Sydney property 2018 – what to expect?
For the first time in years, Sydney buyers and sellers want the same thing – answers.
Property reports are coming in from all angles including banks, the RBA, statisticians and commentators.
We published an article on the matter back in April 2017 from property journalist Robert Harley that urged people to expect house prices to have ups, as well as their downs.
“In the past, Sydney house prices have stalled for long periods. And they have fallen, particularly at the end of each boom,” he wrote.
“In a boom market, the two or three buyers chasing any one home are prepared to pay extra for tomorrow’s price rises. In a falling market, there can be only one buyer and one who wants to pay less than yesterday’s price.
“No sector of the city is immune as the boom comes to an end.”
Remember, at the end of the boom of the 1988-89, the value of harbour front mansions near halved. Ego-driven entrepreneurs dominated the stock exchange at the time, and when that market slumped, the banks came looking for their money, and prices collapsed.
Harley finished by saying: “What buyers and owners are less willing to acknowledge is that when the boom does come to an end, prices correct. Because they do. Even in those so-called bulletproof suburbs within 10 kilometres of the CBD.”
So we spent recent weeks quizzing the people driving today’s prices (the current buyers and sellers of Sydney) whose outlooks varied from greyish to carefree.
The current homebuyer pool is still full of people who won’t rule out buying in 2018. One purchaser had been following the market since early 2017, hopeful of jumping in next year.
“I’m aware of the financial position I need to be in to buy a property and from the start of 2017 it was too crazy, there was no hope.
“Now it feels more measured, it’s giving people like me a chance to save up more deposit. Premium homes still seem to be getting good prices, but anyone can see things are getting easier, so we’ll see.”
Other buyers were topping up cash reserves in hope of jumping into new price brackets, or buying something more substantial.
In the seller realm, we spoke to one investor who had bought and sold for $0 gains after buying in a high-density neighbourhood, and almost settled on a lower offer at a loss.
They’d felt the sting of a slower market, but made the decision to sell as part of the bigger picture.
“If the market has slowed in my neighbourhood then it’s slowed where I want to buy next. I’d like to get into a terrace in a AAA-type city neighbourhood. I’ll make that move next year as more of a long-term investment.
“Then, any future gains might offset my current situation. People need to stop worrying about short-term wins and look at the bigger picture. I was one of those people.”
We dug hard to find other sellers who had sold out and not bought back in. One vendor bought in September 2016 before selling in July 2017, riding plenty of the growth from the recent wave. They weren’t in a hurry to repurchase, but were instead, eying off opportunities or the shove of personal circumstance.
“I’m just monitoring the market and hoping for a good buying opportunity, but it’s my gut feeling that I’ll buy again in 2018,” they told us.
“Personal needs for my own home will take precedence over worrying about what the wider market is doing. We’ll buy for family needs, and we’ll buy to get into something bigger.”
These personal inclinations to be in the property market echo other interpretations the wider data.
One oft-quoted report in property media is SQM Research’s Housing Boom and Bust, which forecast Sydney’s median home price to increase 4-8 per cent over 2018, largely due to growth in the second half of the year.
Onlookers savored the headlines of Sydney growth falling below levels expected for other capitals i.e. Hobart, which is expected to see growth of 8% to 13% next year, and Melbourne, anticipating 7% 12% growth.
Yet one important afterthought in the commentary was the notion that, despite the cooling of a hot Sydney market, many home hunters would still struggle to get into the market:
“Housing affordability will likely continue to deteriorate in 2018 with growth in property prices still outpacing wages growth.”
It’s no wonder people still want to be ‘in’ the market.
From an agency point of view, spring hasn’t provided the best gauge for 2018 in matching these current buyers and sellers.
It usually lets us predicts how the things will kickstart in the New Year. But expectations started so far apart for spring buyers and sellers, that most recent weeks were spent watching them close the gap in their standpoints, before finally landing on their ‘fair price’.
When we can’t rely on the mood of the people we look at buyer/seller data across the BresicWhitney group, and that’s full of mixed messages too. People are still turning out to view properties en masse, but the buyers are less rabid. Properties are selling but the days-on-market rates are higher.
Every buyer is watching their segment of the market as prices go through the wash cycle. And if prices continue their correction, will those current buyers still be gung ho about buying in 2018? Time will tell…