Sydney's speed and price growth is sometimes staggering

Sydney's speed and price growth is sometimes staggering
Sydney's speed and price growth is sometimes staggering

Conditions in the housing market have been mixed across Australia this spring, though the new RBA Governor Philip Lowe has suggested some of the Sydney property market has seen "brisk" price increases.

"It is a complex picture," he noted given prices were still falling in some capitals.

"There remained considerable uncertainty about momentum in the labour and housing markets," the latest RBA minutes advised.

This mixed bag was being watched closely by the RBA board members as they figure out if there's another rate cut yet to come for the nation.

Lowe advised the board had assessed the rapid growth in housing prices and concluded the overall risks had receded over the past year.

But I'd suggest the shortage of stock this spring has actually put many of Sydney's suburban markets into risky top gear.

The regularly high clearance rates, the pre-auction sales and the speed of private treaty sales are showing no signs of slowing.

The eastern suburbs auction success rate sits above 90 percent, while across Sydney it sits around 80 percent.

The days on market for both Sydney houses and units is at near record lows of 27 days before their private treaty sale.

The pre-auction BresicWhitney sale of a Leichhardt warehouse conversion highlighted the trend of vendors pocketing more than they dreamed off.

With 11 registered bidders in June last year, after 40 contracts were issued, a $1.55 million sale was secured when it was still operating as a sign-writing business.

The property returned to the market last month with a mezzanine bedroom level and a splash of paint.

It was marketed with $1.8 million hopes and sold before last weekend's scheduled auction at $2.1 million.

That's $550,000 more - reflecting near 25 percent price annualised growth.

This month there was also a snappy pre-auction sale - after just four days on market - by the fashion designer Collette Dinnigan and her hotelier husband Bradley Cocks at Watsons Bay.

Last traded at $6.25 million 18 months ago, she secured well in excess of the $8 million being sought through Ben Collier at McGrath Estate Agent for the classic Beaux-Arts style home. Perhaps even $9 million.

He was out the front of Saturday's cancelled first open for inspection when I turned up for a look, advising intending inspectees of the overnight sale at an undisclosed price.

When it was last sold at $6.25 million in 2015 Matthew 'Ched' Csidei and his lawyer wife Lauren Roscoe, had sought $8 million too, but it took them over 200 days to secure their sale.

All this staggering price growth at a time when wages growth is low.

Infact research by the RBA and the Australian Bureau of Statistics shows a dramatic fall in the size and frequency of wage gains in recent years.

Six years ago, almost 40 per cent of the 18,000 individual job categories tracked by the ABS received a wage increase in excess of four per cent.

Over the last year, less than 10 per cent of jobs got this type of wage increase.

Around half had a wage increase of between two and three percent.

Recent Roy Morgan research showed that more than two-thirds of mortgages to owner-occupiers were held by households with two incomes.

This poses huge risks if one of the incomes disappears or is even reduced.

The loss of one of the incomes was calculated as having a bigger impact than a doubling in interest rates.

Let's just hope we can keep both these scenarios out of the economic equation.

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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