Introduction: A Market in Decline
The Sydney property market is currently experiencing a significant downturn, with auction clearance rates plunging to their lowest levels this year. Buyers are adopting a wait-and-see approach, anticipating further price declines before making their move. This trend has made Sydney’s property market the biggest drag on under-the-hammer sales in Australia.
Auction Clearance Rates Plummet
Sydney’s preliminary auction clearance rate fell to 58.2% over the weekend, a sharp drop from the previous week’s rate and well below the balanced market rate of around 65%. According to CoreLogic research director Tim Lawless, the main drag on clearance rates is now coming from Sydney rather than Melbourne. This marks the second consecutive week of lower preliminary clearance rates in Sydney, indicating a significant shift in market dynamics.
Comparative Market Analysis: Sydney vs. Melbourne
While Melbourne had initially led the downturn with mature price falls, Sydney is now catching up. Buyers are expecting housing prices in both cities to fall between 1% and 5% in the first half of next year. SQM Research’s Louis Christopher noted that asking prices in Sydney and Melbourne have already decreased by 0.7% to 0.9%.
Impact of Reduced Listings
Despite the weak results, fewer properties are being listed in Sydney, with volumes down by about 300 to nearly 2600 homes over the past week. Traditionally, peak auction season occurs between late November and early December, but this year, vendors are hesitant to list their properties due to the low clearance rates. Chris Skarlatos from The Agency highlighted that sellers who do not need to sell are opting to stay off the market, fearing they may not find buyers.
Case Study: Roseberry Auction
A recent auction in Roseberry, Sydney’s inner south, exemplifies the current market conditions. A three-bedroom house sold slightly above the reserve price of $1.8 million, but only two bidders registered. Last year, similar properties often attracted more than five registered bidders. This reluctance to sell is driven by concerns over low clearance rates and the fear of missing out on better market conditions in the future.
Combined Capitals Auction Performance
The preliminary combined capitals auction clearance rate fell to 62.4%, marking the lowest preliminary result for the second consecutive week. This decline underscores the broader challenges facing the Australian property market, with Sydney being the most significant contributor to the downturn.
Off-Market Transactions: A Strategic Shift
In contrast to Sydney, Melbourne posted a stronger week with a preliminary clearance rate of 67.0%, up from 64.1%. However, this improvement is seen as an anomaly, with many vendors opting for off-market processes to secure better prices. Buyer’s agent Emma Bloom of Morrell and Koren explained that off-market transactions allow sellers to protect the value of their properties by avoiding exposure to the broader market.
High-End Market Success Stories
Off-market strategies have proven successful for high-end properties in Melbourne. For instance, a five-bedroom house in Toorak sold off-market for about $20 million, while another property in the same area sold for $12.66 million. These transactions highlight the continued demand for luxury properties, even in a challenging market.
Regional Market Performance
Elsewhere in Australia, Brisbane held the most auctions with 203 homes and a sold rate of 57.6%, up from 52.9% the previous week. Adelaide’s preliminary clearance rate remained steady at 61.7%, and Canberra returned a preliminary clearance rate of 60.8%. These figures indicate varying levels of market activity across different regions, with some areas showing resilience despite the overall downturn.
Conclusion: Navigating the Slump
The Sydney property market is currently in a state of flux, with buyers waiting for further price falls before committing to purchases. This has led to a significant drop in auction clearance rates and a cautious approach from vendors. However, off-market transactions and high-end property sales continue to show resilience. As the market evolves, staying informed and adaptable will be crucial for buyers and investors looking to navigate these challenging conditions and seize opportunities for future growth.