2018 property – the indicators light the way
The Sydney property market is a contradictory creature and attempts to measure her moods should be treated with caution.
The barrage of data in media reports reverses our beliefs on a weekly or monthly basis, testing the tenets of our blind faith in median price statistics and wider market trends.
These indicators are magnified in market uncertainty with sources today saying the market is up, while others are measuring its downs.
Cue the bull(ish):
A Macquarie Bank report this month determined house prices had ‘stopped falling’, with analysts saying it was likely that housing prices were again rising modestly.
It noted monthly growth in capital city prices in recent months, but stopped short of predicting a rally, “We do not expect a repeat of the 2016 bounce back in housing price growth.”
With cash rate cuts fuelling the market back then, there is more speculation around when to expect rate hikes, but the ensuing hype was uplifting.
Don’t forget the bears:
At the same time, spectators were eying off Corelogic’s latest Hedonic Home Value Index.
“Prices in Sydney and Melbourne fell 0.9 per cent and 0.2 per cent respectively in January mirroring the same decline in December,” it said. “Sydney house prices have now fallen 3.1 per cent since the peak of the market in last July.”
The opposing messages have become the norm.
So what to make of it all?
The data is adjusted seasonally (or not) and includes the wider city, a number of price points, and a contrasting array of dwellings. The apartment development belt in Dulwich Hill performs differently to the one in Waterloo. And the luxury homes of the North shore are different to those in the East.
Conflicting reports cement the notion that the 2018 market is yet to form, and what that might look like when it does. As this limbo market continues with no clear direction, glimmers of clarity can appear in micro data.
The happenings at street level are more relevant indicators for buyers and sellers. They are gold for decision-making in this contradictory market.
Ask for answers:
Open-home attendance is one example. Buyers and sellers love dissecting this for signs of demand.
At the height of the Sydney action in September 2016, BresicWhitney was seeing around 17 groups attend each open home. A year later when the fury went lacklustre, spring 2017 delivered around 7 groups per open home. The after-boom slump had arrived.
Yet as 2018 ramps up, we’re seeing around 15 people per BresicWhitney open.
That’s an inquisitiveness more reminiscent of faster times and shows people become interested in property when the prospect of ‘value’ returns (they haven’t expected to find that in a while).
More buyers are downloading contracts and property reports in 2018 than in spring last year. Our current rate per property is 3.3-3.5 downloads, up around 30% on September/October last year. Serious people going through due diligence could be seen as a sign of buyer-appetite.
You could also draw the conclusion that ‘price guides’ tend to be more realistic as seller expectation adjusts, and the leveling of this playing field has led to an increase in buyer engagement.
With additional stock hitting the market this year, you could also say more sellers have accepted the market has peaked. It also shows homeowners are recognising that a more balanced environment presents better opportunities for trading up or sideways . The urgency has pulled back, and they can be more considered when planning a move.
We went into February with 70 auctions booked – a fast start to 2018. To put this activity into perspective, in more traditional boom months BresicWhitney will sell between 70 and 100 homes.
With the first hammer dropping Saturday February 10, we saw 11 of 14 successful auctions that weekend for a clearance rate of 78.5. The boom of September 2016 delivered BresicWhitney clearance rates of 86%, while by September 2017 that had dropped to 64%
Nothing is more telling than these sales. This house in first-home-buyer territory was as popular as they come, in boom or bust. It saw 104 groups inspect, 20 at each Saturday inspection, and 14 contracts downloaded.
Of the 6 people who registered to bid, it was 2 active bidders who drove the price to $1.15 million. The buzz featured in The Australian & Inner West Courier, with post-auction coverage on Domain News.
It sold to a buyer interested in the approved DA plans.
On the other hand, this similar property (another entry-level terrace with approved DA) saw 29 groups through the entire campaign. With 5 contracts, the mood is more about curiosity and informal offers. It will sell, but with less fanfare.
At the top end you’d expect a slowdown in unpredictable times, but there was no shortage of demand in this luxury home in Bronte. Interestingly, buyers who have ridden the recent inner-city growth cycles made up around 15% of inquiry – a recent trend that is rewarding Eastern Suburbs’ sellers.
With fresh stock and a new pool of buyers, there is plenty to be gleaned right now. Sometimes the most significant mood swings aren’t as obvious.