levels are down anywhere between 30-50% and this is having a significant impact on the market and placing the upward pressure on property prices. Whilst we wouldn’t say buyer FOMO is rife in the market, we’re certainly seeing shades of this behaviour for marque properties. Buyers are acutely aware that listings have significantly tightened up and they need to act swiftly and decisively if they want to be competitive to secure a property. As a result, we’d suggest price growth for a select number of listed properties is well above the May average of 1.2%. While the auction clearance rate improved again in May, around 50% of every auction property is being sold prior, which typically suggests buyers are moving quickly and meeting a price the seller is happy to progress with. We had a range of incredibly strong campaigns throughout the month as the same optimistic selling conditions are playing out from Lane Cove, right through Drummoyne, Balmain, Annandale, Marrickville and Petersham. It really is a defying market following 12 cash rate increases, many mortgage holders are falling off the far cheaper fixed rates they secured two years ago, inflation remains high and consumer sentiment is at the weakest point since December 1990. These conditions are just another reminder that traditional economic patterns seem to be thrown to the wayside in recent years as the appetite to take on debt has completely taken hold of society. Speaking with many agents who operate right across Sydney, the message is the same that supply is limited and there is no tipping point in sight. We’re already entering the traditional quiet period for the year with less sellers active in the winter months, so it will be interesting to watch if we encounter even fewer listings, which could further accelerate price growth before Spring. We’re already seeing that buyers are getting edgy and, in some cases, jumping into properties that in a more balanced market, they would probably pass on. Across our team, we have a steady stream of new property entering the market but it isn’t enough to satisfy the active buyer pool, so we suspect June will be another positive month for price growth. Still, there is so much to keep an eye on and we’ll be monitoring buyer sentiment, property prices, the auction clearance rate, the next more from the RBA and overall economic news very closely.