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,