THREE STEPS FORWARD, ONE STEP BACK

0 CommentsThursday • June 3, 2010 • by Henry Wilkinson

More Favourable Conditions For Sydney Home Buyers Have Arrived

After a very heated start to the 2010 Sydney real estate season, recent weeks have seen a welcome calm in the frenzy. With volatile stock and currency markets resulting from concerns surrounding European debt levels, the real estate market has come somewhat off the boil.

This has been reflected in auction clearance rates going from well over 70% for March and April to around 63% in late May.

During the first few months of 2010, we as buyers’ agents have seen an unprecedented surge in prices – the highest short term spike since we commenced operations in 1999. Many areas of Sydney saw massive rises of 15%-20% between January and late April 2010, depending on the price segment and area. This has been as strong if not stronger than the overall 29% gains to Sydney prices that we saw in the frenzy of 2002.

In our opinion the market steam has come off around 5% over the past few weeks and we believe that the property market is likely to be in a “holding pattern” until world financial markets strengthen.

Provided that financial markets stablise, we expect the Sydney market to perform at more realistic and sustainable levels.

Favourable contitions remain for the Sydney property market and these include:

• Recovered economy, having experienced a GDP growth rate of 2.7% for the 12 months to March 2010
• Unemployment at a low of 5.3%
• Relatively low interest rates which appear to have now stabilised. The RBA in their recent June meeting stated that interest rates are now at “appropriate levels”.
• High levels of immigration continue to stimulate demand for housing
• Lag in property development will continue an under supply of housing
• An expected continuing of the shortage of listings over the winter months
• Lower Australian dollar has substantially increased the purchasing power of expatriate Australians and foreigners purchasing Australian real estate

We believe that a calming in the frenzy can only be a good thing for buyers and that conditions for buyers are now more favourable than they have been since mid 2009. A change in the “buy at all costs” mentality of early 2010 has seen more sense return to the market and has created some good buying opportunities in the current measured market.

Market Report dated 3 June 2010

Posted in: Market Update

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