Sydney’s property market is not looking good for sellers at the end of this year with more listings, dwindling prices and worsening auction slumps.
SQM Research revealed that total residential listings increased by 7.5 percent over November, pushing the total number of homes for sale Sydney to 40,000, the highest number recorded since 2009. Current listing levels are 20.9 percent higher than from last year.
Dwelling values in Sydney also fell 1.4 percent in the same month from October, bringing the prices down 8.1 percent over the past year to a median of $821,438, according to CoreLogic’s Home Value Index.
“Since peaking in July last year, Sydney’s housing market is down 9.5 per cent which is on track to eclipse the previous record peak-to-trough decline set during the last recession when values fell 9.6 per cent between 1989 and 1991,” CoreLogic head of research Tim Lawless told the Sydney Morning Herald.
In the first weekend of December, Sydney recorded an auction clearance rate of 41.4 percent with chances of sinking into the 30s over the month. SQM’s Louis Christopher said the last time Sydney fell into the 30s was in October-November 2008 during the Great Financial Crisis. The weekend turnover totalled $129 million in sales, well below the near $600 million in the same period a year prior, Domain reported.
Lawless said this downturn was driven by multiple factors, including tighter conditions for investment, housing affordability constraints and a general oversupply.
“We expect headwinds for tighter credit will continue for the foreseeable future and will continue to temper housing market activity,” said Lawless. “This will be especially the case for those markets where investment demand is most concentrated, and where housing costs are high relative to incomes, such as Sydney and Melbourne.”
According to Louis Christopher of SQM Research, on record the Australian housing market has hit its second most overvalued point, potentially drawing closer towards “a dangerous national housing bubble”.
He has stated that “the national property market was overvalued by 22 per cent, which was only lower than 2003 when it hit 25 per cent” and was driven specifically by Sydney and Melbourne, both capital cities having already entered that bubble.
Christopher has announced that “The current tempo has picked up particularly in Sydney. Melbourne has had about 15 per cent per annum price gains, I know that is a little bit higher at what the official numbers suggest but it is our view that, that is what the market has done. And our expectation is that the current trends will continue well into next year.’’
Melbourne had hit its highest overvaluation level of 40 per cent and Sydney was at its second highest level of overvaluation at 40 per cent as well.
Mr Christopher also warned in his latest report that “if the Reserve Bank of Australia didn’t lift interest rates or encourage the Australian Prudential Regulation Authority to clamp down on home lending, the national market could enter bubble territory.”
Hobart values would increase between 7 per cent and 12 per cent, Brisbane between 3 per cent and 7 per cent, Adelaide between 2 per cent and 4 per cent, and Canberra between 3 per cent and 7 per cent.
Fortunately, the report has predicted values in Perth would drop between 8 per cent and 4 per cent and drop in Darwin between 9 per cent and 5 per cent.
This news article was completely sourced by News.com.au
Auction market opens the spring season with significant clearance rate in Sydney, Melbourne, Brisbane, Canberra and Adelaide.
Sydney market remains strong with its fourth consecutive weekend of a clearance rate above 80 per cent, well above the rate recorded at the same weekend last year of 75.1 per cent.
Melbourne market is also at its strongest since last winter, achieving 77.5 per cent clearance rate on Saturday and making it the sixth consecutive weekends of clearance rates above 75 per cent.
Domain senior economist, Andrew Wilson told AFR Weekend that other cities are experiencing similar trend. “Brisbane saw a clearance rate of 54 per cent when it is usually travelling in the 40s, Canberra hit 82 per cent and Adelaide 74 per cent,” said Wilson.
Observers believe that this market boom is motivated by lower number of listings and cuts in interest rates by the Reserve Bank of Australia last month. Wilson reports that this weekend, Sydney only saw 537 auctions compared to 815 auctions at the same weekend last year while Melbourne had 718 auctions compared to 880 last year.