Six months ago, Sydney recorded an auction clearance rate of 55% amidst a fall in property values and a rise in interest rates. Last week, that number rose to 90% in the Hills district and around 80% in the Eastern Suburbs. How and why? In the wise words of Usher, ‘it’s called the U-Turn.’
Though rising rates are still a cause for concern among potential buyers, property values continue to climb due to a crippling shortage of housing stock fuelled by fearful homeowners reluctant to sell in an uncertain market. Those that are willing to put their properties under the hammer are reaping the reward, though, with record prices being paid for properties in at least 20 Sydney suburbs over February and March.
Case in point: A property in Manly selling for $4.5m over reserve last weekend. 1 of almost 700 auctions held across Sydney last week, the 3-bedroom, 2-bathroom home was snapped up by one of the five registered bidders for an unexpected $10.5m, smashing the owner’s $6m reserve. Another $6m-over-reserve was dropped on a Watsons Bay duplex last week, with the winning bidder paying $14m for a 402 sqm corner block of Victoria St. What is this, 2021?!
Over in the inner west, a designer home in St Peters was sold for $2.88m, just $20K below the record price that was set for the suburb during the covid-era housing boom. A clearance rate of 60% is usually reflective of a neutral market. The clearance rate across Sydney for the near 700 other properties up for auction clocked in at around 70%, suggesting the Sydney market is ‘bottoming out’ after a year in freefall. This comes after clearance rates of 74.5% and 73.7% in the previous two weeks. Listing data also shows there were 38.5% fewer new listings this month compared to this time last year, a major factor in supporting these higher clearance rates.
Competition will likely continue to ramp up as demand outweighs supply, immigration returns to NSW post-pandemic, and new first homebuyer incentives introduce a slew of buyers to the market. Due to the current dire rental crisis in Sydney and exorbitantly high rents, some first homebuyers are racing to purchase property where their mortgage repayments will be less than their rent.
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The ensuing shortage of stock will only drive prices up further, with marginal price growth expected in the coming months. After a 15% drop in Sydney’s median house price last year, PropTrack recorded 0.36% growth over February.
Though few of us are in a rush to cast our minds back to 2021, when it comes to the current state of the property market, we’ve been here before. During covid lockdown restrictions, prices surged as cautious owners held onto property and demand intensified. Though a further rise in interest rates could stall growth, recent high clearance rates and even higher price tags suggest we’re heading toward familiar territory.
