Recently released data paints a gloomy picture of the current property market but we think this is actually a great time to buy and sell.
We look at what’s being reported in the media and explore whether this is different from what we’re seeing on the ground.
Auction clearance rates
The media: Over the past few weeks, Domain has reported a series of poor auction clearance rates. On 14 May 2022, Domain recorded just 54% of properties selling at auction compared to 77% this time last year. This was preceded by auction clearance rates of 53% and 56% the two weeks prior to that.
The reality: Auctions rely on competitive tension and, for a property to sell under the hammer, there usually needs to be multiple bidding parties. It’s definitely true that there are fewer bidders right now and so more properties are being passed in. But that doesn’t mean they don’t sell. Most of the time, a property will sell within a week of the hammer falling even where there has been no bidder. Where there are interested parties but the property didn’t reach the vendor’s reserve price, a property will usually sell within the next 24 hours.
So, even though we’re now dealing with a much lower auction clearance rate, most properties are still selling.
The media: In late March 2022, the AFR set the cat among the pigeons, reporting that the median sales price in Sydney’s eastern suburbs had dropped by a whopping 17% – or $650,000 – in the three months to February 2022.
The reality: The AFR relied on data supplied by SuburbTrends, which suggested nearly one in three housing markets nationwide had posted a drop in home values over the same period. But this isn’t necessarily in line with what other data providers are reporting. For instance, Domain data recorded just a very modest decline of 2.8% from December to March across the eastern suburbs. This is more in line with what we’re seeing right now – a flat market rather than a falling one. Property owners who choose to sell will have locked in most of the gains they’ve made over the past year.
It has to be remembered that last year was an outstanding year for property right across Sydney. The median price lifted 25.5% over the year to 31 January 2022 and premium properties performed even more strongly still. In fact, there were 45 sales of over $20 million in our city, with almost all of them occurring here in the East.
This year, we’re not seeing the same number of prestige sales and this has to have some effect on the median price.
Listing numbers on the rise
The media: Earlier this year news.com.au reported PropTrack data showing that the number of listings has surged, with 37.8% more properties on the market across Sydney in February 2022 compared to January 2022. The number of listings then grew again by 15.7% in March, or 11.7% year-on-year.
The reality: The property market has its own rhythm, and the number of listings always grows across February and March before activity slows again around Easter. This year, we saw a real dip in April, when the number of listings declined by 26.2% month-on-month, to be 18.5% lower than the same time last year.
We’re now seeing more stock hit the market once again – autumn is traditionally a selling season – but, as winter hits, we’re likely to see listings again start to fall. That said, the number of buyers in the market also tends to rise and fall throughout the year, with autumn and spring the traditional buying seasons too.
Why this is actually a good time to buy and sell
The data paints the picture of a slowing market, with supply rising and demand dwindling. While we don’t think it’s as gloomy right now as some reports would suggest, it is a much more balanced market than we saw in 2021. That means buyers have greater choice and real estate agents have to work harder to get the very best price for their clients.
It’s actually these kinds of ‘balanced markets’ that are the best time in which to make a property move because property prices aren’t raging upwards, so it’s easier to take stock and consider what ‘fair value’ really is.
At the same time, sellers are finding that they can still get a very good price so long as they have reasonable expectations, present their property correctly and target the right audiences. More importantly, if they’re also buying, they have more stock from which to choose and a much greater chance of securing the perfect next home.
If you’d like to know more about buying and selling in Sydney’s East, get in touch.