Welcome to the Treak Real Estate Property Update: our regular round-up of news from the Sydney and national property markets, as well as what’s happening right here at Treak!
A steadying Sydney market
Since the highs seen in the latter stages of the pandemic, property prices in Sydney have cooled. It’s little wonder, given the heights that were reached, that prices would eventually fall, which they have done to the tune of -12.5% over the last 12 months.
But when we look more recently, and across smaller time frames, we begin to see a plateau. According to CoreLogic, Sydney property prices actually increased by 0.3% over the last week, and by a full 1.0% over the last 28 days.
The auction stats back up this sense of a steadying market. Sydney just had its second busiest auction week of the year: 791 homes were taken to auction across the city last week, up from 782 the week before. While it’s true that the figures from 12 months ago were significantly higher – 1104 homes were auctioned that week – the fact that recent figures are quite stable will offer buyers, sellers and the market as a whole a sense of confidence.
Auction results were steady too – the latest figures indicated 71.5% of last week’s auctions were successful, compared to a preliminary clearance rate of 73.5% for the week prior – which was eventually revised down to 67.9% in the final figures.
The final clearance rate has held in the high sixties for the past four weeks, and this looks set to continue as this week’s remaining results are collected. This is one way in which the current market is outperforming that of 12 months ago, when 64.0% of reported auctions were successful.
A lack of property stock
A potential reason for the steadying market is that this year Sydney sellers seem to be erring on the side of caution. The volume of new listings has consistently been below average since Spring last year, and quite dramatically so – the figure is 13.2% below the previous five-year average and almost 23% lower than a year ago.
This scarcity of properties that are ready to move into has been funnelling a large number of buyers to the same properties – it’s something we at Treak have been noticing on the ground, as we are seeing crowds queuing out the front of many newly listed properties.
This is particularly the case for properties under $1.5m. 16 January saw the NSW government’s first home buyer scheme kick off, which allows first-timers to avoid stamp duty when purchasing these lower-priced properties, and instead pay a smaller annual land tax. If the home is worth $1.5m, first-home buyers can save $66,700 in stamp duty if they opt to pay $3100 in annual land tax for as long as they own the property. As a consequence we’ve seen somewhat of a ‘mini bubble’ for properties under $1.5m.
Will this volume increase? In reality, perhaps not, at least in the foreseeable. Historically weeks nine to eleven have marked the seasonal high point in the flow of new listings, which tend to ease leading into Easter and the cooler months.
In general, houses are selling quicker than apartments, but the shortage of good properties on the market is seeing A-grade properties selling quickly with minimal discounting.
Sydney rentals: low vacancy, high prices
Vacancy rates for houses and apartments are extremely low not just in Sydney, but across the country. This has seen rental prices surge over the last year or so, and with a low supply of new properties in the medium-term, these price hikes are likely to continue.
According to SQM Research, in the week ending 28 March 2023 rental prices in Sydney had risen 23.4% for houses and 29.5% for units over the last 12 months. Meanwhile Domain reports that rental vacancies continue to fall – as of February, Sydney vacancy rates sat at just 0.9%.
What does the future hold?
No one can predict the future, least of all property professionals, but we can use the insights above to see where the Sydney property market might go from here.
Given that housing stock is currently so low, there will likely be pent-up supply – people waiting for property prices to increase a little before putting their houses on the market. They may be encouraged to do so now that prices are steadying (and ever-so-slightly rising), along with the buyer confidence that comes from the RBA’s announcement that after 10 straight rises, the cash rate will be paused at 3.6% for now.
That said, any sign of a rebound in new housing stock could trigger renewed downward pressure on housing values, unless the increase was absorbed by a commensurate uplift in buying activity.
No matter what the future holds for Sydney property, at Treak we are here to help you navigate the market and secure a property at the best possible price. As experienced agents, we can be the edge you need in an ever-competitive real estate market. If you’re ready to live out your property dreams, get in touch today.
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