Amid reports of a slowing Sydney property market, what are the trends driving the market now?
And how are they affecting the eastern suburbs?
Sydney real estate market update
After 18 months of record-breaking growth, more balanced conditions have returned to the Sydney property market. CoreLogic reports Sydney housing values softened by 0.2% in April, following similarly slight declines in February and March. This marks the first quarter of declining home values in Sydney since 2020.
Despite this, CoreLogic’s numbers show that Sydney property owners are still well ahead, with house prices up 17.2% year-on-year and units 8.9% higher than the previous year. In some eastern suburbs, the price gains have been much greater. The median unit price in Elizabeth Bay, for example, has grown by an impressive 34% over the last twelve months, according to realestate.com.au, while three-bedroom houses in Bronte have risen by a staggering 75.4%.
So, what are the market trends currently at play?
More choice for buyers
One of the hallmarks of last year’s frenzied market was a lack of listings. Some vendors were reluctant to list their property for sale amid COVID uncertainty, and the result was simply not enough available properties to meet buyer demand. That placed upward pressure on prices.
Now, however, CoreLogic reports that Sydney’s advertised stock levels have returned to the previous five-year average following more new listings than usual coming on the market. This has taken the ‘FOMO factor’ (or ‘fear of missing out’) out of the market as buyers have more properties to choose from. This is good news for both buyers and vendors – after all, vendors are usually in the market to buy their next property, too.
Interest rate rise
After months of speculation, the RBA raised the official cash rate in early May for the first time since 2010. Record-low rates were arguably a primary driver of Australia’s 2020-21 property boom, but fixed mortgage rates have been on the rise since last year, well before the recent cash rate rise. The result? Buyers’ borrowing capacity has been tightened, which has contributed to the softening of the overall market. However, some market segments are unlikely to be affected by fluctuations in interest rates, such as the prestige sector and many downsizers.
Lower auction clearance rates
A reduced sense of competition among buyers and an increase in the cost of borrowing have seen a reduction in auction clearance rates city-wide.
Domain reports that Sydney’s auction clearance rates have been sitting between 56% and 65% since mid-March, with the rate for the week ending Saturday 7 May coming in at 53%. While this is one of the lowest rates seen in the past two years and certainly much lower than the same time last year when it was 78%, it’s worth remembering an auction clearance rate of 60% is roughly correlated with a balanced market.
Meanwhile, here in Sydney’s east, the Wednesday 11 May edition of the Wentworth Courier reports a clearance rate of 87% for properties sold at or prior to auction across our region, indicating that homes here are continuing to sell well. Interestingly, as auction clearance rates soften across Sydney, private treaty is growing in popularity as a method of sale here in the east. The Wentworth Courier shows that while there are 203 local properties currently listed for auction, there are a hundred more listed for sale by private treaty.
What do these trends mean for the eastern suburbs’ property market?
Sydney is a big and varied market comprising very diverse smaller sub-markets, and despite the wider market direction, prices for certain properties in particular areas can still be on the rise.
As PropTrack economist Angus Moore told the Daily Telegraph this week, Potts Point has seen significantly more sales activity over the past year than in previous years. He also reports that the median unit price in Potts Point has grown by about 11% over the past twelve months, which is faster than the price for units across Australia overall.
Eastern suburbs houses and penthouse apartments, in particular, are also still achieving incredible sales results. Houses in Vaucluse, for example, grew in price by 42.8% in the year to March, putting the suburb in seventh place on Domain’s top 10 list for median house price growth in Sydney.
Meanwhile, units in Darling Point, Double Bay and Bondi Beach ranked third, seventh and tenth, respectively, in the list of Sydney suburbs with the highest median unit price growth. Darling Point units saw 39.3% growth over the year, while Double Bay apartments increased by 31.1% and Bondi Beach by 27.2%.
Of Sydney’s top 10 performing prestige suburbs, six were here in the east, with Vaucluse, Clovelly, Dover Heights, Rose Bay, Woollahra, and North Bondi houses all making the cut with price gains north of 36%.
Looking to buy or sell in the eastern suburbs, or after more information about our local property market? Get in touch with my team today.