May auction results suggest Sydney's property boom may be slowing

May auction results suggest Sydney's property boom may be slowing
May auction results suggest Sydney's property boom may be slowing

Sydney's property boom is now in its fifth year - an unusually long period with unusually high price growth.

But the May auction results suggest there's been a light tap on the breaks.

The slightly lower Saturday auction success has contributed to the current thinking that we've perhaps seen the peak. 

But which peak?

Last weekend Ryde recorded the strongest clearance rate of 90 percent from 46 auctions, but Blacktown, with half the volume, secured just 55 percent.

The overall Sydney figure was 76 percent.

There's so many markets across Sydney each having their own telling characteristics.

As a buyer or seller in the market, it is important to take note of the suburban, citywide and national trends, as they all contribute to the commentary which shapes sale outcomes.

Despite it being at the pricier end of activity, auction trends are a portent of the wider property market direction.

There are indicators that cover the private treaty market.

Some of these have yet to suggest any shift in sentiment, but these to tend to lag auction momentum so should emerge over coming months.

Days on market for Sydney private treaty sales sits at a speedy 28 days, the nation's fastest market, CoreLogic advise. The buying discount off the vendor asking price is just four percent.

Stock on market is up six percent suggesting a bumper winter selection for buyers.

The latest CoreLogic figures show supply of established housing stock for sale is at the highest level for this time of year since 2012.

Estate agent John McGrath senses the booming market has turned.

"Demand softens because prices get to such a high point after a long period of growth that buyers start giving up and exiting the market."

Would-be upgrader buyers choose to stay put and renovate or extend because they feel trading up is just too difficult.

"Whether this new data from CoreLogic indicates a turn of the cycle or a blip, we don’t yet know," McGrath said.

But his feeling is that Sydney is at, or around, its peak for the cycle.

"We’re certainly overdue for a period of price consolidation, which I continue to believe is a healthy sign for the market.

"Vendors are still in the driver’s seat but this won’t last forever, especially if demand is on the way down."

Along with the auction and private treaty market, there is another major segment, separate but also infectious, which is off the plan apartment offerings.

One index I like is the number of residential cranes on the Sydney skyline. According to the latest count, there are 34 more over the past six months. The 292 cranes total account for 53 percent of all Australian residential cranes, the RLB Crane Index indicated. 

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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Property Boom Clearance Rate

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