Bad news keeps coming I’m afraid, with a recent report from Domain showing that Sydney home prices have recorded their biggest annual drop since the GFC, with some areas dropping more than 10% from the peak last year.

The city-wide median has decreased 4.5% since this time last year, with the top-end of the market recording the biggest falls.

According to Domain, house prices on the Northern Beaches have decreased 8.1% since July last year, and unit prices have decreased 5.7%.

The auction method has also decreased significantly, only 17 auctions were scheduled on the Northern Beaches for the first weekend in August, of which only 4 sold at auction, with 6 selling prior.

The good news for the Northern Beaches is that the demand to live here is still very strong. At the beginning of July, Freshwater and Forestville were two of the most-searched suburbs in Sydney, according to realestate.com.au.

There’s been many reports in the media that the fall in prices is due in large part to monetary policy and a looming credit crunch. However, it must be noted that overall credit lending has only dropped 1.8% in total since the peak in lending in November 2017.

What’s alarming is that investor lending has dropped 27.5% since the peak. This is a result of the banks cracking down on investor lending, following orders issued by APRA and of course the ongoing royal commission into banking.

I feel that this is just the beginning however, and we will see credit availability drop further as time goes on.

The market is undoubtedly cooling, but it is not collapsing. Over my 33-year career I’ve seen all the booms and busts, and I want to make it clear that this is not what we are experiencing now.
 
After phenomenal growth of around 75% in Sydney property values from June 2012 - June 2017, it’s only natural that we see some pull-back in the market. It’s common to see a slight decline following a boom.
 
We certainly aren’t seeing streets and streets of vacant properties on the Northern Beaches right now, nor will we ever.
 
Although there is a lot of negativity out there, this agent remains confident.
 
This week we sold a 67 year old knock down home in North Curl Curl for $1,956,666 and we sold this old house Off market in Brookvale for a record $1,600,000.

So I love it when people profit from my knowledge.

If you’d like an update on the value of your home in this changing market, please do not hesitate to contact me at any time.

Thanks for reading,

Tony.

House prices in Sydney are down almost 5-10% since this time last year – the peak of the recent boom.
 
Auction clearance rates Sydney wide have been floating around the 50-55% mark for the last 2-3 months. Although not immune from the recent correction, the Northern Beaches is tracking much better than the Sydney wide average.

Whilst most buyers have sensed the outlook shifting to a buyers’ market, many believe now is a better time to buy after sitting on the sidelines for the first half of the year.
 
Good properties in the right location are still in high demand on the Northern Beaches. If your home is priced and marketed correctly, your property is still going to sell.
 
This point was highlighted at the auction we held in Narraweena a couple of weekends ago.

In a market where only 50-55% of properties are selling at auction, and many more are passing in, our auction attracted 8 registered bidders who created a buying frenzy in the back garden and ended up pushing the price well above the owner’s reserve price. The question was posed by many - what are we doing right?

However, monetary policy and the ongoing royal commission into banking shining a spotlight on the big banks’ every move is making it very difficult for some buyers to get finance.
 
This has reduced the number of eligible buyers able to enter the marketplace, which is driving the current downturn in the market. Purchasers have had their borrowing capacity reduced dramatically, which has made it unviable for some to buy.
 
We have heard some examples of buyers who had pre-approved finance a year ago, who are going back to the bank to find out that they can now only borrow less than half what they were originally approved for.

And the talk of interest rates rising sooner rather than later will cause a further downturn in property values. The bank’s lending costs have been rising, and some of the non-major banks have already lifted their rates independently of the RBA.

It is only a matter of time that the 4 majors will follow; it appears they have been holding off, as it would not look good politically to raise them while the Royal Commission is being conducted.

Another concern is that over the next 3 years approximately $370 billion worth of interest only loans will have to revert to principal and interest repayments, which will cause mortgage stress for many.
 
In essence my prediction is that the next couple of years and perhaps beyond will see a period of flat to negative growth in property values. So if selling is on your radar it may not pay to hold off.
 
If you would like an update on the value of your home please do not hesitate to contact me at any time.

Thanks for reading,

Tony.

Can you believe it - we’re almost halfway through the year!

We’re also a full year out from the peak of the boom – my research tells me that house prices in Sydney reached its’ pinnacle in June 2017, and this year has been a different story altogether.

The first weekend in June saw an auction clearance rate of 64% on the Northern Beaches. This is higher than the recent Sydney clearance rates, which have been between 55-60%.

However 66% of the properties cleared were sold prior to auction. This means that sellers are preferring to take the bird in the hand rather than run the risk of the property not selling on auction day, as there aren’t as many buyers competing for the same property.

The change in house prices since the peak of the boom in June 2017 is around 10%.
 
This translates to a price decline of around $130,000 on a median-priced Northern Beaches home. An entry-level freestanding home under $1.5m on the Northern Beaches was very hard to find in the first half of 2017, now we are seeing entry level home prices starting around $1.3m.

Some homeowners may have missed the memo on this last statistic. The average selling time for a home in Sydney is currently sitting at 40 days plus.
 
It’s taking 2-3 weeks longer to sell a home now than it was at this time last year. The extra time on market may be due in part to sellers being unrealistic in their price expectations and not adjusting to meet the market.

The Winter season should bring some stabilisation to our property market. The traditional ‘wait until Spring’ mentality will take effect and new listings on the market will generally slow, meaning more competition for those homes on the market which should keep prices stable. The Spring selling season will be a great indicator of where the market is heading for the next 12 months.

Where does this leave you if you are planning to sell in the next 3-12 months?

So long as you are informed about the current market conditions and are prepared for a slightly longer campaign, as well as presenting your home in its’ best light you should expect a successful selling campaign.

And remember; if you are buying and selling in the same market, price changes are relative. You should not put your life on hold by worrying about the economics of the housing market.

Thanks for reading,

Tony.

Auction clearance rates Sydney wide have dropped below 60% last weekend. This lower rate was unheard of over the last 5 years, so it’s easy to forget that the long-term average auction clearance rate in Sydney is around 55%-60%. This highlights the fact that we are returning back to a normal market.

The good news is that On the Northern Beaches  we saw a 71% clearance rate, including those that sold prior to auction​.
​
However what is alarming about last weekends result is the number of auctions that were passed in on the Northern Beaches. It was noticeably higher than the previous 6 weekends.

When a property is passed in at auction, it means that the seller was not prepared to release the property for the highest bid on the day or there were no bids at all. This highlights the discrepancy between buyer and seller price expectations coming off a boom market.

So now that the boom is over, it does not mean we should expect a large drop or crash in property values. What is more likely is that we will experience a longer period of flat to small negative growth whilst wages and savings catch up. This is the stance predicted by many economists who expect no excitement in the market until at least 2020.

These predictions are of course subject to a surprise interest rate rise or drop, which were again left on hold by the RBA last week. The RBA may also be hit with new rules and regulations before the Royal Commission into banking has ended.

The Sydney market is currently holding 35% more properties listed for sale when compared with this time last year. This is due to some homeowners ‘locking in’ the profit they have enjoyed over the last 5 years, and also due to the longer time it is now taking to sell – sales in April all over the Northern Beaches were significantly lower than the average, whilst the number of properties on the Northern Beaches listed for sale is significantly higher than the average.

This has all contributed towards another -0.4% drop in Sydney property values over April.

Sydney house prices have now taken their biggest hit since 2015, recording a 2.6 per cent drop in prices over the March quarter.
 
The median house price in Sydney is now $1,150,357, which is $30,000 cheaper than in December. House prices peaked in June 2017 with the median at $1,198,550.

A leading chief economist predicts that the market has still got more downside ahead of us. He believes we may come off another 5 per cent this year and probably another 5 per cent next year and we may continue to fall in 2020 by about 2 per cent. 
 
It must be remembered that no market can keep going up in one straight line. It is still a good time to sell provided that the campaign is adjusted to the current market conditions. Why not lock in the profit you have gained during the boom since June 2012.

To discuss my winning selling strategy for the coming market conditions, please do not hesitate to contact me at any time.

Thanks for reading,

Tony.

The latest report from Corelogic RP Data shows that the median house price in Sydney has dropped 2.5% in the first quarter of 2018.
 
This is the largest three-month decline since August 2008 at the height of the GFC. And this is also following a 1.3% drop in the final quarter of 2017.

And speaking of the GFC, a report has come out that homeowners in some pockets of Sydney have had to reduce their asking price by up to 30% in what is being described as ‘GFC-style’ price declines.
 
This report has named many areas of Sydney but as to be expected, none are located in the Northern Beaches.
​
But before you get too worried, it’s important to know what price these homeowners started from.
 
It is a common symptom of the homeowner who sells after the peak to expect a boom-time price for their home, and at the same time a symptom of the buyer to expect to pay much less after a boom.
 
Both parties are exaggerating the price change and both inevitably will meet in the middle after a generally longer selling campaign, hence why the average selling time in Sydney has blown out to 60+ days.

As you may already know, I’ve been a professional in this industry for 33 years and I’ve seen my fair share of market cycles, and this same thing happens every time.

History shows that property values in Sydney have a period of flat growth for a number of years after a boom period.
 
In 1987 to 1988 we had a boom where property values doubled in price, which followed a period of slow growth in the early 1990’s after ‘the recession we had to have’.
 
​From 1996 prices started to rise again as interest rates began to drop. This lead to another phenomenal rise in property values, with a huge spike after the 2000 Olympic games through to 2003.
 
This again lead to a fall in prices with a period of flat growth to 2009, before a quick sharp rise in 2010, followed by a plunge in 2011, which was setting the scene for the meteoric growth we experienced from 2012-2017 as interest rates dropped significantly in this time frame.

The period that follows next is just following the historical trend in​ the​ Sydney real estate​ market, where we have seen a pullback in prices from its peak mid-2017, and if history is to repeat itself we will experience a period of flat to negative growth over the coming years.

Sure, auction clearance rates and property values have dropped however the bottom line is that this is to be expected from the meteoric rise we have experienced over the last 5 years. 

For the realistic homeowner who understands the importance of preparation in a sale, and coupled with an experienced real estate agent, your selling campaign can still be very successful.

If you know of anybody who is thinking about making a move but is concerned about timing, I’d love to continue the conversation. Please pass on my contact details.

Thanks for reading,

Tony.

There are a few statistics coming out now which are definite indicators of a cooling market in Sydney.

First of all, dwelling values have changed by -2.4% in the three months ending in February.

Second, there were 9.4% fewer sales in February of this year compared to February of 2017, and this is from a much larger sample size too – there is 27.4% more property for sale at the moment in Sydney compared to March 2017.

Thirdly, this glut of property on the market and lack of transactions has caused the average selling time in Sydney to balloon out to 68 days. This is a stark contrast to the sub-30 day selling time we have witnessed over the preceding 4 years.

First home buyer demand is still climbing, however this is in part due to the mass exodus of investors in the market as they struggle to obtain finance.

Check out this graph showing the dramatic drop of interest-only loans from Sept 2015 to Sept 2017:

As the year draws to a close, it’s a good opportunity to reflect on the year that has passed.

2017 has been an eventful year with real estate topping the national headlines almost every week.

We started the year with auction clearance rates on the Northern Beaches around the 80% mark, however the last couple of months has seen the Northern Beaches underperform the city average at 63%.
 
Auction clearance rates are seen as one of the ways to define how the market is performing. It must be noted that a normal Sydney market would see clearance rates around 55%-60%, so we are tracking back to typical market conditions as opposed to the buyer frenzy and double digit returns over the past 5 years.

Market growth has been declining into negative territory since July. In fact, Sydney house prices have declined by 1.3% over the last 3 months. This is the greatest decline over a three month period since March 2016.

The cream has now been wiped off property values, so vendors trying to achieve the prices obtained earlier in the year and in record time have been caught unexpectedly. 

The supply of homes on the market has also slowly risen as the year has progressed. Although it is worthy of note that this number is also reverting back to the mean as we have had a very low supply of homes on the market for the preceding 4 years.
 
This also has a direct correlation with the fact that homes are taking much longer to sell now than they were at the start of the year, causing more homes to remain on the market for longer.

So it’s no question that the market has now reached its peak and buyer sentiment has definitely changed. 

The market has been trying to reach this point for a while now. It’s only kept going because of monetary policy and interest rate cuts. This life support has now been switched off, as banks have been forced to make it harder for people to borrow, and an interest rate cut by the RBA is quite unlikely for the foreseeable future.

So we’d rather deal with a market correction now than continue to kick the can down the road and deal with a potential market crash later.
  
And let’s not have short-term memory loss here – your home has increased in value by as much as 75%-100% over the last 5 years.

So the next 5 years are not going to be like the preceding years. I’ve seen this point in the market many times over my 32 year career. I know it takes a special kind of marketing and negotiating strategy to ensure you get sold quickly and for a great price when dealing with buyers who perceive to have the upper hand at the negotiating table.

To discuss further about preparing your home for the upcoming market conditions, please do not hesitate to contact me at anytime.

Let me be the first to say: I wish you and your family a very merry Christmas and a happy, healthy and prosperous 2018!

Thanks for reading,

Tony.

Well the median house price in Sydney has now fallen for the second month in a row, causing many commentators to officially call the end of the 5 year boom.

Combined with dwindling auction clearance rates, it’s no wonder the media is churning out negative comment over negative comment, which is having a major effect on buyer sentiment.

However the actual numbers are nothing to lose sleep over, a 0.4% decrease over October and a 0.2% decrease over September. And remember these are Sydney-wide statistics, incorporating the troubled outer west and south-western suburbs of Sydney.

In all likelihood, the Northern Beaches has not witnessed a decrease at all, and in the last 12 months your home has still increased by about 8%.

The auction clearance rate last weekend Sydney-wide plummeted to 64%. The same weekend last year it was 80%, however last weekend on the Northern Beaches the clearance rate was a respectable 75%, the highest out of the Sydney regions.

We are at a defining point in the market at the moment. The last time this happened in late 2015, it took two interest rate cuts through 2016 to bring heat back in to the market. This rate-cut lifeline will very likely not occur this time, leaving us in housing-market limbo.

But, these are the machinations of the property cycle, or in fact, any economic cycle. Values do not go up in one straight line, rather a combination of peaks and troughs that over time causes a steady rise in values.

It is easy to have short-term memory loss about this, as it’s not something we have experienced for a while. The market is owed a breather after rising 75% since 2012.

We are due a correction in the housing market, and we’d rather have this sooner than later and not risk a debilitating crash in values.
 
And this means sellers have now got to change their mindset, and need to stop comparing with the prices their neighbours were achieving in the sale of their homes months ago.

With the frenzy now disappearing from the marketplace it is now important that any seller has to realistically price their home in order to achieve a good sale.

As we’re getting towards the pointy end of the year, we are in the process of helping our clients prepare for an early 2018 sale. If you would like to know more about how best to prepare over the holiday period, please do not hesitate to contact me.
 
Thanks for reading,

Tony.

As we enter into the final quarter for 2017, there’s no doubt that there’s been a slowdown in capital growth in Sydney.

In the last three months, Sydney home values have fallen by 1.9% citywide, with the largest areas hit being the inner city, south-western suburbs. Compared to the same quarter last year when Sydney values rose 6.4%, it’s a noticeable difference.

It’s also taking longer to sell a property. Over the past three years, the average time on market in Sydney has been under 30 days. Currently, the average is approaching 40 days.

On a positive note, your home is 8.2% more valuable than it was this time last year.

Sydney has now become a tale of two cities. The outer suburbs of Sydney are feeling the heat at the moment, and with that, they’re bringing down the statistics for the rest of the capital.

Realistically, the slowdown was always going to happen. How long can you have double-digit returns?

Since January 2012, your home has increased by an astonishing 75% approximately. I think we can chalk this period up as unprecedented times.

But are house prices going to go down? What’s going to keep the market buoyant?

Negative sentiment definitely plays on the mind of purchasers and the frenzy has definitely come out of the market.
 
However, Housing demand in Sydney is not going to go away, as it is fueled by strong population growth. In the 1st quarter of 2017, Sydney posted the 3rd highest quarter of overseas migration on record.

And first homebuyers are making a comeback, especially in NSW. The stamp duty concessions granted by the state government appear to be working. First homebuyers reached their highest level since 2013, and they will help fill the void left by investors unable to continue in the Sydney market.

The Northern Beaches market is still holding up despite the negative press.

We have begun working with clients who are looking for an early 2018 sale. This gives us enough time to adequately prepare the home for a record result.

If an early 2018 sale is on the horizon for you or someone you know, now is the time to talk to me as this may well be the best time to sell!

Thanks for reading,

Tony.