Last weeks super Saturday saw auction clearance rates still at all-time boom levels, with the Sydney wide rate at 81.5% and the Northern Beaches higher still at 85.2%. For a comparison, the same weekend last year – which we were still considering a hot market – saw only 69.8% of homes cleared at auction.
It’s becoming a quick affair to sell a home these days, only taking 26 days across Sydney and much sooner on the Northern Beaches. It feels like homes are being sold for record prices as soon as the photos go up on the internet!
This pent up demand is a flow-on effect from buyers who missed out on purchasing last year. They are now more eager than ever to secure a property, after having been searching for many months and feeling that they will miss out on the opportunity to buy, as property as values keep rising month on month.
At this point, I usually tell you about the low supply of property in the Sydney market. This month I’m going to let the following statistic paint the picture for you:
The total number of listings in Sydney right now is about the same as the total number of listings in Brisbane, and slightly lower than the total number of listings in Perth, whilst Sydney’s population is more than the combined population of both Brisbane and Perth.
With what seems to be an endless rise, the question keeps surfacing as to what could cause property prices to drop in Sydney?
Due to the huge demand – especially on the Northern Beaches – it will take either a significant rise in interest rates, or a rise in unemployment, causing more homeowners exposed to defaulting on their mortgages repayments, causing a potential glut of properties on the market.
At the moment buyer sentiment remains bullish however this can easily change causing the market to turn at the blink of an eye.
So if this were to happen, would our housing market crash?
It’s probably the most talked about subject in the media at the moment.
Whilst I believe that properties in Sydney and Melbourne are becoming overvalued following a meteoric rise in prices over the last 5 years, the fact that there is still a huge undersupply of properties in Sydney, and that mortgage stress is currently relatively low due to interest rates at historic all time lows, tells me that Sydney property values are not about to bust.
However, this could all change if the RBA were forced to lift interest rates. We could easily see a 10-15% correction in property values if this occurs, causing homeowners with huge mortgages and negative equity being forced to sell.
The best analogy I can use is that the Sydney property market has become like a speeding runaway train. If a train wreck were to occur the buyers that have jumped on the last carriage are the ones most vulnerable.
For sellers - and I feel like I am repeating myself here – there has never been a better time to sell! If you don't want to miss out on one of the fastest trains that the Sydney property market has seen in decades then please contact me to get an update on the value of your home.
Thanks for reading,