Sydney Market Review - Prices Continue To Bounce Back
Property prices in Sydney have continued to power higher in what was a strong month for real estate across the country.
Dwelling values in Sydney lept by 1.7%, according to the latest CoreLogic data, with prices up by 5.0% over the quarter. As it stands Sydney was the second-best performing property market in the country over that period of time, just behind Melbourne.
One of the highlights has been the incredibly strong auction clearance results, consistently coming in above 80%. This time last year, clearance rates were around 40-50% so to effectively double in that period of time is something that has caught many by surprise.
At the same time, stock levels have remained relatively low, while buyer interest has continued to increase. This was highlighted by the high number of registered bidders across Sydney.
Andrew Woodward, founder of The Investors Way believes that the sharp jump in prices is on the back of aggressive buyers, launched into action by the relaxation of lending standards.
“Property in Sydney has seen continued strong auction clearance rates, although as has been reported previously, the volume of sales is still below what we have seen in prior years. The number of properties for sale in 2018 was approximately 5% higher and in 2017 there were almost 50% more properties for sale, however, the clearance rate was much lower, approximately 50%."
“So it is fair to say that buyer enquiry and interest is on the rise, supported by the increased appetite of banks to lend and the expectation of higher prices coming.
“While the number of properties for sale is still low, buyers are coming into the market off the back of two months of rising prices and the belief that we have turned the corner. There is a fear of missing out, although I expect that prices won’t run away as quickly as they have in the past due to the softer economic conditions.
"A lack of economic growth which has put a cap on wages growth and the tighter than previous lending conditions are holding the economy in check for now.”
Mr. Woodward is expecting this strong buying interest to continue over the next quarter.
“I expect the Sydney market to grow 2-3% in the final quarter of the year and then head into 2020 with expectations of moderate growth of 5-7%. With another interest rate cut expected in early 2020, buyers will be on the lookout for any hint that prices are set to move.”
Managing Director of Patrick Leo, James Nihill, believes the recent surge in prices is being exacerbated by buyers afraid of missing out on the recent price dip.
“Sydney dwelling values have jumped 5.3 per cent and we are seeing the market is driven by FOMO with a lot of buyers scared to wait too long and miss the market after the last cycle, so acting now before prices rise even further as they are predicted to,” said Mr. Nihill.
“Apartments continue to outperform houses in many areas of Sydney and remain a firm favourite with investors as they are low-maintenance with high levels of tenant demand.
"The negative publicity surrounding major construction defects of Opal Tower and Mascot Towers has seen a resurgence in interest in older, existing stock in well-located areas as well as a push for quality with investors seeking to buy from established developers and reputable builders.”
In terms of the rental market, there has been an increase in vacancy rates across Sydney. According to REINSW, vacancies across Sydney have jumped by 0.7% in the month of October to 3.6%.
REINSW CEO Tim McKibbin believes one of the reasons for this is the amount of stock available for rent at the moment, which is a change.
“Feedback from Sydney real estate agents is they’re noticing less people coming to rental home opens,
“In September, some agencies reported renting their highest number of properties in years and are now finding the market has slowed. We are hearing the term oversupply in Sydney, as well as Albury and the Central Coast," said Mr. McKibbin.