Sydney market is changing from sellers' market to buyers' market

Sydney is nearing the point of the property cycle where after years as a sellers' market, it's becoming a buyers' market.

The shift to the buyer's favour comes because there's plenty of stock for sale, accompanied by a flailing auction success rate, and vendors prepared to drop their prices to secure their sale. Last month Sydney property values sat in negative annual growth territory, according to CoreLogic, albeit down 3.4% after around 75% growth since 2012.

Cooley Auctions' auctioneer Damien Cooley recently suggested a healthy auction market, where both sellers and buyers had equal bargaining positions, was between 50% and 60%.

That's where the market currently sits.

Cooley suggests it becomes a buyers' markets should clearance rates become less than 50%.

Buyers certainly are acting like the tide has turned.

It is not that buying has frozen due to any fears, just that home buyers have turned tough in their negotiations.

They are having to lower their buying expectations since they are discovering the banks won't lend everything they yearn for.

Sellers who engage inexperienced agents who've never dealt with a weakened market will be especially exposed as a buyers market puts sellers in an especially vulnerable position if they need to sell because they have already bought elsewhere.

It is not a time for sales' gimmicks, just realism.

It is a time for strong marketing so there's the increased prospect of the property being seen by the reduced numbers of active buyers, plus those potentials who have basically tuned out through months, or maybe years, of missing out.

There's also those passive buyers who don't consider themselves in the market, but could be tempted by what they see on offer.

It's likely fewer listings during the winter hibernation will slow the downward price momentum, but setting the right asking price is crucial for vendors who want to sell before spring volumes pickup.

Overall there's 26,000 offerings across Sydney - around 26% more stock than this time last year - which means buyers have more choice.

There were 22,000 listings at the start of last spring.

Discounting on asking prices is normal, however in an emerging slowing or falling market, the mismatch between asking and paid prices is likely to be at its highest, possibly due to pride or naivety.

CoreLogic currently puts the required discount before sale at 6.2% for private treaty listings that are taking around 40 days. In March it was at a 5.6% discount and 31 days, and in March last year it was a 4.1% after just 27 days on market. 

Little wonder buyers reckon the market is finally trending their way, so wise vendors might move to marginally underprice the market to get ahead of the emerging curve.

This article first appeared in The Daily Telegraph.