Sydney needs listings for balanced market

Sydney needs listings for balanced market
Sydney needs listings for balanced market

Sydney's property market needs more listings to lessen the pressure that has contributed to the recent rampant price growth. 

CoreLogic's Hedonic Home Value Index calculates since the growth cycle commenced in mid-2012 that Sydney dwelling values have increased by a cumulative 70 percent.

We're only at the early stages of 2017 but there are tentative signs the listings drought may be breaking.

Total Sydney listings sat at around 18,000 at the end of January - six percent down on the same time last year. But a week on it is 19,200 which is 11 percent lower.

New listings were up nine percent with 7,000 hitting the market over January, but now at 7700 over the past 28 days, which is just up one percent on the same time last year.

Any sustained higher listing numbers ought show up in an easing in the auction clearance rate, but seemingly not quite yet.

The opening 78 percent auction weekend was up on last year's 75 percent, according to CoreLogic. And last weekend it jumped into the mid-80s.

Even Sydney's annualised price growth has edged up in the past five week, currently sitting at 16.3 percent, up on the 15.5 percent growth during 2016.

That's come because investors have returned big time, competing with home buyers. 

The real estate agency, McGrath Estate Agents, has reported little change in their February numbers in Sydney as the Autumn auction season approaches.

McGrath has 349 scheduled auctions compared to 344 in 2016 with the eastern suburbs the busiest region with 66. 

McGrath’s chief auctioneer, Scott Kennedy-Green said these low volumes have already translated into competitive bidding at auctions. 

Last weekend McGrath sold 91 percent of their 23 properties with all seven sold in the $1.5 million to $3 million bracket.

Kennedy-Green indicated that February 25 will be his busiest auction Saturday for February with 146 auctions. 

McGrath Ltd's chairman, Cass O'Connor blames rocketing real estate prices having created "an environment in which vendors are reticent to sell, fearing they will not get back into the market."

She said the trend really set in this time last year.

"It was as though every vendor woke up in the New Year and made a resolution not to sell," she told shareholders last November. 

Taking a more positive marco view, the LJ Hooker network chairman Janusz Hooker noted while listings were low, it's not as bad as many people were saying. 

As a percentage of total stock it is at historic lows, he noted with under three per cent of total stock turning over. 

But Hooker points out the industry is growing at 200,000 homes per annum.

But the LJ Hooker boss acknowledges Sydney has too many buyers and too few listings. 

Buyers still have some leverage in the current market, with lingering listings from last year and longer selling times leading to higher rates of required vendor discounting.  

Ofcourse some of 2016's frustrated would-be buyers have abandoned their search. Many will now renovate rather than move, as it is more affordable than ever before. 

But the new year always brings a new pool of buyers. Good luck!

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.

Tags: 
Auctions Mcgrath

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