Spring selling season to provide indication of strength in Sydney property market

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The spring selling season is just around the corner. (AAP Image / Julian Andrews).

There is a close correlation between rising auction clearance rates and rising prices for houses and apartments. In fact, the turn in house prices — up or down — has been pretty quick in tracking the auction clearance rate.

Recently Sydney has recorded weekend success rates in the 70s in what has been a stunning turnaround in buyer confidence. Now, as the low auction volumes of winter turn towards the busier spring selling season, the future price direction has become a hot topic among pending participants and observers.

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The Sydney auction market has seen a stunning turnaround of late. (AAP Image/Sam Mooy).

There’s been recent research from ANZ suggesting the recent surge in Sydney clearance rates would historically be consistent with coming price growth of a staggering 15-to-20 per cent.

But ANZ’s head of Australian economics, David Plank doesn’t reckon the historical precedent will emerge, although he admits there is considerable uncertainty given that interest rates have never been so low.

“Our ‘this time is different’ view stems from the expectation that conditions around credit supply will not support a rapid acceleration in house prices,” Plank suggests.

“While APRA’s recent lowering of the interest rate floor eases credit constraints a bit, ongoing changes to the treatment of expenses and the implementation of full ‘comprehensive credit reporting’ from September this year are material offsets to this easing.”

The ANZ economics team anticipate house prices to edge up between 3 and 5 per cent next year.

Big crowds are expected this spring. (AAP Image / Julian Andrews).

“We think the lift in prices so far reflects a ‘pop’, as suppressed demand hits the market following lower interest rates and more certainty around tax,” Mr Plank said.

“As the pop subsides and more supply comes on to the market, we think price growth will ease somewhat.”

Of course another big rally in house prices would present significant challenges to home buyers seeking to buy at the mildly more affordable current prices. It will also concern the RBA and banking regulators.

It is the last thing we want. Normally I’d expect an extended price plateau to follow a downturn.

There’s another key reason why any 2019 spring price growth ought be subdued. Winter’s auction and private treaty volumes were well down on the normal seasonal hibernation. But the initial spring listings appear to have been boosted by the higher clearance rate which is tempting vendors into the market.

Who knows what is going to happen. (AAP Image / Julian Andrews).

CoreLogic research analyst Cameron Kusher says Sydney’s 5000 new listings over the past four weeks sit 35 per cent higher than their winter low point.

At the same point a year ago they were 20 per cent higher than their 2018 winter low. Kusher believes the lift in stock for sale is the biggest test for market depth.

“At the moment, the market seems to be finding sufficient buyers — whether that continues to be the case remains to be seen.”

Sydney is set for its most eagerly anticipated auction selling season. The Daily Telegraph is expanding its auction coverage to Mondays.

It will look at just how sellers and buyers fared in their weekend endeavours. It will also offer insights to the stay put homeowners who are wondering how their own home values are performing after a two- year price downturn.

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