We started the year with a bang when the RBA decreased interest rates to 2%, causing the buyer frenzy to continue for a third consecutive year.
The short supply and huge demand for property in Sydney, powered by very strong population growth has seen us experience unprecedented price growth in such a short period of time. If you bought a property 3 years ago you would be now sitting on a whopping 50% capital gain.
However buyer enthusiasm has slowed toward the end of this year, transitioning back to more traditional selling circumstances, or what we have described as from Nuts to Normal!
Sydney property prices experienced a decrease of 1.4% over November – the largest month on month fall in 5 years.
Sydney auction clearance rates fell to below 60% over the month of November, and currently sits at a 55.2%. This is a stark contrast to earlier in the year when we it peaked at 90% in April.
I’m calling September of this year as the peak of this recent property boom. The market has run out of puff since then and is trying to find a new level. Vendors can no longer rely on their home selling in the first couple of weeks as days on market has increased.
A large majority of investors have dropped out of the market, as strict lending conditions and low rental yields have forced investors to put their purchasing plans on hold.
Housing affordability is another factor that will continue to slow prices. The average homebuyer today is putting more than 40% of their income into mortgage repayments. This is already a very large chunk, and we will inevitably reach a point soon where the average person simply cannot extend any further.
As long as interest rates remain at its current level, my prediction for next year is we will see property prices level out to either flat or very modest growth. Should interest rates rise - although unlikely - property values will decrease further. One thing that is for sure, don’t expect any more double-digit returns in Sydney for a while.
Early 2016 will still be a good time to put your property on the market as buyers will be eager to have another crack at purchasing in the new year.
What does this mean for you? If you are planning on making a move in 2016 – never fear! With over 30 years of real estate expertise, I employ a proven marketing and negotiating strategy tailored for markets such as the one we have moved into.
Please contact me anytime.
From myself and my two assistants Finn & Simon – We wish you ONE very merry Christmas, and nothing but good fortune in 2016.
Thanks for reading,