MONTHLY MARKET WRAP – MAY 2018

  • June 4, 2018

It was good to finally have a complete month free from school and public holidays which allowed people appropriate time to navigate the property market, assess value and make a purchase.

 

There is no doubt we’re continuing to see a spotlight shined on property values and the overall performance of the Sydney market.

The auction clearance rate is fluctuating in different regions, with the Inner West, North and East being the best performing markets. Within these regions there are micro-markets which are also shifting weekly depending on the volume and quality of property available.

What we do know is that Sydneysiders haven’t lost their love affair with property and remain out and about albeit in reduced numbers but with an eagerness to secure anything that represents value.

Here’s the tricky part. How do buyers perceive value in the fluctuating market? This is complex to answer but our indicators suggest buyers are viewing a property of interest on more occasions than we’ve seen in many years. They are also spending more time researching the local market including historic sales, potential developments in the vicinity and any other factors that could influence value over time.

Buyers seem less emotional in the current climate, almost taking the stance of valuer rather than home buyer. We’ve seen this type of buying behaviour before but you’d have to go back to 2012 or even post-GFC.

There are sales moving through the pipeline keeping buying confidence at a reasonable level, but it’s not much more than that. There is a sense that property prices are sliding again and there’s no clearer evidence than the auction clearance rate. Each Saturday an average of 600 auctions are conducted across the core regions of Sydney, with the clearance rate hovering between 55% and 60%. However, it’s the revised clearance rate that is of most interest. This slips into the bottom of a media article here and there however it’s an important barometer.

The revised rate is gathered from additional results following an auction weekend. These results are generally unavailable and not recorded on the Saturday as agents are often still in negotiation or don’t want to disclose a failed auction result. The revised clearance rate over the past several months is tracking about 10% below the weekend result. Therefore, a 55% clearance rate is actually 45%, if not even lower. This suggests that the majority of buyers are rejecting the value on offer at auction and prices need to come down in order for a sale to occur.

This is where we stand to close out May, another junction point for the Sydney market. Value is improving for buyers without question and it’s the savvy sellers who are revising their price expectations, swallowing up the buying interest and securing a good sale. Those holding onto yesterday’s prices are starting to linger on the market as it becomes more obvious where values are sitting and where buyers are willing to engage.

 

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