The June property market became a little like the movie Groundhog Day, with repetitious news reports on conditions and auction outcomes along with an overall funk in the market that was hard to shake.
At our open homes we could almost hit replay on a recording such were the conversations we were having with buyers and sellers. This is a warning before you read much further that this isn’t our most inspiring market review, however it is accurate to our experiences during the month. Having said that, many wise investors have made their fortunes buying smartly in a downturn market and this is the silver lining to an otherwise fairly miserable month for Sydney property.
June recorded many low points which included the worst auction clearance rate in seven years, the fastest decline in property prices over the same period and a raft of banks and market commentators declaring they had underestimated the speed of the property price decline and the length of time this correction may run. ANZ predicted in mid-June that Sydney prices will decline by another 10% which is considerable given we already feel that value has come off.
The vast majority of people who have dealt with a lender during June know of the current challenges in obtaining finance approval and from what we hear, this process may actually become even harder.
This is no market for speculation buying and selling. If you’re not committed to selling and meeting buyer demand, it is highly likely you’ll have a challenging emotional experience. It’s not that the buying market has all of a sudden become a bunch of overzealous piranhas. It’s more that the bulk of willing buyers have been tied down financially and these restrictions create hesitation, cause concern and are simply limiting buyers’ ability to pay that little bit extra to secure a property that suits them. As this environment has descended across the property market, it has placed downward pressure on prices.
Until banks rebalance their risk profiles or until APRA feels the appropriate measures to stabilise the property market have occurred, we can’t see this market getting any better.
As agents we are having direct and hard conversations with sellers every day which largely involve recalibrating an asking price to meet buyer demand. With an auction clearance rate hovering around 50%, this reflects a buyers’ market and also means that essentially half of the properties listed aren’t finding a buyer at the price the seller is proposing during the four-week marketing campaign. There is some good news and that is there are buyers still in the market and many are ready to purchase if they identify value. When we look at recent sales, you could argue values are back to 2016 levels for many properties and this has been identified by a number of people who are now entering the market to take advantage of the favourable buying conditions.
We may very well look back at this period and say “that was the time to buy”.
Correction: An earlier version of this article stated that house "values are back to 2006 levels".
I assume you mean 2016 levels???
at last! its refreshing to have an agent tell it how it is. there are still those that say we a booming along. look out this is just the beginning.
Can you provide some examples of where 2006 values are the current values?
Hi Mark and Justin, I've contacted the author to confirm whether 2006 is correct or whether this was an error.
I'll keep it simple.. on historic mortgage affordability measures Sydney had become and still is just way too expensive ...and that's before the RBA lifts rates.. .I foresee sluggish price weakness for several years to come...
Hi Mark, Justin and Patrick, thanks for the pick up. Property values I feel are now back to 2016 levels. This has now been updated. Hope you found the article informative. Regards Matt.
Hi Raymond and David, we have had it pretty good for the past few years with interest rates. I think we will continue to see an overall continued softening in the property market. However, quality properties are still achieving good results. Buyers have now become picky and the urgency to purchase has evaporated but we believe this to be a more sustainable market for the medium to long term. Regards, Matt.
Sydney you’re in for a rough time, like the wife whose husband doesn’t want her anymore and she says to friends “John wants me and loves me” there’s pain behind that smile and a delusional non recognition of the facts. What’s coming dear is not pretty. Rich dad poor dad Robert Kowalski is selling 2000 apartments and you are?