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,