According to The Agency’s CEO Matt Lahood, though the market has been off to a moderate start over September, things are hotting up for October and November with a flood of new listings.
Every spring selling season varies, some get off to a flying start, while others take a little time to ramp up. In 2017, the latter applies, we are seeing October hot up with a flood of listings coming on, which will continue throughout November. Though not as bullish as previous years, it will be a steady selling period.
Overall there has been a realignment and levelling in the market, which we expect to see continue into 2018. This introduces more stable conditions into the Sydney property market, which is good news for both buyers and sellers and the industry at large.
September in review
September traditionally heralds spring selling season, for a number of reasons things have kicked off more slowly this year. This includes legislative changes designed to moderate the property market, a more conservative consumer outlook on the retail front and continued interest rate speculation for the financial year ahead.
But in many respects this spring is no different, and The Agency listing activity is strong. Looking at the latest CoreLogic Home Value Index data, after two years of sharp increases in value, Sydney property prices remain relatively flat over September with a minor decrease of -0.13% month-on-month. To put this in perspective though, the year-on-year increase in Sydney home values from this time last year is an increase of 10.54%.
A steadying and recalibration of the property market is a welcome change after a period of exponential growth. A more stable market allows everyone to take a bit of a breather, and sets us up for sustainable growth into the future.
That said, Sydney’s property market is not one amorphous mass. So within this overall pattern of stability, there are several minor trends taking shape.
2/6 Ellalong Road, Cremorne, on the market with Nic and Kinsgley Yates
A two-speed market, moving towards stability
Auction clearance rates are a great barometer of what is happening in the market, and they’ve been creeping slowly downwards over the past month. In fact, this spring, clearance rates have harked back to the clearance rates of 2012.
While the auction clearance rates for Sydney as a whole currently sit below 70%, and the volume of listings also indicates a reasonably subdued market, we’ve actually seen strong buyer activity in the marketplace. Sydney, Adelaide and Canberra have all seen a greater number of listings than this time last year.
Sydney is not, and has never been, one property market, and it is usually at a time like this that it becomes most apparent. Sydney’s inner suburbs - the Lower North Shore, Eastern Suburbs and Inner West markets - have all had a strong start to the spring season, and as our Director of Sales Thomas McGlynn reports, in recent weeks we’ve had a 90% clearance rate at The Agency.
It is the outer suburbs and fringes of Sydney that are less robust, even if they are still solid compared to the rest of country. Some of this could be attributed to buyer fatigue.
Currently we are seeing the impact of school holidays and the long weekend subdue activity – but not for long. The auction market is already ramping up.
Good news for buyers and sellers
A fast-moving market makes it difficult for first-time buyers to enter the property market and for vendors to re-enter it. A more stable market gives buyers and sellers time to make their next move.
Buyers have no choice but to meet the market at the price market conditions and demand determine, but in 2017, buyers will have more stock to choose from over October and November, which eases buyer competition. They may also benefit from a cautious consumer outlook, this results in less competition than the past few years.
The assumption that a rapidly rising market is great news for sellers often overlooks the fact sellers are generally looking to re-enter the market. Price moderation allows more time to sell and rebuy, making the process less stressful for vendors.
As the CoreLogic data reflects, it is upgraders and investors who are still driving the Sydney market. Our agents are seeing more first home buyers on the ground, but it’s difficult to determine if the revised first home buyer concessions are a driving factor.
Sellers who meet the market are seeing good results
Home buyers are watching the market carefully and are holding back somewhat, not willing to pay too higher a price, knowing that an overpayment is unlikely to be immediately absorbed by rapid price growth.
Where sellers are listening to market feedback and adjusting their price expectations to meet current demand, we are seeing good results.
75 Ocean Street, Woollahra, sold by the Ben Collier team.
A case in point is the record-breaking week The Agency's top-performing agent Ben Collier had in September, selling $41,930,000 in residential property within seven days. He attributes this result to having difficult conversations prior to the start of a campaign, and taking the time to educate vendors on realistic market value before putting a customised plan in place. Because of this, his team has cleared 100% of the properties they have marketed over the last three months and surpassed their clients' expectations.
Pre-auction and off-market sales popular with particular buyers
We’re still seeing a trend for off-market sales at the higher end of the market, particularly over $5 million, where buyers and sellers increasingly choose to retain anonymity. There’s also an increasing trend for vendors to accept a reasonable pre-auction offer rather than let the campaign run its course to auction. This is partly because buyers see value in putting their best foot forward before auction day to eliminate the competition.
Northern buyers seeking opportunities in Melbourne
Melbourne's property prices continue to rise, albeit at a more subdued rate. The CoreLogic Home Value Index rose by 0.86%, across September. That comes on the back of growth of 0.54% over August and is a massive 12.08% increase on last year’s September home value.
Melbourne is still seeing steady growth across all price points, with multiple bidders helping drive healthy prices and auction clearance rates (these remain above 70% across the city). The Agency’s sales over the past 45 days have averaged 18% above expected, with a good depth of buyers across all segments. Most importantly, there are no signs of clearance rates or prices stalling in the short term.
Population growth is undoubtedly a contributing factor in the continued growth of the Melbourne market and The Agency’s Victorian General Manager, Peter Kakos, says he is meeting more and more buyers who are migrating south from Sydney and Brisbane.
The Block, 46D Regent Street, Elsternwick, on the market with Peter Kakos
Melbourne properties with development potential remain extremely sought after, given the strong market for townhouses and luxury apartments for the downsizer. Meanwhile, new and renovated homes are increasingly popular with young families, which should place The Block contestants Hannah and Clint, who The Agency are representing, in a good position for their late October auction.
End of winter shows positive signs for investors
A great deal of attention has been given to the impact of historically low interest rates over the past few years. However, rental yields have also been at historic lows. Investors can take heart from the latest CoreLogic data, which shows rental yields rising, albeit steadily rather than rapidly. And future increases in interest rates should see a lift in rental prices and competition.
The Agency’s National Director of Property Management, Maria Carlino, says our property management team are fielding a large increase in rental property enquiries and they are seeing more attendees at inspections. These factors combined have reduced The Agency’s days on market from 13 days to 10 days.
And as we say goodbye to winter, we’ve experienced an approximate 3% increase in rental prices, which is good news for investors. The high-end executive rental market is particularly robust and we have some extraordinary homes on our books for lease, including these Annandale, Mosman, Neutral Bay, Randwick and Rose Bay estates.
Australia’s fastest growing network – The Agency
September hasn’t simply been a big month for The Agency when it comes to results.
We’ve also welcomed a stable of new, highly regarded agents to our team this month and have announced the arrival of the Laing family into The Agency fold. The Laing brothers are among the most successful and respected real estate agents in the country, with decades of knowledge and experience. The merger results in 40 staff and two new offices, in Coogee and Bondi Junction.
The addition of the Laing family business not only dramatically increases The Agency’s Sydney-based rent roll, but we are adding a commercial sales and leasing division under the guidance of Michael Laing. The commercial arm will work strategically with our burgeoning The Agency Projects division, which since February this year, has already brought $2 billion in new developments to the marketplace.
As Steven Chen, The Agency’s Executive Director Projects, commented earlier this month:
“With an extensive array of new project settlements across the Eastern Seaboard and Sydney’s CBD, we are comforted by the professionalism and elite service the Laing family will provide for our valued clients”.
Thank you for reading my spring market and company update,
Matt Lahood, CEO The Agency.
