Longer selling periods as buyers more selective amid inner Sydney price cooling

Longer selling periods as buyers more selective amid inner Sydney price cooling
Longer selling periods as buyers more selective amid inner Sydney price cooling

The inner Sydney residential market is cooling off, according to the June report from valuation firm Herron Todd White.

Dwelling values are down almost 7%.

The majority of the suburbs are returning to longer-term auction clearance rate averages with typical auction rates over recent months being closer to the 60% mark, the valuation firm noted.

Auction numbers and clearance rates for these areas during early to mid 2017 were generally well above 70%.

Housing market conditions in general have continued to slow after a period of sustained growth over recent years in the inner west and inner regions of Sydney which HTW noted include a vast range of property types that appeal to a broad spectrum of purchasers including first home buyers, upsizers, downsizers and investors. 

Sydney’s inner west has seen dwelling values fall by 6.8% as of 1 May 2018, it advised adding this region of Sydney had been performing extremely well for a sustained period of time.

"It is not uncommon for a previously heated market to experience some correction."

There are also property types and locations that continue to be in high demand such as Annandale, which was named the most popular inner west suburb in a recent survey, the report noted.

The new unit investment market in particular is now feeling the squeeze as banks have tightened lending criteria across the board with a focus on interest-only loans and investment loans.

"This is intensified with lending restrictions on certain postcodes, most of which are high-density apartment markets around the city fringe locations.

The valuation firm suggested that "based on recent indications we anticipate that the property market will continue in a similar fashion for the remainder of 2018."

"We consider that the market will generally remain subdued with longer selling periods as buyers can be more selective and the frenzy style buying conditions are no longer a factor."

"Oversupply is a strong word, but there is some evidence of this in certain areas."

The market is still going through many large-scale developments, particularly around Green Square.

It remains unknown whether investors and overseas purchasers will have any issues when it comes time to settle the report suggests.

The valuation firm suggests that "we are seeing is an increasing number of units which sold off the plan in the past two to three years being valued below purchase price when they become due to settle".

During the heated market conditions experienced in recent times, it was common that most property types and locations performed well, however given that we are now within a different part of the property cycle there is likely to be a contrast between good quality properties and inferior alternatives.

The HTW June report predicts that property types that appeal to the broader market (owner-occupiers and tenants alike) and location fundamentals such as proximity to train or light rail, shopping, cafes, parks and other services and amenities will continue to be key in ensuring that a property performs well.

While other factors that may have a material effect on the market could relate to interest rate changes (RBA or bank rates), the banking royal commission, legislation and politics, media and overall consumer sentiment.

Tags: 
Residential Market Inner Sydney

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