Strong indicators Sydney market slowing: SQM Research

Recent falls in auction clearance rates across Sydney is a strong indicator the Sydney market is slowing, according to SQM Research managing director Louis Christopher.

According to the latest research from SQM, the preliminary clearance rate result this weekend of 69.6% is lower than the same time last year with more listings on the market (984).

Last year APM recorded a revised auction clearance rate of 76.9% based on 722 listings.

Louis Christopher said the long term average auction clearance rate for Sydney during spring has been in the order of the low 60's and it should be noted that auction clearance rates tend to fall each spring.

"Now what does a clearance rate of the high 60's mean for this time of year? Well let me tell you now, it most certainly doesn’t represent a “bloodbath” as some unqualified commentators have put out there this year. And neither does it represent a boom. Rather it represents more normal market activity," he said.

"For some reason, vendors think spring time is a great time to sell. Perhaps they think their garden is looking fabulous right now. Perhaps they wish to tie up affairs prior to Christmas. Whatever the reasons given, many vendors think this way and therefore it’s not such a great time to sell as everyone else is selling! No wonder they call it the spring selling season!

"Nevertheless in all this, we do acknowledge a slowing in the market. However I do not believe at this stage the Sydney market is close to correction territory. I would not be concerned on that event until we see clearance rates below 60%. That hurdle rate has served us well in the past, particularly in predicting the 2010-2012 downturn."