It has certainly been an interesting first three months of 2018 when it comes to Sydney’s property market. We’ve seen a definite shift in gears on last year reflected in an increase in available housing stock, less competition and more reasonable asking prices.
It seems that APRA’s (Australian Prudential Regulation Authority) crackdown on mortgage lending to investors this time last year, as well as the 4 per cent stamp duty surcharge for foreign investors have slowed investors and overseas buyers consequently impacting upon the rest of the Sydney market.
Property values in Sydney fell for the seventh straight month in March as the housing market continues to cool after an incredible boom time that pushed prices up nearly 20 per cent each year for the past five years.
CoreLogic figures showed Sydney home prices dropped 0.3 per cent in March, leaving values down 2.1 per cent on the year.
According to the Sydney Morning Herald, CoreLogic’s Head of Research Tim Lawless believes that Sydney's property market is showing signs of solidifying, with the 0.3 per cent monthly fall its slowest rate of decline since late last year.
In separate figures released in early April, SQM Research revealed that Sydney listings jumped 11.8 per cent from February – up by 23.2 per cent from a year earlier. This seems to be as a result of property sellers attempting to sell their properties before any further correction in the market negatively affects their homes’ value.
Change in Buyer Approach
As a result of these factors, there has been a considerable change in buyer attitude and approach over the last few months. The once overwhelming sense of urgency to buy a property at any cost, or “fear of missing out”, has altered thanks to greater stock availability and less competition.
Six to 12 months ago, there was intense competition for any quality property (and often the not so great ones as well). This year, however instead of seeing up to 10 interested parties for quality properties, I am seeing up to around two to three potential buyers per house or apartment. The inferior properties are struggling to sell at all.
This has resulted in a swing to a ‘fear of overpaying’ with many buyers proceeding with caution, unsure of the ‘value’ of a property as sales figures of comparable properties from last year are no longer definite pricing predictors.
As a buyer’s agent, the most significant value-add for clients wanting to buy in the current market is using my experience and negotiating skills to secure a quality property at a great price, and ensuring my clients do not overpay.
Buyers’ agents are in a better position to determine price in a slower market as we have access to a range of methods and tools to establish the likely selling price. These include:
- details of the most recent comparable sales
- knowledge of the different selling agents, and how they operate (e.g. open to pre-auction offers)
- finding out the number of interested buyers and their budgets
- finding out the vendor’s selling expectations
- details of any previous offers
- consultation with extensive industry network
Is it a Good Time to Buy?
For those wanting to upgrade, it is a very good time to buy as although your existing property may sell for a softer price than last year, you should more than recover any shortfall with more significant price benefits to be had on the more expensive property.
What Does the Future Hold?
Some industry analysts are suggesting that the market is beginning to bottom out, and that property buyers need to move now if they want to take advantage of falling prices. SQM Research Director, Louis Christopher believes that Sydney house prices still stand a good chance of posting positive growth in 2018.
The good news for buyers is that a return to the boom-like conditions once experienced seems unlikely.
One issue to watch is the return of investors to the market. Louis Christopher believes most banks are well-below restrictive investment lending targets set by APRA and have room to start issuing loans to investors again.
Overseas migration is another factor widely seen as putting severe upward pressure on Sydney’s property values and affordability. Australian Bureau of Statistics figures revealed NSW’s population grew by a substantial 123,000 people in the year to September, driven by the arrival of a record 98,782 migrants.
While it may not last, for now, life is a little easier for buyers with more choice and less competition. But Sydney is still a unique city and in the sought - after suburbs across the Inner West, North Shore and East, we are still seeing quality homes sell above reserve.
To take advantage of a softer market with the guidance of a seasoned negotiator and real estate professional, now is a good time to buy well. If you are considering buying a new house or apartment or an investment property in Sydney, contact Nick now on 0405 134 645.