Auction success stems from slim stock

Auction success stems from slim stock
Auction success stems from slim stock

The supply of new stock for sale is one of the most important factors in how property markets will perform.

Every one of Sydney's 850 suburbs, even every street has its own momentum. Too many or too few makes for interesting times.

There are of course distinct established housing and off-the-plan markets, that sometimes interconnect. Auction and private treaty markets too.

The Saturday auction market sets the commentary agenda because the latest results are published weekly in the Sunday Telegraph.

Last weekend's preliminary CoreLogic result of 80 percent represented the strongest clearance rate for Sydney so far this year, and a big increase from the prior low 70s percent weekend result.

What was especially interesting was the result was higher than the same time last year when the then 76 percent clearance rate came as the market was coming off the boil. 

The strength in the Sydney market has seen week-on-week results over 70 percent ever since the last week in April.

Sydney’s result were especially driven recently by North Sydney and Hornsby (95 percent), the Ryde district (94 percent) and the Northern Beaches (92 percent).

Depending on your location or property type, the factors that drive supply and demand can be varied and not just local. The media coverage the property market receives, whether positive or negative, strongly influences buyer and seller confidence.

The wider factors that influence markets include interest rates, regulatory and lender policies for investors and overseas purchasers, infrastructure and even currency fluctuations.

Clearance rates suggest demand is still strong, however the valuers Herron Todd White suggested this week the decrease in auction numbers has masked the slowing demand.

As the winter months are generally quieter and now the election campaign is behind us, HTW anticipate Sydney should see an increase in market activity.

There are currently around 19,000 properties for sale across Sydney, according to CoreLogic, which is up 4 percent on the same time last winter. But much of the stock has been on the market for many months, with just the 5600 new listings some 27 percent down on fresh listings at the same time last year.

Fewer newly advertised properties being added to the market, according to Tim Lawless at CoreLogic, suggests that vendors are not quite as confident as they were a year ago. Or it could be that after four years of price growth, the supply chain of vendors wanting to sell has been exhausted.

Hobart is an interesting example of low supply at the moment. Its stock levels sit at 1800 properties for sale - which is 33 percent down on the same time last year. And CoreLogic not surprisingly had Hobart sitting just behind Sydney when it came to price growth this year for houses, up 10.9 percent in Sydney and 9.7 percent in Hobart.

By contrast Perth's stock levels sits at 22,000, which is up 15 percent on the same time last year. CoreLogic says Perth prices are down around 5 percent so far this year. Perth, which has about 700,000 households, has more listings than Sydney which has around 1.7 million households. Brisbane also has more for sale than Sydney. Both Perth and Brisbane sit among the capitals where prices are falling.

Earlier this year the RBA Governor Glenn Stevens tipped the Sydney and Melbourne home prices “to take a bit of a breather for a while”.

Any further auction clearance rate at 80 percent would be troubling, but hopefully spring stock ought reduce the recent market heat.

This article was first published in the Saturday Daily Telegraph.

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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