The Silicon Valley Bank collapse and the UBS takeover of Credit Suisse have just influenced the US Federal Reserve Bank to apply a smaller than anticipated .25% rate increase this week, accompanied by a statement that they ‘may be at the top of the tightening cycle’.
Sydney house values rose in Feb +0.1% in Feb and +0.5% higher over the first 15 days of March.
The Sydney auction market has shown some strength with a steady clearance rate in the 60-70 per cent range in recent weeks. The consensus is that a clearance rate of 60 per cent reflects stable house prices while a clearance rate of 70 per cent indicates rising prices.
Domain chief of research and economics Dr Nicola Powell expressed caution on expecting too much from the recent high clearance rates citing seasonality as a key reason for the uptick.
However historic low levels of housing stock must also be credited. More than a year into the slump and CoreLogic figures show a decline in the number of new Sydney listings, down 22 per cent on the five-year average with no significant uptick in distressed sales.
Real estate veteran John McGrath says the housing price slump is nearing its end.
Mr McGrath based his predictions on historical evidence that cycles in “downward legs” last for about 18 months: “We’ve been in this [cycle] now for 15 to 16 months and I think, on average, the last six to seven downward legs have historically been down 8 to 9 per cent, and selling prices in most markets have corrected by between 10 per cent and 15 per cent from their peak in late 2021,” he notes.
Within our business we are experiencing a noticeable increase in buyer enquiry and a more positive attitude toward market conditions which may be a weathervane for change.
We continue to find the market’s performance varied across our buying areas of the Eastern, lower and mid Northern and inner Western suburbs of Sydney.
Family homes requiring minimal to no renovation are in demand with limited supply and prices are stable or increasing.
Older style strata title homes with desirable features such as ‘character’, house like proportions, views, or access to an outdoor area are trading in a market balanced between buyers and sellers.
Generic apartments in higher density pockets are languishing, either selling at a discount to original price guide or withdrawn from market and listed for rent.
‘Renovator delights’,both houses and apartments remain out of favour.
Economic uncertainty combined with conflicting and lagging data means it would be unwise to think we are out of the woods and there are a number of wildcards (the ‘mortgage cliff’, the return of immigration) whose effects are yet to be felt. All in all there is a possibility that we are through the worst of this downturn.
Rather than speculate, we suggest now is the time to participate.
Be psychologically and financially ready to buy, intimately across the areas you’d like to purchase.
The alternative is to risk entering the fray on a rising tide.
As always, please get in touch if you’d like help with your property purchase.
