State of the Sydney Property Market – August 2017
The Sydney property market continued to perform very strongly up until June this year. Auction clearance rates until June ranged between 74-84% range, however the past couple of months has seen them weaken. The start to the spring selling season has been slower than normal with clearance rates in the high 60% range.
This appears to be the first indication that the strong heat has come out of the market and that it has now moved more into a plateau or modest growth phase. We are also starting to see some softer prices and some good buying opportunities for those looking to purchase now.
Is this a temporary “breather” or is the strong price boom over and a new cycle upon us ? Time will tell and movement further into the upcoming Spring selling season will give us a clearer picture.
The recent NSW State Government budget introduced higher duties and land taxes for foreign buyers and owners of property. This appears to be having an impact on certain types of properties and suburbs within Sydney. The revenue raised from these duties and taxes is planned to fund the new stamp duty concessions for first home buyers.
What are the factors that will continue to drive demand ?
- Lack of housing stock. Available listings are way down on previous years, with no signs of this changing into next year. Home owners are choosing largely to renovate their current homes rather than to move or upgrade.
- Record low interest rates. The official RBA rate of 1.5% is well below GFC levels of 3%, and is keeping borrowing costs low for both home buyers and investors. Most economists are expecting these rates to stay low well (or even be further cut) into the foreseeable future. This is despite banks making their own interest rate decisions.
- Increased immigration into Sydney, which combined with a lag in development is continuing to put pressure on new housing supply. There are still a large amount of buyers ready to purchase homes
- Demand for property from investors will continue, particularly family superannuation funds purchasing property. Returns are relatively modest (3-4%) however they are higher than bank deposit rates and many share market returns
- The Australian economy is still relatively strong. Economic growth currently sits at 1.8% for the year to June 17. The economy grew 0.8% in the three months to June 17, an improvement from the 0.3% growth recorded in the first quarter. Domestic spending was a key contributor to growth.
- The national unemployment rate is at 5.6% (July 17) with NSW at 5%.
- Active NSW State Government, which has major infrastructure projects currently under construction and also planned. NSW continues to the be the strongest performing economy in Australia. Most other states in Australia do not currently have pro-active infrastructure building Governments.
If you have any queries on specific areas of the Sydney property market, then please do not hesitate to contact us on (61 2) 9958 4815 or email@example.com
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