Trading conditions start to balance between buyers and sellers

Our first property market review for the year and we’re glad to be turning a corner with hope that the conversation about COVID is behind us. There is no question that we’re seeing more normalised trading conditions between buyers and sellers to kick start the first two months of transactions. We suspected this year would be different after 2021 posted the fifth highest percentage growth in Australian property history and most people held the view that such growth is simply not sustainable. This year buyers have entered the market showing more caution, which in part is driven by tighter lending conditions and more expensive borrowing costs. Of course there are anomalies, with select marquee properties garnering solid attention and continuing to show price growth, however there is also evidence that less attractive properties are starting to experience some price resistance.

It’s been a mixed bag of sales results across our market, with enough energy and urgency to ensure buyers don’t stall their decision-making for too long. However, there is also a growing list of properties that have had auction dates pushed back and buyer guides reduced. The data is also just starting to filter through suggesting that selling conditions are shifting. CoreLogic’s rolling four-week review of capital city values indicates that Sydney saw a marginal price decline of 0.1% in February, being the first decline since October 2020. In our view, this is a fair performance given that there is 17% more property available this year compared to the same period in 2021. We’ve also seen the auction clearance rate hovering either side of 60% throughout the month, according to SQM Research, which is down from an average of 71% for the same period last year. We expected this response in the market as the RBA swiftly changed its rhetoric from “rates will not be increased until 2024” to the very different tone of “it is now plausible rates could increase this year”. The nation’s largest lender, CBA, is forecasting a rate increase of 0.15% in June followed by several 0.25% increases to land at a cash rate of 1% by year’s end.

At the coalface, we’re experiencing buyer interest for every listed property but the experience for sellers is varied. As we alluded to, certain properties are engaging buyers quickly and selling within a matter of weeks while others properties aren’t gaining instant traction. For sellers holding onto the energy of last year, that sentiment has changed, however in our view we’re still achieving prices that reflect the market conditions of September last year. All sellers should remain pretty happy with such an outcome given that period reflected a pinnacle point in Sydney property history. We suspect these conditions will prevail through to Easter however with the world leaving one crisis and verging on another period of instability with Russia entering the Ukraine, we should be prepared for swift market adjustments. Adding to world events, we have the Federal election heading our way for a May conclusion and if history repeats, this may be a period of caution for many looking to make a major financial decision. As always, we are reading market conditions and updating our clients.

Posted in Uncategorized on 28th February, 2022