According to RP Data week ending 28th Feb had auction clearance rate of 82.8 per cent was recorded with 86.2 per cent the week before compared to 77.6 per cent last year. This is the fourth consecutive week in excess of 80 per cent making it the strongest capital city auction market in Australia . According to the report “the Sydney auction market is in uncharted territory now”.
Melbourne’s volume is still on par but clearance rates lag slightly but are still healthy at consistently +75 percent .
During the second yearly LJ Hooker Mosman Investment Seminar, Dr Andrew Wilson of the Australian Property Monitors (ADM) said, while the growth in lower and middle markets is tapering off, properties in the northern beaches, city east and the lower north shore are experiencing rapid price growth.
“The middle and lower ends of the market are starting to taper off, but the lower north shore is really firing up, with eight per cent growth in the March quarter,” Mr. Wilson commented. This growth is more favorable than those in western suburbs that reported to have 3.9% increase in the same period.
Compared with their price cycle in 2009 and 2010, the prestige markets aren’t as developed. According to Dr. Wilson, “There is no stopping in the prestige market at the moment. There is still a lot of positive energy buzzing around with reports of the highest price growth since 2003”
As opposed to an underpinning driver, this positive atmosphere is playing as the driving force to gather more buyers and sellers in prestige market. As regards to growth, the upper market seems to be as good as the middle markets. Hence, more activities are expected in the colder months than in the past.
Bernard Ryan, the director of LJ Hooker Mosman, stated that the prestige area is attracting investors in an increasing number. “Investors and upgraders have been honing in on the lower north shore since interest rates started trending down in November 2011, but activity really gathered pace in the last year,” commented Mr Ryan.
May sees some sanity returning to the Sydney property market, while it is still clearly a buyers market the FOMO syndrome ( fear of missing out) appears to be on the mend with buyers now more selective with their bids.
None the less the market is still strong and indications are that growth, albeit more constrained will be good over the rest of this year. Many vendors who have been sitting on the fence are expected to enter the market in coming months in order to cash in on what many believe is a peak.
Following the budget the current low interest rates don’t look like rising any time soon and so this will continue to drive investors however the first home buyer market looks set to remain in the doldrums.
We had to expect a slow down over the Easter/Anzac long weekends however while Melbourne has just had its best clearance rate in over a year last weekend saw Sydney fall below 80 percent for the first time in 2014.
This is the fourth consecutive weekend fall in clearance rates and despite indications that it is still a sellers market all eyes will be on the RBA. While most economists believe the rate will be held at 2.50 percent this month the RBA will be watching the Sydney and Melbourne markets closely as they have already indicated that the current level of activity is unsustainable.