Sydney shortage causing market shift

A shortage of stock is likely to continue to affect the Sydney property market – especially in the up-to-$1 million price point, according to the Herron Todd White Residential report.

It states there is "trending consensus" among agents and prospective buyers of minimal numbers of properties for sale at the moment – the result of a normal shortage in the winter months and a reluctance by vendors to list in the lead up to Saturday’s election.

And these factors - combined with a new and emerging enthusiasm for property by eager buyers – is building towards a ‘perfect storm’ with low interest rates, improved consumer confidence and limited stock behind a coming sharp rise in values.

This is particularly evident in the low to mid-value range in many areas.

This change in market conditions is in sharp contrast to what was being described as a ‘stagnant market’ some months ago - even though rates were being lowered.

Herron Todd White says the lack of stock has a flow-on effect as fewer sales occur in a tightly held market. It says buyers’ agents are desperately seeking listings so they can be ready to pounce to take advantage of the low interest rates.

This is leading to ‘’positive’’ sales prices being achieved. One example is a Marrickville unit which sold 14 months ago for $435,000. The same agent has just resold it for $505,000 with no improvements. And there were no shortage of prospective buyers, with four bidders prepared to pay more than $500,000.

Herron Todd White predicts out-of-area buyers will continue to take advantage of better-value-for-money properties within greater western Sydney. Examples of strong sales include a fully renovated three bedroom, one bathroom house in outer western St Clair currently under offer for $502,000. This is said to be a record for a ’humble’ 1980s house in the area.

Another example is a modestly updated three bedroom, two bathroom house in north western Baulkham Hills. A $630,000 valuation was enhanced by minor internal updates with the property selling for $702,000.

Both these properties were sold within the first week of their campaigns with large numbers of buyers interested, many contracts being requested and multiple offers being made.

Herron Todd White says there’s been ‘’minor growth’’ in the $1 to $2 million price range which has been exacerbated by a shortage of stock. Areas like the Northern Beaches and North Shore are starting to show evidence of a rising market and improved buyer confidence.

‘’At the $2 million price point we start to see a more restrained market, although improved from this time last year. The eastern suburbs’ market has strengthened slightly at this price point with sales evidence suggesting some return of confidence.’’

So, we’ll have to wait until after Saturday to see if a post-election flood of properties onto the market can saturate some of the pent up demand.