Homesearch Solutions is one of the most established and best respected Mosman Buyers Agents. We have bought hundreds of properties in the local Mosman and Lower North Shore area for homeowners and investors, including local, interstate and overseas buyers. Read more
The question everyone is asking – what will happen to Sydney property prices in 2011? Before we make some predictions for 2011, let’s take a look back at what happened in 2010.
2010 proved to be an interesting year. Until around April/early May 2010, buyer activity was very strong in the inner/middle ring suburbs, with auction clearance rates regularly over 70%. Many of these suburbs showed significant price growth (some areas at as much as 15% in the first 3-4 months). Around early May 2010 however, the market began to soften, influenced by 3 subsequent interest rate rises (in March, April and May), international debt concerns, and a strengthening Australian Dollar deterring overseas and expat buyers. This weakening continued through to the conclusion of 2010, and with clearance rates trending significantly lower, the market was officially off the boil.
There has been a lot of anticipation with the start of 2011. How was the year to begin after the conclusion of 2010, where many properties had failed to sell and were still on the market?
Early indications are that the market has regained some strength after the Christmas break. Auction clearance rates, off to a slow start at 48% for 5th February auctions have improved with the next weeks recording 69% and 63% clearance. We have noticed large numbers at open for inspections of properties up to around $1.5m with good buyer interest for quality properties.
The high $AUD has continued to deter overseas property buyers. As buyers agents we have found that overseas buyers are sitting and waiting for a return to a stronger $USD. This has particularly impacted high-end properties and has presented some good buying opportunities, in some cases more than offsetting the poor conversion rates. This situation is unlikely to continue indefinitely and when rates return to more usual levels, we are predicting the return of overseas purchasers and higher premium property prices.
For investors, rental vacancy rates remain low at 1.4% for December 2010, with inner ring suburbs facing the greatest shortages with a 1.1% vacancy rate. Rental price rises are evident, as a result improving yields for investors.
We do believe that the market indicators are strong. Australia has high employment, historically relatively low interest rates (with no major changes expected in the short term), high levels of population growth and insufficient housing development, which will all ensure that the market will continue to growth however we believe it will do so at a modest rate. As always with Sydney property, there may be some troughs, but history has proven time and time again that the only way has been up, so if you are in the market for the medium-long term, you will find it hard to lose.