As real estate agents, we are always asked how the property market is doing. Unfortunately, there is never one single answer that covers all of Sydney. The most accurate answer we can give is that “it depends”. The property market is travelling at a different pace across different suburbs and also across different price brackets.
For example, at the present time, it is very much a Buyers’ Market for houses in the Upper North Shore. Auction clearance rates are down and vendors are often settling for offers made prior as they are uncertain that taking their property to auction will yield a successful result. But there are still some very ‘hot’ suburbs in the Inner West where competition between buyers at auction can be fast and furious. The buyers here are typically young professionals (with the occasional mix of investors) looking for a good first property.
At a packed Auction in Redfern this past Saturday, a 2 bedroom ground floor unit, which was marketed by the selling agent at around mid $500,000s, was sold at Auction for $660,000, with the opening bid at $600,000. There were 6 registered bidders and the reserve was $615,000. There were several interested investors, but as is very common, emotional home buyers ended up paying the top dollar. These close-to-CBD markets are fueled by post GFC recovering income prospects for our young professionals.
So you have to be specific when you talk about property trends.
Overall though, we are seeing a flat quarter in Sydney property prices. The current sideways market is a reflection of several factors:
- Interest Rate hikes (and forecasts of future rate hikes) affecting affordability of property.
- Unsustainability of the 15-20% returns that we have seen in many Sydney suburbs over the last year (in the long run property prices can not rise faster than incomes).
- Strong Australian Dollar making property more expensive for foreign capital.
So I would expect a flat quarter of property prices with the pendulum swinging towards buyers. In 2011, we can expect to see a return to capital gains but at a more modest rate in lines with long run averages of 8-10% per annum.
If you want to know how the property market in YOUR neighbourhood is doing, feel free to contact me. The ability to understand the nuances between how the various suburbs are performing is vital to making smart buying AND selling decisions. Buyers who do not understand the different market dynamics at play are the ones who either (a) over pay; or (b) simply miss out.
About Oliver Stier
Oliver J. Stier is the Director of OH Property Group, a leading Sydney buyers agency. He studied Quantitative Economics and Finance at Cambridge University (UK), University of Toronto (Canada) and Princeton University (USA). In addition to being a licensed real estate agent, Oliver also holds the Chartered Financial Analyst (CFA) designation.