March 2019

This is the 11th in a series of articles summarising monthly news and happenings in Sydney real estate, and more broadly.

The light at the end of the tunnel?

In the latest CoreLogic monthly housing update, Tim Lawless reports that February had a slight reduction in the rate of market decline, with a surge in first home buyer activity across the more affordable end of the market. While it is too early to suggest whether this marks a bottoming out of the market, at the very least the indicator gives some hope that the current downturn in housing values is in fact finite (and maybe not as bad as everyone forecast). If you listen closely you can hear the collective property market trying hard not to begin the big inhale before the sigh of relief.

To make that temptation worse, The Real Estate Conversation reports a significant upswing in Sydney’s auction results in the last week, showing a marked improvement over the previous week. CoreLogic’s Kevin Brogan has suggested that vendors may have begun to recognise the new reality, and have been adjusting prices accordingly. While – again – a single week’s good return is not enough to establish a trend, the interesting thing is that although the year ago clearance rate is still 2% higher, this year there were nearly double the amount of auctions. The same is more or less true of the total auctions in Sydney, Melbourne, Brisbane and Adelaide. The auction clearance percentage is down, but the amount of stock is much higher.

If these developments are marking the beginning of the end of the downturn, Brogan also mentions that the lead up to Easter could be a good test of the strength of the market, as “Most people will want to get their auctions in before the Easter weekend because Anzac Day is right afterwards,” he said.

Providing some context for this, Tim Lawless, of CoreLogic is quoted separately as saying, “Although this is a positive development, the outlook for the housing market will continue to be affected by uncertainty related to the federal election, lending policies and more broadly, domestic economic conditions.”

Attribution: CoreLogic

Diverse market conditions

With something of an understatement, in the CoreLogic monthly housing update Lawless says, “There is so much happening in the housing market at the moment and conditions have rarely been this uncertain or diverse.” And this month, more than any in the recent past, does this seems to be an appropriate observation.

For example, The Real Estate Conversation reports on new figures from the March 2019 edition of the HIA-CoreLogic Residential Land Report that show that especially in Sydney but also more widely throughout the country, sale prices for residential land lots are falling at a much slower rate than housing, but demand for land is falling much more sharply. Australia-wide land lot prices rose by 0.8 percent, while the number of lots sold has fallen by 16.2%, though whether this takes into account the relative size of stock, is not stated.

And also, despite the glut of residential properties on sale, Kate Burke writes for Domain about new research that Sydney – despite the common complaint that the housing market is nigh saturated with new apartment blocks – is still facing a shortfall of about 200,000 homes in the low to moderate income bracket. The article cites University of New South Wales researchers who have found that there is a huge backlog in social and affordable housing thanks to decades of undersupply in the area. The most under-represented areas are Western Sydney through to the South West:

  • Parramatta needs 28,000 affordable homes
  • Inner South West needs 33,600
  • The South West needs 23,000
  • The remaining 117,000 homes are allocated throughout the rest of the areas in the greater Sydney area (details in the article)

Could it be the Government might do well to buy out some of the apartment fire sales that have been popping up, and redistribute them to those that need them most? The election is over with The Coalition – who promised the least in this area – the winners, so unlikely.

Good time to buy

In anyone’s language, now is a good time to buy especially if you are an owner occupier or first home buyer. While the opportunities are there, sometimes with first time buyers the background experience is not. Kristy Caskey writes for The Real Estate Conversation about some of the ‘things I wish I knew’ when it comes to bidding on an auction. The answer? In a nutshell, preparation, preparation, preparation.