Well, what a difference three months has made! In April, I reported that the industry analysts were suggesting that the market was beginning to bottom out, after seven months of cooling prices. Now that Sydney property prices have taken their biggest dive since the 2008 global financial crisis, many are now telling a very different story.
Predictions on what will happen with pricing in the future vary. However, since the price drops have been fairly orderly, the consensus seems to be a fall of no more than 10 per cent.
NSW budget papers released in June confirmed a 7.5 per cent fall in average home prices across New South Wales from their peak in 2017, with no return to positive growth until 2019-20.
According to CoreLogic, June saw Sydney’s median house price fall 0.3 per cent, extending the slide over the past year to 4.5 percent. This is the largest decline over a calendar year in two decades. There is no doubt that tighter regulations and lending standards are contributing to the price falls.
The auction clearance rate is also down with barely more than 50 per cent of properties clearing in Sydney across recent weekends. CoreLogic figures for the period 5 July, 2018 – 11 July, 2018 had Sydney’s clearance rate at 55.10 per cent. This contrasts markedly with the same period last year when clearance rates were tracking in the high 60 per cent range.
Good Times for Upsizers
So what does all this mean for buyers? Stock is still down in the most sought-after suburbs so I wouldn’t go so far as to say it is buyer’s market but for certain types of buyers, especially upsizers, now could be the time to make your move.
For those looking at upgrading, this is the type of market to embrace and take advantage of rather than shying away from. While you may not be able to sell your current home for a boom price, you could buy at a much lower price as well. Any losses made on the sale of the existing property can be more than off-set by the gains made from buying the more expensive property at a lower price. In the long-term, that will translate to positive capital growth, especially in the highly sought-after areas of the Eastern Suburbs, Northern Beaches or Inner West.
On the other hand, CoreLogic’s quarterly Pain and Gain Report found that while some suburbs such as Hurstville and Canterbury are reporting resale losses, affluent suburbs Willoughby, Hunters Hill, Mosman and Botany Bay saw an incredible 100 per cent profit in the first quarter of 2018. This confirms the prestige end of the market is still strong.
The major risk for buyers in the current Sydney market is paying too much for a property, especially as it is difficult to rely on pricing comparisons from last year.
To obtain greater clarity and insights into the current market, seek out the expertise and knowledge of a buyer’s agent. They will be able to direct you to the best suburbs for long-term growth, and also negotiate a price that is fair and reasonable given the current market value.
A buyer’s agent can also assist you with finding a property that fits your specific criteria, and help you to negotiate quickly when you have found a property you like.
Good quality properties will always attract competition, even in a cooler market so it’s important to be ready to buy with your finances sorted, especially in the current climate with banks being stricter on their lending.
If you are considering upsizing to a new family home, Contact Nick now on 0405 134 645.