Spring has Sprung! It’s that time of the year again when real estate dominates the headlines – and it’s not always positive.
 
The auction clearance rate Sydney-wide last weekend was 18% lower than this time last year. This was the first ‘Super Saturday’ of the year, and it was the slowest start we’ve had in 5 years.
 
It’s not all doom and gloom on the Northern Beaches however, as we saw a respectable 72% clearance rate. It’s still a tale of two cities with areas like Sydney’s southwest felling the brunt of the slowing market, with a clearance rate of just 46.51 per cent. In Parramatta, it was 52.94 per cent.

There are currently 16.4% more listings on the market in Sydney when compared to this time last year. This, combined with stricter bank lending on interest only loans would be the main drivers leading to zero capital growth in Sydney over the month of August.
 
However we are still 12.7% higher than this time last year and properties are taking a little longer to sell, but still inside a month.

Sydney's housing crisis however has reached an alarming new threshold with a key measure revealing it now takes more than two average full-time wages to affordably service a loan for a typical city home.
 
The Housing Industry Association's housing affordability index, which measures the capacity of households to service mortgages, shows Sydneysiders must fork out $4,729 per month, or nearly $57,000 a year, to service a standard mortgage on an averaged-priced home in the city.
 
That is more than 30 per cent of the earnings of a Sydney household with two average full-time wages – the portion of income widely accepted to be a manageable housing repayment.

While interest rates remain at historic lows, Sydney’s appetite for property remains.
 
But as more and more negative headlines come, buyers will try negotiating harder with their purchases and although it is likely that interest rates will remain on hold for at least another 12 months, watch out for when they eventually start to rise.
 
This is a time when the correct marketing and negotiating is crucial to obtaining a boom-time result.
 
Just like a great teacher will have a direct bearing on a child’s education, a great agent will have a direct bearing on the sale of a property and its result.

If you would like to have your property sold before Christmas, now is the time to begin the preparation phase. Feel free to contact me any time to schedule an initial meeting
 
Thanks for reading,

Tony.

Despite the gloomy news headlines regarding the future of our property market, there are no real head winds on the Northern Beaches with a very healthy 86% clearance rate last weekend.
 
In contrast nationally, house values dropped for the very first time in a while – down by 1% for the month of May. This stagnant growth could be explained by the increased supply – there are 6.2% more listings on the market when compared with June 2016.​ However the market is still 11.4% in front when compared to June 2016.

So although recent media reporting may entice you to think that property values are about to tank, I believe we are in a transition period to the next phase of the property cycle. Put simply, the buying frenzy seems to have dissipated, however properties are still selling.
 
Sure, some areas of Sydney that are investor hotspots with an abundance of vacant land will possibly experience a downturn, but the desire to live on the Northern Beaches will always bring demand. The only way we will see red across the board is if interest rates were to rise and ​they were put on hold once again this month by the RBA.

However it is interesting to note that many economists are now predicting that interest rates may drop once again later this year if the economy does not improve. It’s ironic that if this was to occur it will surely prolong the strong growth in property values as money to borrow becomes even cheaper.

Now that Winter has well and truly set in, there is a misconception that the selling season is over until Spring. However, this could not be further from the truth in this current market.
 
As many sellers follow this trend, it gives the home seller who goes against traditional thinking a huge advantage.

You see, when Spring comes around, everyone who has been holding off selling during winter all come onto the market at the same time, causing those huge Super Saturdays you see in the news every year with the number of properties on the market and going to auction increasing dramatically.
 
This can actually work against the home seller, as they will be competing with more homes on the market all at the same time giving buyers more choice. It then becomes simple economics - More supply will put downward pressure on home values.

By placing your home on the market in quieter winter times, this effect works to your advantage. There will always be buyers still looking to buy in winter, and with less to choose from, they all come to your doorstep and push the price upwards.
 
Once Spring has sprung your home becomes less isolated in the marketplace.
 
Thanks for reading,

Tony.

In what appears to be normal these days, our property market increased by almost 1% over March alone, putting us at 5.6% so far for the year, and almost an astonishing 20% since April 2016.
 
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,

Tony.

Well this real estate boom just keeps giving. Continuing on from a stellar end to 2016, the market has kicked off with another bang with a further increase in Sydney dwelling values of 2.8% so far this year.

The best description I can give you is that the Northern Beaches property market is on still on fire with the amount of buyers looking to purchase way exceeding the amount of properties on the market for sale.

House prices have increased by 16% since February 2016, if you bought in 2012 you are sitting on a 65% quick capital gain, and since 2009 the price of real estate has doubled.

The clearance rate in Sydney last weekend was 83.5%, up from 76.5% in the same weekend last year, and the Northern Beaches saw an impressive clearance rate of 85%.

Homes on average are taking approximately 33 days to sell however on the Northern Beaches it’s no surprise  that many are selling within a couple of weeks and at record prices.

The low supply nature of the Sydney property market continues to amplify with 12.3% less properties for sale in Sydney now than in February 2016. This continued high demand is a huge factor in our continued price growth.

So what can we expect for the rest of 2017?

Unless we see a lift in interest rates this year (which is unlikely), my prediction is that while stock levels remain at these historic lows, 2017 we will probably see prices to continue to rise robustly. This will certainly add pressure to the issue of home affordability which has recently been highly reported.

​Another concern is high debt levels. 1 in 2 Aussies fear they don’t have enough savings to cope with an unexpected financial shock.

Also an oversupply in the unit market is one to keep on. Take a look at this graph showing the rapid increase in unit construction since 2012:

​Welcome to the 2016 Annual Report.

What a year it has been! The year has seen huge geopolitical changes that have yet shown to affect Australia’s housing market.

The housing market continues to rise due to a combination of factors, chief of which include low interest rates, increasing demand and strong investment returns in terms of capital growth.

Sydney’s house prices have increased by 10.6% over the year, which seems a lot, however when compared to the 15.6% increase over 2015 it’s clear the pace of growth has started to slow.

Can you believe that house price have risen by a staggering 65.9% since the start of the current growth phase in June 2012. An amazing amount of profit has been made in 4 and a half years.

True to the supply/demand ratio, as house prices rise, supply wanes. There were 18.2% less property transactions in Sydney in 2016 when compared to 2015, which was in itself lower than the previous two years before that.

Homes took slightly longer to sell in Sydney in 2016 than they did in 2016. An average of 32 days on the market compared with 27 in 2015. The difference is not a significant amount so it is no cause for concern right now.

There’s one question now that everyone wants answered: How long will we continue to grow? With demand showing no signs of slowing, and with no interest rate rises in the foreseeable future, the bigger question is at what pace will we continue to grow?

As we know, the single biggest factor causing the price rise is record low interest rates and successive rate cuts. But why does the RBA keep cutting interest rates causing home prices to skyrocket and creating the generational divide of housing affordability? Well, the RBA governs the entirety of Australia, including states where the housing prices are actually falling (such as Perth and Darwin). So the cuts are required there to reduce the downward pressure on home prices. It is only Sydney and Melbourne who’s prices are getting out of control.

So what’s in store for 2017? As usual, there will be the traditional doomsayers talking of financial crisis (much as they predicted for 2016 to no avail). In terms of property, whilst demand stays strong, the only factor that could harm property values would be an interest rate rise. However this looks unlikely. In fact, another rate cut to 1.25% seems more likely in the first half of 2017.

We are likely to see continued growth in the Sydney property market, albeit at a reduced amount (i.e. no more double digit returns). However an oversupply of unit constructions may slow the increase further in this segment of the market.

I’d love to speak with you personally in more detail if there are any other questions you would like to discuss. Please feel free to contact me at anytime.

From me and my team at One Agency, have a very merry Christmas and a Happy New Year!

Thanks for reading,

Tony.

We saw an increase of 3.1% over May. This positive statistic is a direct effect of the surprise interest rate cut by a further 25 basis points in May. The market is up 13.1% since May last year.

The very low supply of housing on the market is fuelling further price growth. Take a look at this graph, showing the number of property listings for the first 4 months of each year since 2011 on the Northern Beaches:

And this table shows the number of property listings for the first 4 months of each year by Sydney sub-region.
 
You can see that year on year, the amount of properties on the market keeps reducing dramatically to less than half when compared to 5 years ago:

We have seen auction clearance rates jump right back up to the historic highs of mid-2015 with the Northern Beaches boasting an 82% clearance rate, outperforming the Sydney average by 6%.

June 2016 marks the fourth year of this current growth cycle, so with record breaking selling conditions, why aren’t more people selling?

Many factors play a part in this. Some are holding off due to the federal election, while many people have simply put their plans on hold because they cannot find a suitable property to move into.
 
The other major factor is the high change over costs in moving particularly the payment of stamp duty when re-buying.

Now for sellers that are ready to go onto the market - should they wait until Spring?

A common misconception when it comes to selling real estate is that many people think the best time to put a property on the market is in Spring time.
 
Traditionally many people put their selling plans on hold in Winter because of the colder months. This in fact leads to an influx of property coming onto the market in Spring, which means more competition amongst sellers.

I urge you, if selling is on your radar, to forget Spring time and seriously consider selling in winter when there are less properties listed for sale.

Many housing economists are predicting that after a record period of building construction, there will start to be an oversupply of new housing completions in 2017/2018.
 
This will mostly affect new apartment sales while freestanding homes in good areas will still be sought after.
 
However, the projected increase in the number of new dwellings across Australia is going to start to outweigh our large population growth and this will more than likely bring an end to our housing boom.
 
I strongly believe that we are at the top and this is the year. Please feel free to contact me at anytime.

Thanks for reading,

Tony.

We saw an increase of 2.4% in our house prices in Sydney over the month of April, the highest growth for a single month in 2016.

House prices in Sydney are now 3.9% higher than at the start of the year, and 8.9% higher than May 2015.

Our auction clearance rates on the Northern beaches are over 80% compared to 70% for the whole of Sydney.

Homes are taking slightly longer to sell, with the Sydney average being 36 days on market compared to 26 days at the same time last year.

The Federal Budget was released last week, and though there wasn’t many changes made that will directly affect the housing market, the statement from Treasurer Scott Morrison that negative gearing will not be touched will at least settle some uncertainty from many Australian investors for now.

Do not expect this to go away though, as it is shaping up to be a hot topic for debate in the upcoming election.

Perhaps the biggest news of the month was the surprise drop in interest rates by a further 25 basis points to 1.75%, following reports of deflation in our economy.
 
This was attributed to falling petrol, food and clothing prices, plus property prices abating and is the first time in seven years that we have seen a falling dollar value.

This is the first time the RBA has made a cut in a year. This further sugar fix should put more kindling into the fire of Sydney’s hot property market.
         
Some economists are suggesting the deflation will continue and we could see another cut in August.

My only concern is that this is artificially propping up home values, and we may see a heavy landing in the future once interest rates eventually go back up. Just remember the saying – what goes up must come down.
 
My advice is that if selling is on your radar do not wait until Spring time when most sellers put their property onto the market thinking it is the best time of year because the flowers are in bloom.
 
Take full advantage of the current interest rate drop and the low supply on the market during the colder months.

I must point out that the two previous years saw the market start to run out of puff after meteoric rises at the start and middle of the year.
 
If you have any questions about how to maximise the value of your property, please feel free to contact me at anytime.

Thanks for reading,

Tony.

Well property values in Sydney keep trickling along. Over the month of March we saw a modest increase of 1.1% in home values, putting us up 7.4% for the year. However, this is a vast contrast to the 10-15% growth spurts we were experiencing since June 2012. 
 
This natural movement of the housing cycle shows it at 12 on the property clock as the market draws towards the end of the current growth phase.
 
​Buyer activity is still extremely strong on the Northern Beaches with an auction clearance rate of over 78% last weekend. This graph shows  the resurgence in clearance rates in 2016 climbing back to the all-time highs of the middle of last year.
​

Sydney-wide, 648 homes went to auction last week with a 70% clearance rate. The same weekend last year, 427 homes went to auction with nearly 85% sold.
 
I see Auction activity in Sydney continue to rise through to the Queen’s Birthday holiday break in June, which will signal the beginning of the seasonal quieter winter auction period.

There are just over 20,000 properties currently for sale in Sydney, however this is 11% more than this time in 2015. The increased supply is a factor in the slowing growth in the market.

So what’s on the cards for Sydney’s housing market long-term?

It is interesting to note that  NSW lost 95,000 people to interstate migration in 2015, whilst Melbourne gained a further 95,000. Melbourne has now overtaken Sydney as Australia’s fastest growing city, and if this progression continues it will be our country’s largest city by 2056.

Housing affordability is still a major issue for many people in Sydney, with the average homebuyer priced out of 75% of the market.

This is spurring heated economic debate for policy changes, as it would appear home ownership is out of reach for younger people that will sadly become a generation of renters.

For those that have been fortunate enough to get into the property market I’m concerned at the debt levels that many families are inheriting. Australians’ mortgage debt has more than doubled over the last decade. This may not be an issue for now however once interest rates inevitably start to rise and if house prices were to fall, it would have severe implications on a mortgagees’ capacity to service their debt.

However while interest rates remain at all-time record lows and talk of another possible interest rate cut this year then the property market in Sydney will remain resilient.
 
The market keeps giving. Last week we sold this studio in Manly for a block record of its size in this complex. Astonishingly an identical property sold late last year by another agency for $110,000 less.
So if selling is on your radar you still may have not left your run too late.

Thanks for reading,

Tony.