There’s been plenty of ebb and flow lately in the Australian housing market, mainly due to lockdown restrictions. What’s clear though is that experts are seeing more buyer confidence than seller confidence, which is understandably having an impact on the inventory for sale.
We’ll look at what’s happening with Sydney property trends, and how the Shore Financial experts can help buyers figure out how to move forward.
In Sydney, the auction clearance rates in August were holding strong with motivated buyers. In mid-August, the city saw a rise in weekly auction numbers from 592 to 609. With 519 results collected, 84% of the auctions were successful. This is the highest preliminary clearance rate that Sydney had seen since April 2021.
Of the successful sales, 55.5% were sold before the scheduled auction date even occurred. While the figures did see a small drop after that, the final figures have largely remained at 80% success rates or above. This may be because private inspections of the property are still allowed.
In Melbourne, where private inspections have been banned, sellers are withdrawing their properties from auction in the midst of far lower clearance rates. 61.6% of auctions were withdrawn in August with a final auction rate of just under 36% according to CoreLogic. It was the lowest clearance rate in the city since September 2020.
Melbourne’s large withdrawal rates have pulled down the national average to the lowest it’s been for the year. Across the capital cities, 1,525 results were analysed in August with 63.3% having been successful. Sydney is already starting to see a slight decline as winter drew to a close.
Much of the differences between Sydney and Melbourne can be explained by how each city is adjusting to prolonged lockdowns. In Melbourne, public auctions and private inspections have been banned, whereas Sydney allows private inspections by appointment for one person only.
If a buyer is unable to see the property before purchasing it, confidence often dwindles in the face of rising prices. Because sellers know that this will affect their sale price, they’re more inclined to withdraw their properties from auction than face buyers who want to get the property for less than what it’s worth. Analyst Louis Christopher of SQM Research remarked that if buyers can still do a private inspection, they are in a better position to make an offer before auction, whereas Melbourne buyers are buying sight unseen.
Perhaps unsurprisingly in the face of lockdowns, Australians are more comfortable in online auctions both because they’re private and they cut down on the number of onlookers with no intention of bidding. In fact, a Bondi Junction terrace home recently sold at $400,000 over its reserve price for $3.3 million. (Of the 13 bidders who registered, 5 participated in the auction.)
There’s no telling exactly what will occur, but the spring surge is likely to be postponed until late October. Extended lockdowns will mean patchy listings early on this spring, which will make it difficult to accurately predict the state of the market. Even as August saw higher auction numbers in Sydney, it’s recently begun to dwindle again.
The key takeaway here is that buyer confidence is currently higher than seller confidence. If lockdowns drag on, it increases the odds of buyers slowing down. If lockdowns lifting/easing dates stay on track though — which will occur with higher vaccination rates in the country — there could be a surge in October when the economy gets back in full swing.
It’s worth noting that smaller markets like Adelaide, Canberra, and Brisbane are doing relatively well. Adelaide in particular saw more than 87% successful listings, with Canberra trailing right behind at nearly 89% and Brisbane a respectable 72%.
Regardless of how the Sydney property market performs, Shore Financial is dedicated to helping buyers come out on top. It’s not always possible to predict the market, but it is possible to get a handle on the numbers and work them to your advantage. Homebuyers need concrete advice during a time like this to navigate through everything from online auctions to negotiating the terms of the sale.
Our staff is highly valued in the real estate industry with countless professionals looking to us for timely answers and accurate advice. If you want to learn more about why Shore Financial is #1 ‘Most Likely to be Recommended by real estate agents, we invite you to contact us today.