Sydney spring price prospects to be shaped by stock influx

Prices have again been on the rise, but will the mighty Sydney residential market be tamed this spring like last spring? That's the big question as we start the peak selling season.

Probably not by much as buying demand is strong, and new supply remains low.

The early September low stock levels pretty much following the trend of much of the year. New listings are down by 20 percent year on year, according to CoreLogic.

Normally low listings mean vendors don't think they can get their asking prices.

But there's no such lack of confidence on that front with the Sydney weekend auction clearance rates stepping up through the 70s and even into the 80 percent plus stellar success levels.

Yes there is a back-of-mind anxiety about the future of the Australian economy which inhibits some listing activity.

The mid-year Federal election certainly didn't help momentum with Tracey Fellows, the head of realestate.com.au, saying uncertainty surrounding the July election outcome contributed to listings being down 11 per cent compared last year. 

Sydney's boom-like conditions are now effectively four years long - give or take a few minor pauses since things started to turn upwards in mid-2012 - so those opportunistic speculative offerings by savvy operators have virtually been exhausted.

Sure there's always the demographic offerings - arising from births, deaths, marriages and divorce. But the common cry from many a prospective seller has been "where could I buy." And so they hold off their listing because they can't see the answer.

Last month at Pennant Hills, in Sydney's north-west, a four-bedroom family home sold for $1,824,000 at auction, at $174,000 above the highest offer made before the auction. 

The four-year-old house only went on sale because of a marriage breakdown.

It was strongly contested - with 10 registered bidders - in an area starved of stock, Ray White agent James Andrews said. 

There are 2555 homes in Pennant Hills and not one per cent is on the market, he noted.

"Stock levels are low. It's a very, very desirable area."

There are just five September auctions in Pennant Hills advertised on realestate.com.au, with Andrews having two of these offerings next weekend. There are another six houses listed by private treaty.

Housing market conditions are very different from region to region, capital city to capital city, but the unexpected re-emergence of strong price growth in Sydney has caught most forecasters - and presumably the RBA and APRA - off-guard. 

Tim Lawless who heads research at CoreLogic says listings matter.

"The number of properties being advertised for sale provides a vital clue about the direction of housing prices.

"Those cities where advertised stock levels remain short are continuing to see upwards price pressures, while cities with historically high stock levels are seeing downwards pressure."

CoreLogic is currently tracking just over 19,000 listings across the metro region of Sydney.

"As a comparison point, when the Sydney market was moving through a down phase between late 2010 and mid-2012, CoreLogic was tracking just over 40,000 properties on the market," Lawless advised.

"The fact that Sydney listing numbers remains so low is one of the factors providing the upwards pressure on housing prices.

"Buyers simply don’t have a lot of stock to choose from, which creates urgency in the market and provides leverage to vendors when setting and negotiating their prices," Lawless noted.

Being spring we are likely to see an upwards trend of newly advertised properties enter the market.

But will it be enough to tame the market’s strength?

This article was first published in the Saturday Daily Telegraph.