Sydney auction market cooling as finance harder to come by
The Sydney auction market is cooling as finance is harder to come by, especially for investors and those wanting to use interest-only loans.
The preliminary clearance rate reported by Domain was a shade under 70 percent - now tracking well below the frenzied peak - while CoreLogic put the preliminary figure a but higher at 73 percent.
The median auction price for houses was $1,515,500, some $142,500 or 10.4 percent higher than on the same weekend last year.
Similarly the median auction price for units was up by $76,000 or 8.6 percent from the same weekend last year to $955,000.
Overall the median price of $1,335,000 was the third highest on record.
Return of the first homebuyer
A factor skewing the median price higher was that some first homebuyers are reportedly sitting on the sidelines until next weekend when the new incentives will have kicked in post-July 1.
From next week, therefore, there may be some renewed upwards pressure on entry level stock priced up to around $800,000.
Overall, though, the credit squeeze has changed the dynamic of the market considerably, and price pressure is easing.
In some inner suburbs such as Erskineville, Glebe, Enmore, Newtown, Haberfield, Darlinghurst, Surry Hills, Redfern, and Pyrmont I've already noted a looming shortage of rentals, with vacancy rates sinking to as close to zero as you'll ever see.
Sydney is having an absolute shocker at the moment with its traffic congestion, partly due to the disruption caused by the light rail construction.
Therefore it's no surprise that areas experiencing a rental shortage are those with great city access.
It's a different story for some of the suburbs where commuters need to drive into the city for work.
Over the next year as investors are increasingly squeezed out of the market there will likely be an increasing number of news stories reporting a Sydney rental crisis, at least for certain locations and sought-after property types.
Contrast these tight rental markets with the overbuilding and homogeneous glut of rentals on Sydney's city fringe, 60 kilometres to the south west.
PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and blogger.
His latest book is Four Green Houses and a Red Hotel.