Spring is upon us and the sun is shining on what looks like a favorable auction season.
We can now look forward to a market boost with the winter property hibernation behind us.
In his recent column in Switzer, John McGrath explores what this time of year means for the property market.
HERE’S WHAT HE HAD TO SAY:
This is always an exciting time in the property market.
It’s the first week of the Spring auction season and I think it’s going to be a fantastic few months in Sydney real estate.
The best part about this year’s Spring is not just the expectation that vendors will achieve good prices, but also the expectation that buyers will finally have a decent amount of stock to choose from in suburbs where supply has been especially tight throughout Winter.
In mid-May, total supply was down 21.4% in Sydney compared to the same time in 2014, according to CoreLogic RP Data.
By early August, stock was only down 4.9%, indicating more homes coming onto the market in the lead-up to Spring.
Clearance rates in Sydney have dropped a bit in recent weeks – into the late 70% range after staying above 80% for many months.
I think this could be an indication that some buyers have decided to wait for Spring and the usual increase in listings, instead of competing in late Winter for homes that might not exactly suit their criteria.
The first three weekends of Spring will be an interesting test in terms of listing numbers, sale prices and clearance rates.
Public school holidays in NSW begin on September 19 so we might see a short interval in new listings coming to market over that period as family home vendors wait until the first week of Term 4 to launch their properties on the market.
From this point, the Spring market will move forward all the way to mid-December.
PEOPLE NEED TO REALISE THAT SYDNEY’S BOOM WILL INEVITABLY END AND PRICE GROWTH WILL MODERATE
When this will happen?
We don’t yet know but I wouldn’t be surprised if by this time next year, things might have settled down considerably.
I continue to hold the view that a pause would be healthy for a sustainable market.
In a booming market, it’s not surprising to see a spike in the number of homes offered for sale via auction in Sydney.
Auction is by far the very best way of flushing out the highest price the market is willing to pay for your home, especially during booms.
People are far more excited and motivated and prepared to pay a premium for the home they want.
CoreLogic RP Data figures show 38% of Sydney listings in the 2015 financial year were marketed via auction.
In Melbourne, it was 39%. Canberra is also putting a large number of homes to market via auction – 36%, even though that market is nowhere near as strong.
House price growth in Canberra during FY15 was 3% compared to Sydney’s 17.8% and Melbourne’s 11.2%.
These three cities do have strong auction cultures, but in the case of Canberra, it just goes to show that despite the market being weaker than Sydney and Melbourne, auction is still the preferred method for a similar proportion of the market.
Buyers who feel nervous about bidding at auction should check out my recent post on how to prepare yourself for the big event.
If you want to buy in today’s market, you really don’t have the luxury of choosing to avoid auctions and focusing on private treaty offerings only – there’s simply not enough homes available for sale and most vendors are recognising that auction is the way to go.
CoreLogic RP Data recently published a report showing the Top 10 Hottest Auction Suburbs nationwide, for both houses and apartments, and the No 1 suburbs in each capital city.
Take a look at Queens Park in Sydney’s Eastern Suburbs, where 98.3% of houses in FY15 were marketed via auction.
This isn’t one of those stats skewed by low sales volumes either – we’re talking 60 listings for the year and 59 of them were auctions.
Check out the lists below, courtesy of CoreLogic RP Data.
HIGHEST PROPORTION OF AUCTION LISTINGS FY15 | HOUSES | NATIONAL
Queens Park NSW 98.3%
Clovelly NSW 95.9%
Malabar NSW 95.7%
North Wahroonga NSW 95.5%
Alexandria NSW 95%
West Pymble NSW 93.2%
Bexley North NSW 92.9%
Clifton Hill VIC 92.9%
Curl Curl NSW 92.6%
Ashbury NSW 91.2%
NO 1 AUCTION SUBURBS IN EVERY CAPITAL CITY (HOUSES)
Sydney – Queens Park 98.3%
Melbourne – Clifton Hill 92.9%
Brisbane – Paddington 65%
Perth – Watermans Bay 32.1%
Canberra – Hughes 90.6%
Adelaide – Kingswood 87.1%
Darwin – Fannie Bay 55.2%
Hobart – Battery Point 20.7%
HIGHEST PROPORTION OF AUCTION LISTINGS FY15 | APARTMENTS | NATIONAL
Kew East VIC 97.1%
Carlton North VIC 91.3%
Bronte NSW 89.5%
Dolls Point NSW 88%
Bondi Beach NSW 87.1%
Bellevue Hill NSW 86.5%
Balaclava VIC 86.4%
Surrey Hills VIC 86.2%
Centennial Park NSW 85.4%
Stanmore NSW 85.4%
NO 1 AUCTION SUBURBS IN EVERY CAPITAL CITY (APARTMENTS)
Sydney – Bronte NSW 89.5%
Melbourne – Kew East VIC 97.1%
Brisbane – New Farm 31%
Perth – North Coogee 10.3%
Canberra – Cook 54.2%
Adelaide – Norwood 41.6%
Darwin – Rapid Creek 14.3%
Hobart – Lindisfarne 13.6%