A bit like a party where no one wants to leave, but the sun rising the next morning kind of makes them do, there is some talk of late about a new dawn approaching for market conditions in Sydney.
On the ground, over the past few weeks, it does feel like some of the market heat has cooled, with a slight power shift in the power dynamic from sellers to buyers, but they may not mean what you think it does.
Market cooling?
Of course, only dozens of future sunrises will determine whether this is a permanent fixture or a fleeting one but there is some data that is starting to support a market change of sorts.
According to SQM Research, the total number of property listings in Sydney spiked by 25 per cent between September and October this year, with the volume of listings now at the highest level since November last year.
In fact, the total number of listings in Sydney is now similar to what it was before the pandemic hit, which was a period when dwelling prices were relatively soft.
Likewise, auction clearance rates have been trending down over recent weeks, with the Sydney rate hitting 71 per cent for the week ending 23 November – a significant drop from the 83 per cent it recorded two months before.
A Sydney auction clearance rate of 71 per cent is also below the 76 per cent recorded at the same time last year.
There are definitely fewer people at open homes, but that is perhaps not overly surprisingly when many people brought forward their buying decisions over the past year for a variety of reasons, including some unexplainable market frenzy.
It appears that agents are actively back on the phones looking for buyers in Sydney – a professional reality that they didn’t have to bother with for the best part of the past year.
Some of the prices being paid also seem to have come off the boil a little, along with these more “normal” market conditions.
However, when markets appear to moderate, it is A-Grade assets that hold up better because of their superior attributes, with record prices still being achieved for these types of dwellings but perhaps not on every, single sale.
B- and C-Grade properties, on the other hand, are starting to bear the brunt of the market turn it appears.
Is it full-time on the good times?
The reality of the situation is that property markets are generally slow-moving beasts, which means that the tap just doesn’t turn on, or off, overnight.
As I mentioned earlier, only time will tell if this market quasi-normalisation is temporary or something more permanent.
However, there are a number of positive attributes that are set to underpin the Sydney property market for a while yet.
What I’m talking about are interest rates, which are set to stay low for quite some time.
Borders are opening up again, which will be a boon to our economy, as well predictions of significantly more jobs growth ahead.
If we consider how property markets have performed in the past, it’s clear that booms have a tendency to last longer than just a few months or a single year. Indeed, sometimes there is a mid-boom pause, before a market goes charging off again.
Distracted buyers
The situation at present is just as likely to be a case of distracted buyers because most of us have had our freedom returned to us after the best part of two years.
Lockdowns are generally over, we are socialising with friends and family once more, including over the upcoming holiday period – which is plenty to focus on rather than property.
Plus, there is an element of buyer fatigue in Sydney because of the extreme market conditions over recent months.
Most people are probably keen to take a breather, especially if they have missed out on purchasing many times.
However, where others see a potential market change, I see opportunity with fewer active buyers and more property listings available.
Indeed, between now and Christmas, could well be an excellent time for motivated buyers to strike, while everyone else is distracted – and probably just temporarily as well.
